>>> US Close Dow +0,25% S&P +0,21% Nasdaq +0,49% Russell +1,14%

Closing Market Summary: Flirting With Record Territory

The S&P 500 notched its fourth straight advance on Tuesday, adding 0.2%, and touched a new intraday record (2873.23) before pulling back in the afternoon, eventually settling 0.4% below its January 26 record close (2872.87). The benchmark index kept within a pretty narrow range, hovering between +0.2% and +0.6%.

As for the other major averages, the Dow Jones Industrial Average finished with a gain of 0.3%, and the Nasdaq Composite added 0.5%. The small-cap Russell 2000 outperformed, soaring 1.1%, to finish at a new record high (1718.05) for the first time since June 20.

Tuesday's session began on an upbeat note as investors looked ahead to renewed U.S.-China trade talks, which will kick off on Wednesday. President Trump said he doesn't believe the mid-level negotiations will lead to much of anything, but the market has been optimistic nonetheless.

The bullish bias then weakened a bit after the S&P 500 posted a new intraday record around midday. The top-weighted technology sector led the leg lower, trimming its gain notably; the group was up as much as 0.8%, but finished higher by just 0.1%. Tuesday's tech reversal added to a week's worth of struggles; tech has lost 0.7% since last Tuesday, while the S&P 500 has gained 0.8%.

News that President Trump's longtime personal lawyer, Michael Cohen, has struck a plea deal with federal prosecutors also weighed in the afternoon. The deal does not currently include cooperation with investigators, according to The New York Times, but might still have implications for the president, who worked closely with Mr. Cohen for more than a decade.

The consumer discretionary (+0.9%) and industrials (+0.8%) sectors were the top-performing groups on Tuesday, with consumer discretionary benefiting from the latest batch of corporate earnings. Retailers TJX (TJX 106.46, +4.81) and Kohl's (KSS 80.20, +1.35) jumped 4.7% and 1.7%, respectively, after reporting better-than-expected earnings and revenues. Meanwhile, homebuilder Toll Brothers (TOL 39.52, +4.79) spiked 13.8% after also beating on the top and bottom lines.

In total, seven of eleven sectors finished in the green, with most advancers adding between 0.4% and 0.7%.

On the downside, the consumer staples (-0.8%), utilities (-0.7%), and real estate (-0.9%) groups finished at the back of the pack. Within the consumer staples space, J.M. Smucker (SJM 108.20, -7.67) and Coty (COTY 11.52, -0.88) lost 6.6% and 7.1%, respectively, after issuing disappointing guidance.

Away from equities, the U.S. Dollar Index slid for a fifth straight session, dropping 0.6% to 95.16, after President Trump reiterated his displeasure with the Fed in exclusive interview with Reuters released on Monday, saying he was "not thrilled" with Fed Chair Jerome Powell for raising rates. Treasuries also moved lower, pushing the benchmark 10-yr yield two basis points higher to 2.84%.

As for economic data, investors did not receive any notable reports on Tuesday.

  • Nasdaq Composite +13.9% YTD
  • Russell 2000 +11.9% YTD
  • S&P 500 +7.1% YTD
  • Dow Jones Industrial Average +4.5% YTD

FT : Bill Gross’s bond fund hit by wave of investor redemptions

Bill Gross’s bond fund hit by wave of investor redemptions
Legendary manager now oversees $1.2bn, compared with $300bn during peak at Pimco

Bill Gross, once renowned as the world’s top fixed-income manager, has seen his fund fall in value by 40 per cent this year as investors abandon the one-time “bond king” following an extended period of weak performance.

Investors have withdrawn $834m from the Janus Henderson Global Unconstrained Bond fund, which now manages just $1.2bn, according to Morningstar, the data company.

The latest outflows mark a fresh low point for a manager who once controlled a $300bn bond fund, the world’s largest, when he was employed by Pimco.

