Weak Bank Revenues Show the Tough Road Back for the Economy

Anyone looking for reasons why the economy isn’t growing faster should contemplate the bank earnings that have started to roll in.

Wells Fargo and JPMorgan Chase reported third quarter results on Friday. At both, revenue was lower than the same period in 2012. JPMorgan’s revenue was down 8 percent from a year ago, while Wells Fargo’s fell 3 percent.

Revenue is a good indicator of the underlying strength of a bank’s business and the amount of demand for its loans and services. Banks can pull all manner of levers to make their earnings look better in any given quarter, but that is harder with revenue. As a result, when their top line is torpid for long periods, that prompts bigger questions.

Banks play an important role in the economy. When they lend, they help finance spending and investment. They can also do something that other financial entities cannot. When they take in deposits and lend them out, they effectively create new money. That out-of-thin-air credit is usually a driving force in the economy.

After two of the recessions in the past couple of decades, banks picked themselves up and helped fuel economic growth by piling into new business. Wells Fargo was one of those banks. In the four years after the 1990-91 recession, its revenue on average grew by 15 percent a year. In the four years after the 2001 slowdown, the bank on average posted 13 percent growth in revenue. Since 2009, the bank’s revenues have actually shrunk by about 1 percent a year on average.

There are plenty of reasons for the sluggishness.

Banks are sensibly avoiding some of the riskier types of loans that got them into trouble. They typically don’t hold onto the mortgages they make, but sell them into the market with a government guarantee of repayment. This generates financial gains, but those gains have fallen off as interest rates have risen this year. In addition, management may be distracted by legal problems, and new rules may make it harder to reap profits from certain types of lending and trading. Inefficiencies within banks may also be holding them back.

But a major reason for the tepid revenue is low interest rates.

Since the 2008 financial crisis, the Federal Reserve has tried to keep interest rates at record lows. In theory, this should motivate consumers and companies to take on more debt. But many thought they already had too much. So even with the incentive of rock-bottom rates, they are reluctant to add to their debt.

At the same time, with interest rates so low, banks have earned less interest on the loans they do make, crimping a major source of profits.

It’s hard to see an easy road out. Higher interest rates might boost lending profits at the banks. But the Fed shows every intention of keeping rates as low as possible to stimulate the economy. And while higher rates could increase lending income for the banks, at least initially, more expensive borrowing could also stall the economy and lead to higher defaults.

Effectively, a virtuous circle is needed to lift the economy out of its funk. People and companies have to want to borrow more. Banks then have to be comfortable lending to them at low rates. As this promotes economic growth, the Fed can let rates rise, which would bolster banks’ lending profits. The banks would then make even more loans, further fueling growth.

That is how the economy turned around before. But the banks’ weak revenues suggest such an outcome is still a long way off.

Weekend Reading: Wall Street’s View of the Fiscal Crisis

As the budget shutdown in Washington continued, investors on Wall Street faced criticism that calm markets were encouraging House Republicans and making a default more likely. Here’s a look at what some of the experts are saying about the fiscal crisis.

“A freak-out now would help stave off financial devastation later,” Jesse Eisinger wrote. “By staying cool, the markets are making a crisis more likely.”

Andrew Ross Sorkin wrote about “the perversity of Wall Street’s psychology: The more Wall Street is convinced that Washington will act rationally and raise the debt ceiling, most likely at the 11th hour, the less pressure there will be on lawmakers to reach an agreement. That will make it more likely a deal isn’t reached.”

Some skepticism returned to the markets on Thursday after the White House signaled that it would reject a Republican proposal for a short-term fix.

“The political situation has gone from horrible to bad, but we’re still a long way from a constructive resolution,” said Michael Purves, chief global strategist at Weeden & Company.

While the Dow Jones industrial average was up for the week, investors did move their money out of the market for Treasury bills.

“These bills are like the center of gravity for the financial universe â€" they really are,” said Lee Sachs, a former Treasury official who now runs the lending firm Alliance Partners. “Defaulting on these would be like the laws of physics being repealed.”

While nervousness is growing, DealBook’s Nathaniel Popper reported that the market reaction has been muted compared with past crises.

“We all tell ourselves, ‘This is something that is not going to happen,’ ” said David Coard, the head of fixed-income trading at the Williams Capital Group. “This would be like a black swan event â€" it’s not something that you would have thought that the U.S. could do in a million years.”

A look back on our reporting of the past week’s highs and lows in finance.

FRIDAY, OCT. 11

JPMorgan Reports a Loss as It Grapples With Legal Woes | It is the first time that the nation’s largest bank has had a quarterly loss under the leadership of Jamie Dimon. DealBook »

Wells Fargo’s Profit Is Up Even as Mortgage Market Slows | The nation’s largest home lender reported a 13 percent jump, bolstered by the improved quality of its loans and a $900 million release in its reserves. DealBook »

THURSDAY, OCT. 10

Stocks Rally, Talks Stall, Then Skepticism Returns | There are growing concerns on Wall Street that the shutdown, and the uncertainty over the debt ceiling, may exert a drag on economic growth in the final months of the year. DealBook »

