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Pre-Market: JPMorgan Pays Up, Admits No Wrongdoing; Retail Sales Bounce

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By not admitting to any misdeeds, JPMorgan Chase may have avoided even bigger write-downs in criminal lawsuits.

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Stocks are set for a third straight day of losses after a landmark speech by Ben Bernanke and a surprise increase in retail sales last month.

Retail sales unexpectedly rose 0.4% last month after staying flat from August to September. Economists forecast that amidst the government shutdown, retail sales would have been flat. Even excluding autos and gas, sales rose 0.3%, also beating expectations. The consumer price index showed that deflation still persists. Month-over-month CPI fell 0.1%, though economists expected no change.

Still to come today is a report on existing home sales. The annualized pace of pre-owned-home sales in October is projected to fall to 5.13 million. We will also get the minutes from the last meeting of the Federal Open Markets Committee for more clues regarding the Fed's reasoning about quantitative easing and the state of the US economy.

US stock index futures were mostly flat this morning. Dow (INDEXDJX:.DJI) futures fell 0.03% to 15,929 while S&P 500 (INDEXSP:.INX) futures were down 0.03% to 1,784.70. Futures on the Nasdaq Composite (INDEXNASDAQ:.IXIC) gained 0.10% to 3,379.00.

Yesterday, Fed Chairman Ben Bernanke gave a speech to the National Economists's Club where he discussed how the Fed manages market reactions. He said that the target rate will be near zero even after quantitative easing ends, and that the market misinterpreted the FOMC's statements over the summer.

"When, ultimately, asset purchases do slow, it will likely be because the economy has progressed sufficiently for the Committee to rely more heavily on its rate policies, the associated forward guidance, and its substantial continued holdings of securities to maintain progress toward maximum employment and to achieve price stability," he said. "In particular, the target for the federal funds rate is likely to remain near zero for a considerable time after the asset purchases end, perhaps well after the unemployment threshold is crossed and at least until the preponderance of the data supports the beginning of the removal of policy accommodation."

"A perceived reduction in the Fed's commitment to meeting its objectives -- contributed to the increase in yields, it was neither welcome nor warranted, in the judgment of the FOMC. This change in expectations did not correspond to any actual lessening in the FOMC's commitment or intention to provide the high degree of monetary accommodation needed to meet its objectives, as Committee participants emphasized in subsequent communications," he said.

Yesterday, as expected, JPMorgan Chase (NYSE:JPM) paid $13 billion to end probes into its sales of questionable mortgage bonds, but admitted no wrongdoing. This is a massive boon to the bank, as an admission of misleading investors or fraud would have been a bloody shirt for prosecutors in other ongoing suits to wave. JPMorgan is not yet off the hook for numerous private lawsuits and criminal investigations.

Struggling retailer JC Penney (NYSE:JCP) reported losses of $1.81 per share, missing expectations by $0.09. Same-store sales were down 4.8% and revenue fell to $2.78 billion. However, its forward guidance was better than expected. Management expects comparable-store sales to grow sequentially and year-over-year in the fourth quarter. Shares were up 7.9% in the pre-market.

Shares of Yahoo Inc. (NASDAQ:YHOO) jumped 2.5% this morning as the company added $5 billion to its share buyback program. Since January of 2012, Yahoo has already repurchased $5.3 billion in its own stock.


Twitter: @vincent_trivett
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No positions in stocks mentioned.
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