“It is not surprising that he has not been able to attract the staggering levels of money he managed at Pimco,” said Randy Waesche, chief executive of Resource Management, a financial advice group. “Investors do not flock to funds that consistently lose money.”

Mr Gross’s fund has now dropped to last place in Morningstar’s non-traditional bond fund category after recording negative returns of 6.5 per cent in the first seven months of the year.

Bond funds have been ravaged this year as investors have fled in response to rising interest rates. Several top-selling funds from 2017 have haemorrhaged cash in the first six months of the year.

It is unclear how much of the $1.2bn Mr Gross manages is on behalf of external clients. He personally invested $700m in the fund when he started running it four years ago.

Mr Gross has been on the wrong end what he has called the “trade of the year”, betting that German government bond prices will fall as US Treasurys rise. His fund also lost more than 3 per cent in value on a single day in May as fixed-income markets were rocked by the Italian financial crisis.

Dick Weil, who recently become sole chief executive of Janus Henderson, this month told CNBC that Mr Gross had “made some bad bets”.

Mr Weil, a former Pimco executive who was instrumental in bringing Mr Gross to Janus Capital in 2014, said at the time: “He believes still in his basic presumption that inflation is not going to get out of control. And so he hasn’t lost faith in his fundamental view. But he’s been wrong and wrong badly in the short term. And he’s accountable and we’re accountable for that.”

Mr Waesche added: “Mr Gross will be remembered as one of many talented investment advisers that did well for a time, but ultimately lost to the vagaries of the market.”

George Soros was one of Mr Gross’s early backers at Janus, but pulled $500m from the fund in 2015 as losses began to mount.

Janus Henderson did not immediately respond to a request for a comment. The fund’s flows and performance data were first reported by Ignites, an FT news service.

(HedgeFund Wisdom) - Quaterly Review of 13F Filings

>>> Consensus New Buys
* Spotify (SPOT): This music streaming giant completed a direct listing during the quarter rather than the typical initial public offering, but regardless they now have a publicly traded vehicle. Funds such as Tiger Management, Maverick Capital, Coatue Management, and Tiger Global all show stakes in the company. Keep in mind, however, that some of these firms invested back when the company was still private (like Tiger Global) and have owned it for some time. The company’s main competition is the likes of Pandora (P), Apple Music, and other music streaming services as the music industry has evolved from buying CDs to buying MP3s to now streaming.
* NXP Semiconductor (NXPI): Hedge funds such as Appaloosa Management, Third Point, and Tiger Management all show new stakes in the company. During the quarter, NXPI’s merger with Qualcomm (QCOM) was not allowed by Chinese regulators and the deal was called off. This stock is featured in the investment thesis summary section later this issue.
* 21st Century Fox (FOXA): This media giant has been the subject of a heated bidding war between Walt Disney (DIS) and Comcast (CMCSA). In the end, DIS prevailed and the deal has already been approved by US regulators with the condition that Disney sell Fox’s regional sports networks. The deal still has to pass other regulators and is anticipated to close sometime next year. Funds such as Paulson & Co, Tiger, and Farallon Capital all show new positions.
* AutoZone (AZO): Funds including Greenlight Capital, Maverick Capital, and Coatue Management all show small new stakes in the automotive parts supplier. Bears have pointed to Amazon’s (AMZN) increasing presence in the automotive supplies arena as a big competitive threat. Bulls argue that not all the inventory is sold online and often times consumers or mechanics need parts right away rather than in two days.