Suit Revives Goldman Conflict Issue | In a lawsuit, a former Federal Reserve Bank of New York worker, Carmen M. Segarra, raises questions about the success of Goldman Sachs in policing potential conflicts. She says she was fired after she refused to alter her findings. DealBook »

2 Founders of BlackBerry Weighing a Takeover Offer | Mike Lazaridis and Douglas Fregin said they were weighing a bid for 92 percent of the company and had hired Goldman Sachs and Centerview Partners as advisers. DealBook »

Two Brazilian Brothers to Pay Nearly $5 Million in Insider Trading Case | The S.E.C. says that Rodrigo and Michel Terpins of Brazil acted on inside information about the H. J. Heinz takeover to turn $90,000 into $1.8 million. DealBook »

After High Demand, Royal Mail Shares Are Priced at High End | Shares were priced at £3.3, or $5.28. That values the company at £3.3 billion, or $5.28 billion, the biggest privatization since the government sold the railways in the 1990s. DealBook »

WEDNESDAY, OCT. 9

Government Standoff Shakes Trust in U.S. Debt | Investors are growing wary of the government’s ability to pay its debt in a timely fashion after Oct. 17, shifting the market for short-term Treasury bills and potentially having long-term effects. DealBook »

The Trade: Complacency on Wall Street Could Be Worse Than a Panic | Investors do not expect a government default, but the ideological fissures in Washington are deeper than they grasp, Jesse Eisinger writes. DealBook »

Madoff Trustee Asks Supreme Court to Let Him Sue Banks | Lawyers for Irving Picard argue that a ruling that he lacks standing to sue banks on claims that they abetted the fraud contradicts other court decisions. DealBook »

Men’s Wearhouse Rejects Takeover Bid by Jos. A. Bank | The Men’s Wearhouse board calls the unsolicited $2.3 billion offer a “highly opportunistic” one that would probably draw antitrust scrutiny. DealBook »

Tepid Opening for Promoter of Electronic Dance Music | Shares of SFX Entertainment, which owns electronic dance music festivals, started trading on Nasdaq and quickly faded, closing down 8.5 percent. DealBook »

TUESDAY, OCT. 8

SAC Is Said to Weigh Plea Deal to End Case | After months of fighting the government’s insider trading case tooth and nail, the hedge fund is leaning toward admitting criminal wrongdoing and agreeing to pay a record financial penalty to resolve the charges. DealBook »

New Corporate Tax Shelter: A Merger Abroad | More corporations are reducing their tax bill by buying a foreign company and reincorporating elsewhere. DealBook »

Deadlock Worry Jolts the Market for T-Bills | The yield on a one-month bill rose to its highest level since 2008, a sign that some are worrying more about the festering gridlock in Washington. DealBook »

Deal Professor: In Twitter’s I.P.O. Filing, Signs That a Start-Up Has Matured | Twitter’s initial public offering appears to be the first one from a big technology company that simply prepared a thorough filing without pushing the boundaries, writes Steven M. Davidoff. DealBook »

MONDAY, OCT. 7

Little Fear on Wall St. of Default, at Moment | Many investors learned from the 2011 crisis â€" and the budget standoff at the end of 2012 â€" that Congress can find a way to compromise at the last minute, and are expecting the same thing to happen again. DealBook »

DealBook Column: No Way U.S. Would Allow Debt Default? Don’t Bet on It | The more Wall Street is convinced that Washington will act rationally and raise the debt ceiling, the less pressure there will be on lawmakers, writes Andrew Ross Sorkin. DealBook »

Worsening Debt Crisis Threatens Puerto Rico | The territory has almost as much debt per capita as Detroit and is drawing federal concern. DealBook »

Legal Side Effect in Admission to S.E.C. | DealBook »

Cuban Says He Was Taken Aback by S.E.C. Charges | Mark Cuban, the owner of the Dallas Mavericks, said he was cooperating with the S.E.C. in an inquiry, and was surprised to learn that he was being charged with insider trading. DealBook »

More Setbacks in Deal for U.S. Tire Maker | The proposed buyout of Cooper Tire and Rubber by Apollo Tyres has been delayed by labor opposition in two countries, and now Cooper has filed suit against its suitor. DealBook »

WEEK IN VERSE

Some shutdowns we preferred to the current crisis.

Liz Lemon | Tina Fey shuts down everything on “30 Rock.” YouTube »

Dirk Nowitzki | The Dallas Mavericks star sends everyone home. YouTube »

Peter Venkman | The Ghostbusters containment unit was never designed to be shut down. YouTube »

Weekend Reading: Wall Street’s View of the Fiscal Crisis

As the budget shutdown in Washington continued, investors on Wall Street faced criticism that calm markets were encouraging House Republicans and making a default more likely. Here’s a look at what some of the experts are saying about the fiscal crisis.

“A freak-out now would help stave off financial devastation later,” Jesse Eisinger wrote. “By staying cool, the markets are making a crisis more likely.”

Andrew Ross Sorkin wrote about “the perversity of Wall Street’s psychology: The more Wall Street is convinced that Washington will act rationally and raise the debt ceiling, most likely at the 11th hour, the less pressure there will be on lawmakers to reach an agreement. That will make it more likely a deal isn’t reached.”

Some skepticism returned to the markets on Thursday after the White House signaled that it would reject a Republican proposal for a short-term fix.

