J.P. Morgan Chase Set To Release Chase Pay Digital Wallet

dance of the banks

In this article, published in The Wall Street Journal, J.P. Morgan Chase, the nation’s largest bank by assets, is modifying its Chase Pay platform to compete with the likes of Apple Pay, Google Wallet, Android Pay, and PayPal. The move will allow Chase Pay cardholders to create a digital wallet and make payments in store, online and in app.

J.P. Morgan Chase Has an Advantage

According to the article, J.P. Morgan Chase currently supports over 94 million cardholders, giving the nation’s largest bank a distinct advantage. Having this large customer base makes the transition to digital wallet even more feasible. In an interview, cited in this article,  the head of J.P. Morgan’s consumer and community banking, Gordon Smith, said, “We’ve got the scale to bring an awful lot of customers”. This statement provides clarity into J.P. Morgan’s assessment of Chase Pay and the presumed scale that can be utilized for its success.

Retailers Are Ready For Chase Pay

Along with its large customer base, J.P. Morgan Chase also has a long list of business to business relationships that can make Chase Pay even more expansionary. By partnering with MCX, Merchant Customer Exchange, Chase Pay cardholders have instant access to a plethora of retailers. This allows cardholders to use their digital wallet to purchase goods and services through select retailers in store and online. The specific retailers involved can be found on this website.

Problems with Chase Pay

Traditionally, payment via digital wallet is processed by near field communication (NFC) technology, which is built into today’s latest smartphones and allows the consumer to wave his or her device at payment stations to pay for goods and services. According to this article, the only problem is that Apple does not allow third-party developers to utilize the iPhone’s NFC chip for app integration. This restricts J.P. Morgan Chase from accessing the NFC capability of iPhone’s in order for Chase Pay customers to pay using their Apple iPhone. The operations team at J.P. Morgan Chase is then forced to work around the situation to provide its Chase Pay cardholders with an efficient way to pay using the digital wallet on their smartphone.

Mobiles Bezahlen mit der Vodafone Wallet

QR Codes Solve The Problem

Instead of NFC, cardholders will be able complete transactions at retailers by using quick response (QR) codes. The mechanics behind QR codes are simple. The cardholder will open their Chase Pay app and generate a unique QR code on their smartphone and the cashier will scan it to complete the payment. Simple as that.

Chase Pay Will Take Over Digital Wallet Market

Since approximately half of American households are Chase customers, cited in this article, and J.P. Morgan Chase will automatically transfer cardholder information over to Chase Pay for current cardholders, then Chase Pay is in position to acquire a large share of the digital wallet market.


A New Plan For Corporate Tax Inversion

Corporate tax inversions occur when a corporation decides to re-incorporate overseas either by merger or acquisition with a foreign corporation. Primarily, this is beneficial if the corporation generates a large portion of income overseas, since income is taxed overseas and in the country of incorporation. Therefore, a corporation would invert in order to lower their tax liability.

Inversions Erode Federal Tax Base

When a corporation re-incorporates overseas, the corporation is not subject to U.S. corporate tax on foreign generated income. However, a U.S. based corporation has to pay federal corporate taxes on income generated overseas unless they stockpile the income overseas and not on U.S. soil. Carl Icahn, a well-known activist investor, said in this article that “companies are currently holding $2.2 trillion abroad that could otherwise be invested in the U.S.” This creates a burden on the U.S. Government, which relies on the federal tax base as a primary asset.

Inversions Hurt Shareholder Value

Following this sequence of events, when a corporation stockpiles income overseas to avoid taxes, then foreign generated income is unable to be returned to the shareholders of a U.S. based corporation. Found in this article, one of the largest companies with billions in foreign generated income is Apple Inc. Effectively, Apple is unable to utilize their large sums of cash overseas to finance share buybacks and dividends that will benefit shareholders. Ultimately, decreasing potential shareholder value.

As described in this article, corporations that undergo inversions effectively lower their tax rate, but shareholders of inverted corporations incur capital gains tax on all shares owned as if they sold them.

Increasing shareholder value is a prime goal of U.S. corporations and inversions deteriorate shareholder value by decreasing buybacks and dividends and increasing taxes borne by shareholders.

Donald Trump

Donald Trump Will Stop Inversions

Who will stop inversions and return value to shareholders?

