JPMorgan hit by spending blowout

Good morning. Here's what happened overnight and what you need to know today.

1.

Expense problem: JPMorgan Chase shares fell as much as 4.7% after the bank said it expects to spend USD105 billion ($158.2 billion) next year. The forecast is about 9% above analyst expectations and exceeds the top estimate in a Bloomberg survey of USD101.1 billion. Consumer and community banking CEO Marianne Lake said at a Goldman Sachs conference in New York that the increase will be driven by volume and growth-related expenses, strategic investments and the structural effects of inflation. She said her division is a “big driver” of the growth, with spending going to adviser incentive pay, product marketing, AI and new branches. Lake also said JPMorgan expects fourth-quarter investment banking revenue to be up by low-single digit percentages and markets revenue to rise in the low-teens percentages. She added conditions for bank M&A were more constructive than in the recent past. (Bloomberg)(Reuters)

2.

Banking hit: Wall Street edged lower on Tuesday, with a sharp drop in JPMorgan weighing on the Dow as investors awaited the Federal Reserve’s final interest rate decision of the year. Higher 2026 spending warnings helped push the Dow down 0.3% in afternoon trade. The S&P 500 was flat and the Nasdaq slightly higher. Traders are widely expecting a quarter-point rate cut on Wednesday (Thursday AEDT), but confidence in further cuts next year has faded following stronger-than-expected job openings data and cautious signals from Fed officials. October vacancies rose to a five-month high, while layoffs hit their highest level since early 2023. Nvidia shares slipped after Donald Trump confirmed the US will allow exports of its H200 chips to China with a 25% government cut, prompting criticism from Washington hardliners and reports of a potential response from Beijing. Home Depot dipped after issuing a muted sales outlook and Exxon Mobil said CFO Kathryn Mikells would retire in early 2026. Shares in bitcoin treasury firm Twenty One Capital plunged 24% on debut. (Bloomberg)(WSJ)(Reuters)

3.

Platform ban: Australia became the first country to enforce a ban on social media for children under 16 today, with 10 major platforms including TikTok, YouTube, Instagram and Facebook ordered to block access from midnight or face fines of up to $49.5 million. Most will comply using age estimation tools, ID checks or behavioural analysis. The law is being closely watched by governments considering similar moves, amid growing global concern about the impact of social media on children’s health and safety. Anthony Albanese, in a video message that will reportedly be played in schools this week, says the ban will help young Australians switch off and encouraged them to “start a new sport, learn a new instrument” and “spend quality time with your friends and your family, face to face.” But as the policy takes effect, the rollout is being overshadowed by pressure on minister Anika Wells over her taxpayer-funded travel. After a week of revelations, Wells yesterday referred her expenses to the Independent Parliamentary Expenses Authority for review. The Coalition has called on her to step aside, saying the referral is “too little, too late”. (Capital Brief)(Reuters)(SMH)(AFR)

4.

Top-tier divorce: King & Wood Mallesons (KWM) will end its China–Australia partnership after 14 years, with staff told on Tuesday that the firm will become two separate entities in 2026. Once the split is finalised on 31 March, the Australian arm will be known as Mallesons. The memo announcing the split, seen by Capital Brief, was distributed ahead of a formal announcement expected over the next 24 hours. It was sent out soon after the first reports of the split emerged on Law.com. KWM Australia CEO Renae Lattey and chairman David Friedlander wrote that they were “very excited about what this next chapter will bring”. They said: "We’re becoming the only top tier independent firm from Australia — a full-service firm to all our clients here, across the region and around the world." There will be a transition period before officially rebranding in March 2026. The partnership has been in its death throes since former global CEO Sue Kench stepped down at the end of 2024. (Capital Brief)

5.

Chip wars: Chinese regulators are expected to limit access to Nvidia’s advanced H200 microchips in the country, according to sources cited by The Financial Times, despite US President Donald Trump’s decision to permit the export of the chips to China. On Monday, Trump said that he had informed Chinese President Xi Jinping that the US will allow Nvidia to ship the H200 chips to approved customers in China, “under conditions that allow for continued strong National Security.” However, sources told the FT that regulators in Beijing have been discussing ways to only allow limited access to the chips and that buyers would likely have to go through an approval process to explain why domestic providers couldn’t meet their needs. Nvidia CEO Jensen Huang has been lobbying to lift the export ban (introduced under Joe Biden), arguing that exporting the chips would mean China would become dependent on US technology. Bloomberg first reported that US officials were considering lifting the export ban last month. (FT)(Truth Social)

6.

New(s) frontier: Australian news publishers have been left in the cold by Meta despite striking a wave of AI deals with media companies in the US and Europe, as the consultation process over Labor’s revived plans to force tech giants to pay for news enters its final stretch. The Instagram and Facebook parent is not currently in discussions with any of Australia’s largest media companies, according to two people familiar with the company’s activity, despite striking deals with CNN, Fox News and others in the last month. Meta repeatedly rebuffed Australian publishers seeking to discuss new agreements since the tech giant last year abandoned deals worth $70 million a year, one source told Capital Brief. The company instead has signalled that it will not even consider commercial deals in Australia until Labor finalises the details of its News Bargaining Incentive, a revived effort to force tech firms including Meta, Google and TikTok to pay for news. (Capital Brief)

7.

AI cloud: Microsoft said it will invest USD17.5 billion ($26.4 billion) in India over four years starting in 2026 to expand AI and cloud computing. CEO Satya Nadella announced the commitment during a visit to India and a meeting with Prime Minister Narendra Modi, describing it as Microsoft’s largest investment in Asia. The plan includes building a new hyperscale data centre in Hyderabad, its biggest in India and set to go live in mid-2026. It also plans to expand its existing regions in Chennai, Hyderabad and Pune. Microsoft said the investment will focus on “scale, skills and sovereignty”. It also announced new sovereign cloud services and a partnership with India’s Ministry of Labour and Employment to integrate AI tools into the e-Shram and National Career Service platforms. The India investment is part of a broader USD23 billion in new global AI spending, which also includes over CAD7.5 billion for Canada. It follows earlier AI-related investment announcements this year of USD10 billion in Portugal, over USD7.9 billion in the UAE, and USD30 billion in the UK. (Capital Brief)(Satya Nadella)(Microsoft)(Bloomberg)(Reuters)

8.

High note: Stonepeak will join a slew of fund managers who this year have listed private credit instruments on the ASX as it looks to capitalise on the eventual phasing out of bank hybrids. The Stonepeak-Plus Infra1 Note will list today and will offer investors access to infrastructure debt assets. Last month, the note surpassed its $300 million target in cornerstone commitments. The note is the first for the $121.1 billion New York-headquartered investment firm to be listed on the ASX and senior managing director and head of Australian New Zealand private credit Andrew Robertson said it was targeting the growing private wealth sector, where retail investors have historically been unable to invest in infrastructure assets. Other fund managers that listed private credit debt notes on the ASX this year include MA Financial, Challenger, Realm Investment House and Real Asset Management. (Capital Brief)