“The political situation has gone from horrible to bad, but we’re still a long way from a constructive resolution,” said Michael Purves, chief global strategist at Weeden & Company.

While the Dow Jones industrial average was up for the week, investors did move their money out of the market for Treasury bills.

“These bills are like the center of gravity for the financial universe â€" they really are,” said Lee Sachs, a former Treasury official who now runs the lending firm Alliance Partners. “Defaulting on these would be like the laws of physics being repealed.”

While nervousness is growing, DealBook’s Nathaniel Popper reported that the market reaction has been muted compared with past crises.

“We all tell ourselves, ‘This is something that is not going to happen,’ ” said David Coard, the head of fixed-income trading at the Williams Capital Group. “This would be like a black swan event â€" it’s not something that you would have thought that the U.S. could do in a million years.”

A look back on our reporting of the past week’s highs and lows in finance.

FRIDAY, OCT. 11

JPMorgan Reports a Loss as It Grapples With Legal Woes | It is the first time that the nation’s largest bank has had a quarterly loss under the leadership of Jamie Dimon. DealBook »

Wells Fargo’s Profit Is Up Even as Mortgage Market Slows | The nation’s largest home lender reported a 13 percent jump, bolstered by the improved quality of its loans and a $900 million release in its reserves. DealBook »

THURSDAY, OCT. 10

Stocks Rally, Talks Stall, Then Skepticism Returns | There are growing concerns on Wall Street that the shutdown, and the uncertainty over the debt ceiling, may exert a drag on economic growth in the final months of the year. DealBook »

Suit Revives Goldman Conflict Issue | In a lawsuit, a former Federal Reserve Bank of New York worker, Carmen M. Segarra, raises questions about the success of Goldman Sachs in policing potential conflicts. She says she was fired after she refused to alter her findings. DealBook »

2 Founders of BlackBerry Weighing a Takeover Offer | Mike Lazaridis and Douglas Fregin said they were weighing a bid for 92 percent of the company and had hired Goldman Sachs and Centerview Partners as advisers. DealBook »

Two Brazilian Brothers to Pay Nearly $5 Million in Insider Trading Case | The S.E.C. says that Rodrigo and Michel Terpins of Brazil acted on inside information about the H. J. Heinz takeover to turn $90,000 into $1.8 million. DealBook »

After High Demand, Royal Mail Shares Are Priced at High End | Shares were priced at £3.3, or $5.28. That values the company at £3.3 billion, or $5.28 billion, the biggest privatization since the government sold the railways in the 1990s. DealBook »

WEDNESDAY, OCT. 9

Government Standoff Shakes Trust in U.S. Debt | Investors are growing wary of the government’s ability to pay its debt in a timely fashion after Oct. 17, shifting the market for short-term Treasury bills and potentially having long-term effects. DealBook »

The Trade: Complacency on Wall Street Could Be Worse Than a Panic | Investors do not expect a government default, but the ideological fissures in Washington are deeper than they grasp, Jesse Eisinger writes. DealBook »

Madoff Trustee Asks Supreme Court to Let Him Sue Banks | Lawyers for Irving Picard argue that a ruling that he lacks standing to sue banks on claims that they abetted the fraud contradicts other court decisions. DealBook »

Men’s Wearhouse Rejects Takeover Bid by Jos. A. Bank | The Men’s Wearhouse board calls the unsolicited $2.3 billion offer a “highly opportunistic” one that would probably draw antitrust scrutiny. DealBook »

Tepid Opening for Promoter of Electronic Dance Music | Shares of SFX Entertainment, which owns electronic dance music festivals, started trading on Nasdaq and quickly faded, closing down 8.5 percent. DealBook »

TUESDAY, OCT. 8

SAC Is Said to Weigh Plea Deal to End Case | After months of fighting the government’s insider trading case tooth and nail, the hedge fund is leaning toward admitting criminal wrongdoing and agreeing to pay a record financial penalty to resolve the charges. DealBook »

New Corporate Tax Shelter: A Merger Abroad | More corporations are reducing their tax bill by buying a foreign company and reincorporating elsewhere. DealBook »

Deadlock Worry Jolts the Market for T-Bills | The yield on a one-month bill rose to its highest level since 2008, a sign that some are worrying more about the festering gridlock in Washington. DealBook »

Deal Professor: In Twitter’s I.P.O. Filing, Signs That a Start-Up Has Matured | Twitter’s initial public offering appears to be the first one from a big technology company that simply prepared a thorough filing without pushing the boundaries, writes Steven M. Davidoff. DealBook »

MONDAY, OCT. 7

Little Fear on Wall St. of Default, at Moment | Many investors learned from the 2011 crisis â€" and the budget standoff at the end of 2012 â€" that Congress can find a way to compromise at the last minute, and are expecting the same thing to happen again. DealBook »

DealBook Column: No Way U.S. Would Allow Debt Default? Don’t Bet on It | The more Wall Street is convinced that Washington will act rationally and raise the debt ceiling, the less pressure there will be on lawmakers, writes Andrew Ross Sorkin. DealBook »

Worsening Debt Crisis Threatens Puerto Rico | The territory has almost as much debt per capita as Detroit and is drawing federal concern. DealBook »

Legal Side Effect in Admission to S.E.C. | DealBook »

Cuban Says He Was Taken Aback by S.E.C. Charges | Mark Cuban, the owner of the Dallas Mavericks, said he was cooperating with the S.E.C. in an inquiry, and was surprised to learn that he was being charged with insider trading. DealBook »

More Setbacks in Deal for U.S. Tire Maker | The proposed buyout of Cooper Tire and Rubber by Apollo Tyres has been delayed by labor opposition in two countries, and now Cooper has filed suit against its suitor. DealBook »

WEEK IN VERSE

Some shutdowns we preferred to the current crisis.