>>> Consensus Increased Positions
* Microsoft (MSFT): This is the second consecutive quarter this stock has graced this list. This time around, Third Point, Farallon, Maverick, Coatue, Viking Global, and Lone Pine Capital all added to their stakes. While ‘FANG’ stocks have been all the rage (Facebook, Amazon, Netflix, and Google), MSFT has steadily climbed higher and been quite the performer in its own right.
* Charter Communications (CHTR): Prior to and during its merger with Time Warner Cable, Charter Communications was a consensus hedge fund trade. The past few quarters it had seemingly fallen out of favor a bit, but in the second quarter funds returned to shares, utilizing the pullback to add to their stakes. Managers such as Bridger Management, Glenview Capital, Farallon, and SPO Advisory all boosted their exposure to the US broadband giant.
* Alibaba (BABA): Hedge funds including Tiger, Maverick, Tiger Global, and Lone Pine all accumulated more BABA shares in Q2. Chinese internet stocks as a whole have pulled back from their highs this year as the Chinese market in general has been in bear market territory, prompting some funds to bolster their positions. The current U.S.-China trade war also probably hasn’t helped things.
* United Technologies (UTX): Pershing Square, Third Point, and Viking Global all added to their UTX positions during the quarter. The company has been reviewing strategic alternatives and many of these funds believe that the company should divest some business units or spin them off into three separate entities. The company will announce the results of its review in the fourth quarter.

>>> Consensus Sold Positions
* Dominos Pizza (DPZ): When asked what stocks have been some of the best performers over the past five years, many people probably wouldn’t be quick to rattle off a pizza maker. But DPZ shares have performed extremely well as the company embraced digital selling platforms and reinvented itself a bit. Funds that finally took profits in the name include Coatue, Maverick, and Tiger.
* Bloomin Brands (BLMN) & Sprouts Farmers Market (SFM): There were hardly any consensus sells this quarter apart from Dominos. These two stocks were sold by a lot of funds, but the position sizes were incredibly small to begin with, so it’s not a material transaction. Coincidentally (or not), the same group of funds sold both of these stocks: Coatue, Greenlight, and Maverick Capital.
* Time Warner (TWX) & Monsanto (MON): Both of these stocks were risk arbitrage trades and their mergers recently closed. Time Warner was acquired by AT&T (T), and this also explains why T now shows up as a ‘new position’ in some portfolios throughout the issue. Monsanto was acquired by Bayer.

>>> Consensus Decreased Positions
* Facebook (FB): A lot of funds reduced exposure to the social media giant during the quarter, but it’s also worth mentioning that there was a decent amount of other funds that were actually buying too. So in reality, this is more of a ‘mixed activity’ name, but the trading action definitely skewed negative enough to land on this list. Funds that trimmed their FB stakes include Tiger, Omega, Farallon, Maverick, Third Point, Lone Pine, Appaloosa, and Viking Global. The company has recently had data privacy issues with the Cambridge Analytica scandal. And in news since the end of the quarter, the FB’s recent guidance was well below investor expectations as they lowered both growth and margin expectations significantly.
* UnitedHealth Group (UNH): Maverick, Omega, Appaloosa, Viking Global, and Lone Pine all reduced exposure to the biggest health insurance provider in the U.S.
* Shire (SHPG): Omega, Maverick, Paulson, and Glenview all reduced exposure to this pharmaceutical company. And though the reduction was consensus, many funds still hold noteworthy stakes (especially Paulson, which counts SHPG as its third largest holding).
* Adobe (ADBE): This is most likely a case of profit taking given that ADBE shares have been a rocketship the past few years. The company’s business model transition to a subscription service has been a huge success and funds that realized some gains include Tiger, Omega, Maverick, and Lone Pine.

WSJ : U.S. Stocks Poised to Enter Longest-Ever Bull Market

U.S. Stocks Poised to Enter Longest-Ever Bull Market
The latest leg of the record bull run has been driven by booming U.S. economic growth, strong quarterly corporate earnings

U.S. stocks are on the verge of surpassing their longest-running rally, ratifying a market rebound that began in the ashes of the financial crisis and defying those who have questioned its staying power.
Wednesday will mark 3,453 days since the S&P 500 hit its low of 666 on March 9, 2009. Since then, the broadest U.S. blue-chip index has more than quadrupled in price terms, creeping within 0.6% of its January all-time record and outpacing most rival major indexes around the globe.