The current leader for the Republican presidential nomination, Donald Trump, has directly addressed corporate tax inversions in his tax-reform plan. Trump plans to cut the corporate tax rate from 35% down to 15% , as described in this article. This creates an incentive for corporations to remain incorporated in the U.S. and also makes incorporation in the U.S. more attractive for corporations abroad. Also cited in the article, Trump will make this corporate tax cut feasible by instituting a “one-time tax of 10% on overseas profits for U.S. corporations”. Overall, Trump’s plan will make the U.S. globally competitive in the realm of corporate taxes.

Hillary Clinton Causes Biotech Turmoil


Democratic Presidential Nominee, Hillary Clinton, announced her plans, via Twitter on September 21, for increased regulation in the healthcare industry. Mrs. Clinton sought to fulfill this need after a The New York Times article, found here, was published citing a drug with a price increase from $13.50 to $750 overnight. This “price gouging” by pharmaceutical companies is at the forefront of reform in Mrs. Clinton’s plan for increased regulation. But, what does this mean for investors?

Comments Spook Investors


In a week following the tweet by Mrs. Clinton, major biotech indices were down more than 20%, according to this article published in the Wall Street Journal. In the chart to the right of the iShares Biotech ETF (IBB), which seeks to track NASDAQ listed biotechnology and pharmaceutical securities, and the NASDAQ Composite, a market index for healthcare and technology securities, the IBB declined 11.72% more than the NASDAQ Composite. This discrepancy of 11.72% creates a unique event centered around the effects of Mrs. Clinton’s tweet. Meaning her announcement, via Twitter, was unexpected by the market and the securities exposed to such regulation were impacted more than the broad market.

Therefore, investor portfolios with exposure to biotechnology were largely affected by Mrs. Clinton’s tweet.

Price Gouging Is Necessary

Although supporters of Mrs. Clinton would disagree, price gouging is a necessary tool used by the healthcare industry for the sale of prescription drugs. By using price gouging, firms account for the following:

  • Risk compensation, for the uncertainty of FDA drug approval rates
  • Research and development (R&D), the most important driver for innovation and success of healthcare companies
  • Marketing costs, which are heavily utilized for market exposure of newly patented drugs.

Without higher prices to drive R&D and marketing, these companies would be unable to research and develop leading treatments and cures in areas like immuno-oncology.

Hilary Clinton is Misdirected 

The proposed policy changes by Mrs. Clinton, found in this article, are centered around new medicines on the forefront of disease transformation. Since,according to the article, roughly 70% of new drug developments are completely new approaches in fighting disease, then Mrs. Clinton’s plan to restrict price gouging will subsequently affect the budgeting and allocation of capital to R&D spending for new drug development projects. This lowers the incentive for new drug development, putting significant pressure on companies determined to find a cure for rare diseases. Just think if the developments toward hepatitis C and metastatic melanoma were never funded, then treatment would never have been developed and these diseases would still be considered a death sentence.

Instead, Mrs. Clinton should focus her efforts away from price gouging in new medicine and toward helping patients by lowering costs and market timing for more generic drugs, thus saturating the generic drug market and eliminating “perpetual monopolies for old, off patent drugs like Daraprim”, as described in this article.

Become a Leader, Thank Your Employees


decoded@mcbw 2012

Hard-working employees often goes unappreciated by management. According to The Wall Street Journal, a way for managers to correct this is by simply thanking your employees.

A Change in Corporate Culture

But, aren’t employees just doing their job? Why would a boss need to thank their employees for tasks they payed them to do?

These questions understate the value of employees and create a large barrier between employees and managers. By doing so, employees are left feeling undervalued. A Monster.com poll, in this article, found that 90% of American workers occasionally feel unappreciated on the job and 50% never feel appreciated.

Instead, managers should thank their employees on any given day. The sense of feeling appreciated in the workplace, described in this article, can lead to greater happiness as well as better financial decision making and problem solving. Happiness and productivity in the workplace have also been found to be correlated, according to this study. In general, being appreciated can increase personal morale and lead to better mood, sleep, and alertness.

By expressing appreciation to employees, managers can change the culture of their business. This new corporate culture will help develop and retain productive employees by offering a welcoming atmosphere where hard work is recognized by management.

Create a Better Workplace

If you’re in a leadership role, then become an effective leader by saying thank you to your employees. Whether it be for a near meaningless task or a big project, make your employees feel appreciated and they will return the favor.

A simple thank you can transform workplace culture into a communicative environment built on productivity and success. With the linkage between happiness and productivity defined, why would a manager restrain from saying thank you every once in a while? The only result is a better workplace environment.