Liz Lemon | Tina Fey shuts down everything on “30 Rock.” YouTube »

Dirk Nowitzki | The Dallas Mavericks star sends everyone home. YouTube »

Peter Venkman | The Ghostbusters containment unit was never designed to be shut down. YouTube »

Activision Closes Deal for Most of Vivendi’s Stake

Thanks to a court’s timely intervention, Activision Blizzard on Friday closed its deal to buy a majority of Vivendi’s stake in the video game maker for $8.2 billion.

The speedy closing comes just a day after the Delaware Supreme Court struck down an injunction by a lower court that prevented the transaction from being completed.

With the deal’s closing, Activision Blizzard, the maker of the blockbuster “Call of Duty” franchise, will become an independent company, though still under the control of its chief executive, Robert Kotick, and its chairman, Brian Kelly.

“The incredible shareholder response that we’ve gotten from institutional shareholders to the deal has been a great validation,” Mr. Kotick said in a phone interview.

The transaction was long in the making but began coalescing several months ago when Mr. Kotick assembled a group of partners to help buy out most of Vivendi’s stake.

Mr. Kotick had long wanted a firmer grasp over the company that he has built into a video game behemoth. As Vivendi, the French conglomerate, grappled with issues in its other businesses and was increasingly diverted from Activision Blizzard, he moved to take control.

In late July, Activision Blizzard announced that Vivendi would reduce its stake to 12 percent from 61 percent.

But the plan was dealt a surprising setback last month when a Delaware Chancery Court judge intervened as part of a shareholder’s lawsuit against the deal. The judge, Vice Chancellor J. Travis Laster, ruled that Activision Blizzard’s certificate of incorporation required a shareholder vote on the deal.

Lawyers for Activision Blizzard argued in court that the provision did not apply because it pertained to a merger and not what was essentially a stock buyback.

A prolonged delay would have had serious consequences for the deal. The financing for the transaction is scheduled to expire on Dec. 15, which would have left Mr. Kotick and his partners scrambling if the deal had not been completed by then.

Now, Mr. Kotick said, he and the company are free to focus on new projects, beginning with the latest installment of the “Call of Duty” franchise, “Call of Duty: Ghosts.” He said that he was also intrigued by the emergence of huge video game tournaments in countries like South Korea, a business model that could be exported elsewhere.

And he plans to focus heavily on making inroads in China. One of the members of the investment group that backed the July transaction is Tencent, the big Chinese internet concern, Mr. Kotick pointed out.

“The investment decision shows the enthusiasm they have for ‘Call of Duty’ in China,” he said.

But one area that Activision Blizzard may be less active in is deal-making. The company prefers to develop skills and technologies in-house at this point.

“We’re pretty rigid and disciplined,” Mr. Kotick said.

Activity Does Not Always Equal Productivity

In all likelihood, you get more done today than you ever have before. That’s mostly because you can do so much more, so much faster, wherever you are, through e-mail, texting, instant-messaging, tweeting and posting.

The real issue is whether you’re getting the right things done. That was the most frequent complaint I heard during the three days I spent this week with 200 chief executives at the Conscious Capitalism C.E.O. Summit â€" more on that in a coming column â€" and in the conversations I’ve had with leaders over the last year.

So what stands in the way of your being truly productive? By that, I mean finding the right balance between attending to what’s truly urgent and focusing on what’s less pressing but will most likely add the most enduring value.

You need more sleep than you think, and maybe much more

We live by a persistent myth: that one hour less of sleep will give you one more hour of productivity. Instead, what it gives you is one more hour awake, and you are less rested. The near guarantee is that you’ll be progressively less productive over the course of the day.

Even small amounts of sleep deprivation take a powerful toll on our cognitive capacity. A vast trove of research suggests that 95 percent of us need at least seven to eight hours of sleep to feel fully rested. Two and a half percent need more than eight hours, and the final 2.5 percent â€" or about one out of 40 people â€" require less than seven hours.

In other words, you’re not likely one of them, even though you may well think you are. According to a sleep researcher, Tom Roth, for example, the percentage of people who require five or fewer hours of sleep to feel fully rested, rounded to a whole number, is zero.

If you get sufficient sleep, the strong likelihood is that you will accomplish more, in less time, at a higher level of quality if you have sufficient sleep. It’s the last thing you ought to be sacrificing, not the first.

Do the most important thing first

The pull to e-mail is powerful and Pavlovian. That’s especially so after a night’s worth of new messages have filled your in-box (assuming you weren’t sleeping with your smartphone, and sneaking a peek in the middle of the night).