The latest leg of the bull run for the S&P has been driven by booming economic growth in the U.S., as well as renewed strength in quarterly corporate earnings. Investors have also bet that the global economy will continue to expand at a steady pace even amid turbulence in some emerging markets such as Turkey and Venezuela. The largest advances in recent months and years have been concentrated in the U.S. technology companies that have practically become synonymous with technical prowess and business dominance, notably AppleInc., Amazon.com Inc. and Google parent Alphabet Inc.
The gains, aided by the U.S. corporate tax cut in December, deliver a rebuttal to skeptics who have argued that everything from a slowdown in China’s growth to rising U.S. interest rates to intensifying trade tensions would dash the market’s run. In the view of many portfolio managers and others, the ruddy health of the U.S. tech industry and the broad strength of the domestic economy likely point to continued increases for stock prices in coming quarters, even if high valuations are likely to limit the scope of any rise.
“Companies are tearing it up,” said Don Townswick, director of equity strategies at Conning & Co. “It’s quite possible to see the market continue to do well.”
Few investors would have bet that the longest bull market in U.S. history would follow on the heels of the worst financial crisis to rock the world since the Great Depression. A decade ago, storied investment firms like Bear Stearns Cos. and Lehman Brothers Holdings Inc. disappeared while others including Merrill Lynch & Co. were sold under intense market pressure. Many analysts and investors believed in March 2009 that, even with broad market indexes down 40% and more from their peaks 18 months earlier, worse tidings were yet to come.
Charging Ahead
The S&P 500's current bull market is set to become its longest in history.

Instead, the economy struggled back to its feet over a period of years. Investment flows inevitably shifted away from a hamstrung financial industry toward fast-growing, consumer-facing technology companies that were devising products that managed to change everything from the ways Americans shopped for clothes to how they communicated with one another. One investor favorite of the current rally, Facebook Inc., didn’t enter public markets until 2012. Its shares are up nearly fivefold since its market debut.

The current rally isn’t the hottest. The previous record S&P bull market that ended with the tech bust in March 2000 rose 417% over 3,452 days—far above the current rally’s 322%. The current run is the third-longest rally in the Dow Jones Industrial Average, after bull markets that ended in 1961 and 1929, according to Dow Jones Market Data.
One test of the current bull market, investors and executives said, is whether popular tech companies will be able to continue to justify the massive sums invested in them amid intense competition, fickle consumer taste and Wall Street’s notoriously imperfect efforts to predict broad trends.
Companies in the S&P 500 technology sector make up 22% of the current bull market’s return, according to S&P Dow Jones Indices, with Apple alone accounting for 4.1% of the gain. Four companies—Amazon, Microsoft Corp. , Apple and Netflix Inc.—account for 40% of the S&P 500’s nearly 7% gain for the year, according to S&P Dow Jones Indices.
Skeptics note that the leading shares in previous expansions, communications companies in 2000 and banks in 2008, fared poorly in the subsequent downdraft.
What’s more, with the Federal Reserve gradually raising interest rates and unwinding a decade of easy-money policies enacted after the crisis, many investors believe that shares trading at high price/earnings multiples—as many of the largest tech stocks are—will prove vulnerable to a reassessment of future return prospects.
Yet many of the underpinnings of the so-called goldilocks period for stocks remain intact, with interest rates remaining low and inflation just touching the Fed’s 2% target following a period of increases. Few economists expect a recession any time soon. As a result, even interest-rate sensitive investors aren’t willing to call an end to the bull rally just yet.
“Any time you have modest to good growth and modest inflation, you can worry about valuations,” said Scott Wren, a senior global equity strategist at Wells Fargo Investment Institute. “But this expansion is going to continue for a while longer.”
Some bulls find solace in a look back at some of the market’s hard times since the crisis. Michael Batnick, director of research at Ritholtz Wealth Management, contends that the current bull run began in 2013—when the S&P 500 set its first record close since the financial crisis.
Others argue that the current bull run was interrupted by steep slides in 2011, when the S&P 500 declines were just shy of an official bear market. Either way, investors say there is little use in trying to time the bull market’s end.
“Arbitrarily saying I need to take off risk because we’re at the anniversary of the longest bull market is a suboptimal way of investing,” said Mark Stoeckle, chief executive of the Adams Funds. “Markets can go up a lot longer than many people think they can.”