Apple Stock Falls After New Product Conference

On Wednesday Sept. 9th, Apple unveiled updated versions of their marquee products including the Apple Watch, iPad, Apple TV, and iPhone. For the Apple Watch, Apple revamped the software with OS2, which will create better app integration, new customization features, and a more intuitive use for Siri. They also added multiple new watch bands ranging from the new Hermés leather bands to the more affordable sport bands with multiple color combinations.


A New, More Powerful iPad 

The iPad lineup saw a huge update with the additions of the new iPad Pro and iPad Mini 4. The iPad Pro was the star of the stage with a large 12.9” screen supporting 5.6 million pixels. The new A9X chip in the iPad Pro helps support not just content consumers but now content creators with more computing power than ever. With its seamless ability to run complex software, like AutoCAD 360, the iPad Pro is now able to compete with most portable computers.

Apple TV Gets Much Needed Upgrade

Apple claims to have found the future of television through apps. The new redesigned Apple TV with tvOS software allows you to consume media from apps, like Netflix, on your larger television screen. With the iTunes App Store conveniently on the Apple TV, consumers can use the device as a gaming console. The new Siri Remote, let’s you quickly navigate on-screen with built-in voice integration and also doubles as a unique gaming controller. The Apple TV, a once single-use product, is now a multipurpose device that delivers entertainment right to your living room.

Minor Improvements for iPhone

Lastly, Apple showed off the new iPhone 6s and 6s Plus, an updated version of the preexisting iPhone. Now you get more functionality through 3D Touch, a 12MP camera, and a faster A9 chip. The addition of 3D Touch allows the screen to sense depth of touch, which enables more multitasking features without excessive on-screen buttons. The camera on the new iPhone supports 4k video functionality and live photos. These new features are being run by Apple’s A9 chip, which as claimed by Apple, has 70% more processing power than previous generations.

AAPL Shares Fall  More Than 2%

Apple Event Yahoo Finance Marked UP

At the same time Apple’s new products were being released, Apple stock (Ticker:AAPL) was trading on the NASDAQ stock exchange. The following is a timeline during the new product conference:

  • 9:30AM – 1:00PM: AAPL traded in a tight range between $112 and $113 in anticipation of the event at 1:00PM.
  • 1:00PM – 1:15PM: Tim Cook, CEO of Apple, announced improvements to the Apple Watch and after he said, in this article, that “Today, we have the biggest news in iPad since the iPad”. In response, AAPL peaked at $114.02, up 1.30% on the day.
  • 1:15PM – 1:30PM: AAPL turned to the downside reaching $112.29, down 0.10%.
  • 1:30PM – 3:00PM: Following the release of Apple Watch and iPad Pro, AAPL continued to the downside. By 3:00PM the stock had reached $111.50.




Since the reversal started before the new Apple TV and iPhone’s were announced, a logical conclusion would be to point toward the Apple Watch or iPad Pro as reason for the decline. Lets examine three possible cases for the early reversal in Apple stock.

First, Tim Cook announced the hefty starting price of $799 for the iPad Pro. This is far above any expectations, which creates a negative reaction in the eyes of consumers and investors.

Second, the realization that the iPad Pro is now in direct competition with Microsoft’s Surface Pro 3, a tablet starting at a lower price of $699, is a negative to investors. For example, the iPad Pro has add-on accessories that are exact comparisons to the keyboard and stylus pen that come included with the Surface Pro 3. Moreover, Apple is known for creating products unlike anything currently on the market, and the iPad Pro comes off as a replication of the Surface Pro 3 with Apple branding.

Lastly, Steve Jobs, deceased co-founder of Apple, in 2007 at the Macworld convention was quoted in an article saying, “Who wants a stylus?… Nobody wants a stylus. So let’s not use a stylus.” Thus, following the release of the controversial Apple Pencil, a $99 accessory for the iPad Pro, the stock price dipped into negative territory.

Long-Term Investors Should Remain Hopeful

The ultimate indicator of long-term success for the new Apple Watch, iPad, Apple TV, and iPhone is not the short-term price volatility of the stock, but better yet is the future revenue generated from these products. When Apple reports fourth quarter earnings later this year, investors will understand the true impact new product development has on long-term stock performance. Therefore, a 2% decrease in Apple stock should not be seen as negative. Instead, the decrease should signify that current investor projections are not 100% positive on future product performance. Consequently, the future revenue performance of Apple’s new products remains an investment risk to owning the stock.