The vast majority of the messages that accumulate don’t truly demand your immediate attention. Instead, they take up your time and consume your attention at precisely the time of day that most of us have the most energy and the fewest distractions.

By checking your e-mail first, you effectively turn over your agenda to others. It is far better to decide what your agenda ought to be the night before and make that the first thing you focus on at work, without interruption, for up to 90 minutes.

If you must check e-mail when you get up because there are urgent messages, scan quickly for anything that truly cannot wait an hour. Answer those, ignore the rest, and then do what’s truly most important.

Stop pushing through

Human beings are designed to operate in 90-minute cycles. At night, we move through the five stages of sleep in that time â€" the Basic Rest Activity Cycle. During the day, we’re guided by our ultradian rhythms, and we move from high physiological alertness toward physiological fatigue in 90-minute intervals.

The consequence is that we operate best when we take intermittent breaks to renew and refuel. Here’s a simple way to think about it: Imagine you’re challenged to do the maximum number of situps you can over 30 minutes. You’re given the choice of doing them continuously until you’re exhausted, or doing them in sets of 5 or 10 with a short period of rest between each one. Do the latter and you’ll generate more situps done, keep better form along the way and feel less tired at the end.

Work in the same way and you’ll be able to focus more intensely for the same reason a sprinter can go all out: you have a finish line in sight. By focusing more intensely for shorter periods, you’ll get more done, in less time, at a higher level of quality, more sustainably.

Get it off your mind

With so much coming at us all the time, it’s hardly surprising that our instinctive default is to do whatever feels most urgent and easiest to address. The consequence, of course, is that we often keep putting off what’s most challenging and then lack the energy to do it by the time we finally get to it.

I believe in lists, first and foremost as a means of downloading everything that’s on your mind to get it off your mind. We each have relatively small working memories and they’re easily overloaded. The less you try to keep straight in your head, the more space there is for you to think clearly and deeply about any given subject that demands your attention.

With that in mind, I keep all my lists in one place. They include what I want to do that day, over the next week, and in the longer term. I also keep a list of e-mails I need to send; calls I intend to make; ideas I want to explore further; issues I want to discuss with specific colleagues; and even things that are making me feel anxious. Once I’ve written something down, I know it will be there when I need it, and so it usually stops preoccupying me. Many times it ends up taking care of itself.

The other value I derive from detailed lists is that they help clarify what I ought not to be focused on. By having everything in one place, I can much more easily decide what’s truly important and what’s not. Half the value of having a list is to make it more obvious what not to do. I might have 50 to 100 items on my lists, but I typically give explicit priority to three or fewer in any given day.

Make it matter

Finally, and simply, ask yourself a simple question before you begin any activity: “Is this the best way I could be spending my time?” If the answer is no, don’t do it.

About the Author

Tony Schwartz is the chief executive of the Energy Project and the author, most recently, of “Be Excellent at Anything: The Four Keys to Transforming the Way We Work and Live.” Twitter: @tonyschwartz

Activity Does Not Always Equal Productivity

In all likelihood, you get more done today than you ever have before. That’s mostly because you can do so much more, so much faster, wherever you are, through e-mail, texting, instant-messaging, tweeting and posting.

The real issue is whether you’re getting the right things done. That was the most frequent complaint I heard during the three days I spent this week with 200 chief executives at the Conscious Capitalism C.E.O. Summit â€" more on that in a coming column â€" and in the conversations I’ve had with leaders over the last year.

So what stands in the way of your being truly productive? By that, I mean finding the right balance between attending to what’s truly urgent and focusing on what’s less pressing but will most likely add the most enduring value.

You need more sleep than you think, and maybe much more

We live by a persistent myth: that one hour less of sleep will give you one more hour of productivity. Instead, what it gives you is one more hour awake, and you are less rested. The near guarantee is that you’ll be progressively less productive over the course of the day.

Even small amounts of sleep deprivation take a powerful toll on our cognitive capacity. A vast trove of research suggests that 95 percent of us need at least seven to eight hours of sleep to feel fully rested. Two and a half percent need more than eight hours, and the final 2.5 percent â€" or about one out of 40 people â€" require less than seven hours.

In other words, you’re not likely one of them, even though you may well think you are. According to a sleep researcher, Tom Roth, for example, the percentage of people who require five or fewer hours of sleep to feel fully rested, rounded to a whole number, is zero.

If you get sufficient sleep, the strong likelihood is that you will accomplish more, in less time, at a higher level of quality if you have sufficient sleep. It’s the last thing you ought to be sacrificing, not the first.

Do the most important thing first

The pull to e-mail is powerful and Pavlovian. That’s especially so after a night’s worth of new messages have filled your in-box (assuming you weren’t sleeping with your smartphone, and sneaking a peek in the middle of the night).

The vast majority of the messages that accumulate don’t truly demand your immediate attention. Instead, they take up your time and consume your attention at precisely the time of day that most of us have the most energy and the fewest distractions.

By checking your e-mail first, you effectively turn over your agenda to others. It is far better to decide what your agenda ought to be the night before and make that the first thing you focus on at work, without interruption, for up to 90 minutes.

If you must check e-mail when you get up because there are urgent messages, scan quickly for anything that truly cannot wait an hour. Answer those, ignore the rest, and then do what’s truly most important.