FT : Bitcoin: fiat rocks

Bitcoin: fiat rocks
Cryptocurrencies were meant to challenge the financial establishment

Bitcoin could soon have its own chamber of commerce. The news is on a par with anarcho punk band Napalm Death announcing a lounge jazz album. Cryptocurrencies, as championed by libertarians, were meant to challenge the financial establishment via fiat money, not apply for membership.

The disruptive dream has fallen flat with the bitcoin price. This has slid by two-thirds to $6,440 since December. The implied value of bitcoin in issue is around $107bn. If the cryptocurrency was an S&P500 company, it would not even make it into the top 50.

Fed officials meeting at Jackson Hole are unlikely to debate the threat to the dollar. In one simplified scenario envisaged by UBS, bitcoin would need to rise 30-fold to cover a day’s transactions on the Visa payments network. Analysts at the big bank also modelled demand, estimating that 70 per cent of price action is speculative.

Crypto punks may take UBS’s verdict that “bitcoin cannot be considered money or a viable asset class (yet)” as a compliment rather than an insult. But there is an obvious reason why regularising bitcoin appeals to squarer promoters, such as the Winklevoss twins, founders of the US Gemini Trust exchange. Niche demand for bitcoin and its peers can never support more than a niche intermediary business. To bulk up, mainstream funds are needed.

The Winklevosses want to launch an exchange-traded fund investing in bitcoin. The US Securities and Exchange Commission has rejected their application twice. Unaccountably, it thinks bitcoin trading could be open to manipulation.

Self-regulatory organisations help US watchdogs police the markets. The twins support moves to set one up. The first step is a working group of crypto exchanges, the Virtual Commodity Association. Consumer protection is among its priorities. Perhaps it will organise an annual dinner dance. The real hard core commodity, fiat money, will continue to serve governments, fund wars and sway the lives of billions.

>>> Mulberry valuation – back down to earth

Mergermarket.com

Mulberry valuation – back down to earth

Buyout possibilities at handbag designer Mulberry [LON:MUL] are likely to come into sharper focus following a 30% stock price slump yesterday (20 August).
Mulberry was considered a potential target through 2013 and 2014 following a report of interest from fashion house Hermes [EPA:RMS]. At the time, its high valuation appeared to limit the potential either for a bid from strategics like Hermes or 56% shareholder Challice Ltd, a vehicle of Singapore billionaires Christina Ong and Ong Beng Seng.
Reported interest from Hermes came at a time when Mulberry was trading close to its all-time high. Reports then cited a possible takeout price of around GBP 25 per share, some 525% higher than where Mulberry trades today.
Today, Mulberry’s looks like a straightforward tuck-in acquisition for any of the fashion industry’s major players. Trading at 1.3x sales after yesterday’s sell-off, it is comfortably cheaper than UK-listed rivals and precedent transactions. That argument couldn’t be made with as much certainty when it was trading at 3.5x back in 2013.
UK luxury comp Burberry [LON:BRBY] trades at 3.4x sales and 15.1x EBITDA while Jimmy Choo was bought by Michael Kors [NYSE:KORS] in 2017 for 2.9x sales and 17.7x EBITDA. At Jimmy Choo’s EV/sales takeover multiple Mulberry would be worth more than GBP 8 per share.
Profitability metrics are less relevant for Mulberry than sales-based multiples, the Flash would argue. Mulberry is facing short-term profit headwinds and said yesterday it would take a GBP 3m charge related to the collapse of retailer House of Fraser.
Potential buyers are more likely to be interested in Mulberry’s 63% gross margin than its 4% operating margin – operating cost savings with a brand as small as Mulberry should be significant.
Shareholders are likely to have an important role to play. Challice Limited, an investment vehicle of Christina Ong and Ong Beng Seng, a wealthy Singapore-based family, owns 56% of the share capital. Melissa Ong, the couple’s daughter, is a director of Mulberry. A take-private from Challice looks perhaps the most likely buyout scenario but it’s equally possible they might be keen to seek an exit following a long and successful investment time frame which extends back to the year 2000.
Banque Havilland, a private bank, owns a further 24% and Tybourne Capital Management, a Hong Kong-based hedge fund, owns about 11%. Tybourne first disclosed its position in 2014 when Mulberry traded at around GBP 6.60 per share. Havilland bought its shares from fashion financier Kevin Stanford in 2009 when the stock traded below GBP 1.00.