Stop pushing through

Human beings are designed to operate in 90-minute cycles. At night, we move through the five stages of sleep in that time â€" the Basic Rest Activity Cycle. During the day, we’re guided by our ultradian rhythms, and we move from high physiological alertness toward physiological fatigue in 90-minute intervals.

The consequence is that we operate best when we take intermittent breaks to renew and refuel. Here’s a simple way to think about it: Imagine you’re challenged to do the maximum number of situps you can over 30 minutes. You’re given the choice of doing them continuously until you’re exhausted, or doing them in sets of 5 or 10 with a short period of rest between each one. Do the latter and you’ll generate more situps done, keep better form along the way and feel less tired at the end.

Work in the same way and you’ll be able to focus more intensely for the same reason a sprinter can go all out: you have a finish line in sight. By focusing more intensely for shorter periods, you’ll get more done, in less time, at a higher level of quality, more sustainably.

Get it off your mind

With so much coming at us all the time, it’s hardly surprising that our instinctive default is to do whatever feels most urgent and easiest to address. The consequence, of course, is that we often keep putting off what’s most challenging and then lack the energy to do it by the time we finally get to it.

I believe in lists, first and foremost as a means of downloading everything that’s on your mind to get it off your mind. We each have relatively small working memories and they’re easily overloaded. The less you try to keep straight in your head, the more space there is for you to think clearly and deeply about any given subject that demands your attention.

With that in mind, I keep all my lists in one place. They include what I want to do that day, over the next week, and in the longer term. I also keep a list of e-mails I need to send; calls I intend to make; ideas I want to explore further; issues I want to discuss with specific colleagues; and even things that are making me feel anxious. Once I’ve written something down, I know it will be there when I need it, and so it usually stops preoccupying me. Many times it ends up taking care of itself.

The other value I derive from detailed lists is that they help clarify what I ought not to be focused on. By having everything in one place, I can much more easily decide what’s truly important and what’s not. Half the value of having a list is to make it more obvious what not to do. I might have 50 to 100 items on my lists, but I typically give explicit priority to three or fewer in any given day.

Make it matter

Finally, and simply, ask yourself a simple question before you begin any activity: “Is this the best way I could be spending my time?” If the answer is no, don’t do it.

About the Author

Tony Schwartz is the chief executive of the Energy Project and the author, most recently, of “Be Excellent at Anything: The Four Keys to Transforming the Way We Work and Live.” Twitter: @tonyschwartz

At Citi, Pandit Is Gone but Is Still Serving the Bank’s Shareholders

Michael L. Corbat is approaching his first anniversary as chief executive of Citigroup. The bank’s chairman, Michael E. O’Neill, installed him after organizing a putsch to oust Vikram Pandit as C.E.O. The new boss has accelerated some cost cuts and clarified strategy around the edges, but the broad direction is still Mr. Pandit’s. Either way, it is serving shareholders well.

That may not be immediately apparent when Citi reports third-quarter results next week. The bank is expected to earn $1.06 a share, according to Thomson Reuters data, about the same as a year ago, when it beat expectations.

A year ago, Mr. O’Neill called Mr. Pandit into his office and told him his time was up, having already rounded up the board and tapped Mr. Corbat, who kept it under his belt the previous week as he and Mr. Pandit attended meetings together in Tokyo.

Though the $150 billion bank has not shifted its course under the Corbat-O’Neill duo, the stock market has welcomed regime change. Citi shares have gained a little over 40 percent in the past year, beating JPMorgan and Wells Fargo, if not Bank of America.

To be fair, Mr. Corbat may be a better interlocutor with the bank’s regulators and owners. In March, he broke down for shareholders the various markets where Citi operates into four clearly defined categories. Mr. Corbat has also given investors precise targets by which to judge him. He wants a return on tangible equity of least 10 percent by 2015, and for the overall return on assets to be 0.9 percent to 1.1 percent.

Citi almost hit both objectives in the six months to June. So they are soft enough that barring a calamity, all Mr. Corbat has to do is to keep earnings steady and allow the runoff from Citi Holdings and the utilization of deferred tax assets to pick up the slack. For that, he and his shareholders owe a nod of gratitude to his predecessor.

Rob Cox is editor of Reuters Breakingviews and Antony Currie is an associate editor. For more independent commentary and analysis, visit breakingviews.com.

Strong Demand for Royal Mail Stock May Not Translate to Lloyds Shares

Lloyds Banking Group shouldn’t get too cocky in the wake of the sharp rise in Royal Mail’s shares. The state-backed British bank may be tempted to focus its next share sale entirely on retail customers after strong demand sent the postal service’s shares up 36 percent in their first few hours of trading. But the differences between a Lloyds secondary offering and Royal Mail’s primary one warrant a different approach.

Provided Royal Mail doesn’t tank any time soon, its listing clearly helps the government sell its remaining 32.7 percent stake in Lloyds. After September’s successful 3.2 billion pound ($5.1 billion) sale to institutional investors, the bank could look at selling another 10 billion pounds ($15.9 billion) of shares when it returns to the market some time after March, bankers reckon. Proof that retail interest is there, too â€" the retail portion of the Mail’s initial public offering was seven times oversubscribed â€" will help.