NY Post : Another big bank drops Tesla coverage amid buyout chatter

Brokerage Morgan Stanley has ceased equity coverage on Tesla, potentially a sign the bank may be doing business directly with the electric carmaker as it explores options to go private.

Goldman Sachs dropped its coverage of Tesla last week shortly before confirming it was acting as a financial adviser on a matter related to the automaker.

Tesla Chief Executive Elon Musk had tweeted early last week that he was working with buyout firm Silver Lake and investment bank Goldman Sachs as advisers in his efforts to secure tens of billions of dollars in funding and take the car maker private.

Morgan Stanley’s website showed Tesla had been moved to “Not Rated” from “Equal-weight” on Tuesday.

Neither the bank nor Tesla could immediately be reached for comment.

Separately, Norway’s wealth fund, a Tesla investor, said on Tuesday that its rules would allow it to stay on as an investor in the electric carmaker if it delists from the Nasdaq exchange.

Musk has given no details of funding since saying in a blog on Tesla’s website a week ago that he was in discussions with Saudi Arabia’s sovereign wealth fund and other potential backers but that financing was not yet nailed down.

He earlier shocked investors and sent Tesla shares soaring on Aug. 7 with a tweet that said “funding secured”.

Shares of Tesla were up marginally at $309.50 in trading before the bell on Tuesday.

(CNBC) JP Morgan to unveil new investing app with an eye-catching, disruptive pr

JP Morgan to unveil new investing app with an eye-catching, disruptive price: Free

  • J.P. Morgan's new digital brokerage service comes with free trades, portfolio building tool and access to equity research.
  • The bank's new trading service starts next week and will be available to its 47 million mobile or online users.
  • All customers get 100 free stock or ETF trades in the first year. Those with Chase Private Client get unlimited trades.
  • CEO Jamie Dimon hinted at this move in 2016, citing Amazon Prime as his inspiration.

J.P. Morgan Chase is about to lob a grenade into the increasingly competitive world of retail investing.

The bank is rolling out a digital investing service next week that comes bundled with free or discounted trades, a sophisticated portfolio-building tool and no-fee access to the bank's stock research. Anyone who downloads J.P. Morgan's mobile banking app or uses its website can get at least 100 free trades in the first year.

The move, more than two years in the making, instantly intensifies the price war that is occurring throughout the investing landscape. Whether it's executing trades, managing portfolios or simply owning mutual funds and ETFs, costs have been collapsing on Wall Street. Among brokerages, the free trading app provided by Robinhood Markets has gained attention recently for attracting more than 5 million users, and a $5.6 billion valuation, in just a few years.

But J.P. Morgan, the biggest U.S. bank, has a distinct advantage over many competitors: It already has financial ties with half of American households. When its engineers flip a switch in coming days, more than 47 million people who already use the company's banking app or website will gain access to the new service, called You Invest.