But strong demand for mail delivery shares may not translate into strong demand for bank ones. Lloyds shares are traded in the market, so investors can already see what it is worth. A reduced chance of a Royal Mail-style bounce will dampen demand.

The price the government paid for its Lloyds bailout also matters. The government’s sale of some of its stake in the bank to institutional investors in September valued the company at a small premium to the effective 73.6 pence per share at which the government bought its stake in 2008. Having trumpeted its feat of turning a profit, the state will be loath to sell future tranches below this level. But with the shares already trading above the book value at 76 pence, the scope for a retail-friendly discount is currently limited.

Big retail offers are also hard to execute. Unlike the accelerated sale last month that wrapped up Lloyds’ first tranche in a few hours, retail offers can drag on for over a week, giving hedge funds ample time to short the stock. Retail buyers are more likely to sell immediately, rather than provide the long-term support that companies prefer.

Of course, an improving British economy could leave Lloyds shares more highly rated come the spring. But even if this happened, the bank would be better off restricting its retail sale below Royal Mail’s 33 percent. Anything more could backfire.

Are Competing Bankruptcy Plans a Good Thing?

As LightSquared’s creditors get prepared to consider which of four reorganization plans to vote for, it bears noting how much Chapter 11 has been changed by the 2005 amendments to the bankruptcy code.

LightSquared has a plan. Harbinger, its hedge fund shareholder, has a plan. The banks have a plan. And then there is the plan from SP Special Opportunities, an entity that owns a large chunk of LightSquared’s debt and very little else.

SP was formed by Dish Network’s chairman, and its plan involves Dish taking over the debtor’s wireless spectrum. Who would ever guess?

None of this would have happened before the code was revised in late 2005. While those amendments are mostly known for making bankruptcy a more difficult process for individuals, one of the key changes was to limit a corporate debtor’s “exclusivity.”

Before 2005, Chapter 11 debtors had the exclusive right to file a plan at the beginning of the case, and that right could be extended for “cause.” Most Chapter 11 debtors went through their entire case without facing competing plans.

That all changed after 2005, and now the court can only grant a limited extension.

The real question is whether this is a good thing. The proponents of the change were probably thinking about the failed cases of the 1980s â€" especially those of Eastern and Pan Am Airlines - where the debtors frittered away their value without any real threat of losing control of the process.

On the other hand, LightSquared creditors may wonder if having such a bounty of Chapter 11 plans to choose from is such a great idea. At least they look to be a sophisticated bunch.

Imagine if a retail bondholder in the General Motors bankruptcy had had to sort through four Chapter 11 plans, each with very different views of the debtor’s value and how that value might be achieved.

That’s the sort of thing that empowers distressed debt investors, when the bondholders throw up their hands and sell out for pennies on the dollar.

In a Bid for Men’s Wearhouse, a Merger Battle With Modern Strategies

On Wednesday, the first volleys of a war started when Men’s Wearhouse issued a news release rejecting a $2.3 billion offer from Jos. A. Bank Clothiers to acquire the men’s clothing company. For spectators, it’s not only a battle to watch for its outcome but also for how hostile takeovers have evolved.

Men’s Wearhouse flat out rejected Jos. A. Bank’s offer, bringing to mind the shrill “just say no” defenses of the 1980s.

Men’s Wearhouse claimed that the offer “significantly” undervalued the clothier. This wasn’t Men’s Wearhouse’s only complaint. It also called the bid “opportunistic” and “subject to unacceptable risks and contingencies,” as Jos. A. Bank’s proposal is subject to due diligence and the retailer has only a highly confident letter for its debt financing from Goldman Sachs rather than committed financing. To boot, Men’s Wearhouse stated that the bid “could raise significant antitrust concerns.”

Men’s Wearhouse not only rejected Jos. A. Bank’s proposal but also, in another maneuver from the 1980s, adopted a poison pill, which effectively limits a shareholder to 10 percent ownership of the company (a threshold that rises to 15 percent if the shareholder is a passive one).

For now, Men’s Wearhouse’s outright rejection has been validated by the market. A number of analysts also called the offer price too low. On Wednesday the stock price of Men’s Wearhouse closed a few cents over the $45 a share that Jos. A. Bank offered, implying that the market thinks a higher bid is not only likely but justified as well.

While Men’s Wearhouse is currently saying no, it may soon find itself pressured by the new shareholder forces in our capital markets.

A few months ago I deemed the hostile offer on life support, if not dead. The reason was that companies no longer wanted to take the risk that a hostile bid involved. Bidders instead preferred to rely on unsolicited offers that would pressure the target to come to the table.

Jos. A. Bank appears to be following this more modern strategy. The first sign of this is that the company has locked itself out of truly making a hostile bid. Since the advent of a poison pill, an effective hostile bid is typically accompanied by a proxy contest to unseat the target’s directors and remove the pill. This would clear the way for the bidder to purchase the company despite the board’s resistance.

But Men’s Wearhouse’s annual meeting of directors was Sept. 10, meaning that Jos. A. Bank would have to wait almost a year to begin a proxy contest.