"There are customers out there who may not want to trust their credentials or their money to an app of the month," said Jed Laskowitz, a J.P Morgan veteran who runs You Invest. "We're thinking about what's right for our customers, helping them get invested, and stay invested and diversified." The move is a remarkable turnaround for a bank that charged $24.95 for online trades as recently as last year. Still, the industry has been expecting something disruptive from the New York-based company for some time. In June 2016, Chief Executive Officer Jamie Dimon hinted that he was considering no-cost brokerage trades or a free automated investing program. His inspiration: Amazon Prime and its hodgepodge of free services.

"If you're a good account, it's no different than Jeff Bezos doing the $99 Prime and adding services to it," Dimon said at the 2016 investor conference.

Under Dimon, J.P. Morgan has aggressively gone after market share in businesses from institutional trading to deposits, causing industrywide ripples when it deems the opportunities are worthwhile. One example: The bank caused a stir in 2016 with its Sapphire Reserve credit card that came with a 100,000 point sign-on bonus. Thanks in part to that move, the industry is still in the throes of a credit card rewards war.
Targeting millennials

With You Invest, J.P. Morgan is targeting two broad groups, according to Kelli Keough, global head of digital wealth management. The first are people who have never invested before, including millennials, and who may be overwhelmed with the sheer number of investment choices, she said. The second group are people who have a Chase account but invest elsewhere.

"Folks that are new to investing, there's a perception that trading is expensive," said Keough, who joined the bank from Charles Schwab in 2015. "We wanted to lower the hurdles. We wanted to help people invest without cost being an issue, and to reward people who are doing more business with us."

In early trials, You Invest users are 15 years younger on average than clients of the bank's human financial advisors, Keough said. The overwhelming majority, 90 percent, haven't invested with J.P. Morgan before, she said.
How it works

Signing up through the bank's app can be done in three minutes, and moving money between Chase accounts happens instantaneously. Users can also seamlessly fund their investments from outside accounts. There is no minimum required to open an account.

All customers get 100 free stock or ETF trades in the first year, an offer that becomes permanent for those with Premier-level bank accounts, which require a combined $15,000 held at the bank.

Those with Chase Private Client, a higher account that typically requires at least $100,000 in holdings, get unlimited trades. The bank is currently considering adding other tiers that would incentivize people to pull money from other brokerages.

Users can construct diversified portfolios with an automated tool called portfolio builder by inputting their risk tolerance and objectives. In a recent demonstration, a client was able to quickly screen through ETFs — most of which came from competitors including Vanguard — and construct a portfolio composed of cheap ETFs and a few stocks.

The number of free trades a user has left is prominently displayed on the app. Keough said that most investors don't typically need more than 100 trades a year, but if they exceed that amount, they'll be charged $2.95 per trade, which still undercuts most rivals.

For instance, TD Ameritrade and E-Trade charge $6.95 per trade. Charles Schwab charges $4.95 a trade. All three offer free trades for a fixed amount of time for new clients who deposit enough money. Bank of America offers customers of its Merrill Edge service 30 free trades per month, but that perk begins at $50,000 in balances. Otherwise, trades cost $6.95.

Shares of TD Ameritrade and Schwab were lower in premarket trading Tuesday.

The next phase for J.P Morgan is for investors who want to be more hands off. Start-ups including Wealthfront and Betterment pioneered the so-called robo-advisor, or automated investment managers. Big banks including Morgan Stanley and Wells Fargo have since released their own robo-advisors. Most charge between 0.25 to 0.50 percent of assets under management per year.

J.P. Morgan will unveil its own robo-advisor under the You Invest brand in January, Laskowitz said. He declined to say whether the bank will make good on Dimon's threat from 2016 to give away the service for free.

"If you think about our pricing structure, it will be very similar with what we're doing with our brokerage platform," Laskowitz said of the robo-advisor. "We're rewarding people for doing more with Chase."