Men’s Wearhouse is incorporated in Texas, which means that while the company allows shareholders to remove directors by written consent at any time, such a removal can only be done for cause. Cause, however, is essentially defined as willful misconduct, something that does not exist here since the directors are merely saying no. So for Jos. A. Bank a full hostile option is effectively foreclosed.

Jos. A. Bank lawyers are at Skadden, Arps, Slate, Meagher & Flom and its banker is Goldman Sachs, so it has competent advisers on its side. In this light, it is not hard to conclude that the company consciously avoided making a hostile bid.

Instead of relying on a hostile offer, Jos. A. Bank is most likely counting on two things to get a deal. First, the two companies have a large overlapping shareholder base. BlackRock, for example, owns 9 percent of Men’s Wearhouse and 8.2 percent of Jos. A. Bank. Jos. A. Bank is likely to count on these shareholders to pressure Men’s Wearhouse into a deal.

Second, almost every bidder bids low in the first round to allow room for an increase, but a lower bid also pushes shares into the hands of arbitrageurs and hedge funds. About 30 percent of Men’s Wearhouse’s shares were traded on Wednesday, meaning that it appears that this has happened.

Jos. A. Bank is most likely hoping that shareholder pressure from overlapping shareholders and arbitrageurs will push Men’s Wearhouse to a deal. And there is also the possibility that a hedge fund shareholder activist will take a significant stake, focusing these forces on Men’s Wearhouse. In this light, Men’s Wearhouse’s poison pill is really about limiting shareholder activist hedge funds from building too big a stake and working together.

It all means that Men’s Wearhouse’s hard-line 1980s-like strategy may not last and may go the same way as Michael Jackson’s moonwalk.

Royal Mail Shares Surge in Debut

LONDON - Shares of Royal Mail rose 38 percent on their first day of trading on the London Stock Exchange on Friday, adding to criticism from some policymakers that the government sold a majority of Britain’s main postal service too cheaply.

Royal Mail, whose roots date back to the court of Henry VIII in the 16th century, made its stock market debut after its shares were priced at 3.3 pounds, or $5.30, each on Thursday, valuing the company at $5.3 billion. They shot up to as much as 4.56 pounds during conditional trading among institutional investors on Friday morning. The shares will open for full public trading on Tuesday.

The privatization is the largest sale of state assets since the breakup of the country’s railway operation in the 1990s, and demand for Royal Mail shares was seven times the stock being offered. Some investors said they were encouraged to buy Royal Mail shares by the company’s growth in parcel service and by memories of the privatizations of the 1980s, when many investors made an immediate gain after share sales of companies like British Gas.

The large demand for the shares and their jump in price on Friday prompted criticism from the opposition Labour Party, which argued that the government priced Royal Mail shares too low. Chuka Umunna, the Labour Party’s business secretary, said taxpayers would get “massively short-changed” and there were calls for the share sale to be pulled amid suggestions that it was undervalued.

Vince Cable, the business secretary, told BBC radio that there was an “enormous amount of froth and speculation” propelling the first-day price movement and that “what matters is where the price eventually settles.”

About 150,000 Royal Mail employees are set to benefit from the share price increase so far. The government, which is keeping a 38 percent stake in the company for now, offered them free shares, worth 10 percent of the company, as part of the sale.

The Communication Workers Union, which represents some Royal Mail employees, said it continued to oppose the sale, which was “about greed” and was awaiting the results of a strike ballot on Wednesday. The union conducted a protest outside the London Stock Exchange on Friday morning.

Wells Fargo Quarterly Earnings Jump 13%

Wells Fargo, the nation’s largest home lender, reported a 13 percent jump in third-quarter profit on Friday even as a slowdown in the mortgage market muted the bank’s growth.

Bolstered in part by the improved quality of its loans and a $900 million release in its reserves, the bank’s net income rose to $5.6 billion, or 99 cents a share. That outdid the $4.9 billion, or 88 cents a share, Wells Fargo earned in the third quarter of 2012, making it the 15th consecutive rise in quarterly profits for the bank. The report also exceeded the expectations of analysts polled by Thomson Reuters, which predicted earnings of 97 cents a share.

For the 10th straight quarter, Wells Fargo reported a new record in profits.

“Wells Fargo continued to demonstrate strong and consistent financial performance in the third quarter,” the bank’s chief executive, John G. Stumpf, said in a statement.

Revenue, however, slumped to $20.5 billion, from $21.4 billion a year ago. The revenue results were slightly lower than analysts’ estimates.

And beneath the steady churn of profits, the bank’s mortgage machine has started to stall, a consequence of the rise in interest rates that is discouraging borrowers from refinancing their mortgages. The bank received $87 billion worth of home loan application in the quarter, a steep fall from $188 billion in the period a year earlier. Its mortgage originations totaled $80 billion, down from $139 billion. And a decline in mortgage banking revenue, the bank said, stemmed from a decline in refinancing.

The slowdown largely stems from a subtle shift at the Federal Reserve. Until now, banks have benefited from Fed policies intended to stimulate the economy in the wake of the financial crisis. As the Fed slashed interest rates, it spurred millions of borrowers to refinance their home loans to take advantage of the lower rates.

But this spring, the Fed signaled that it could ease its stimulus as the economy continues to recover. The warning prompted investors to drive up interest rates around the globe, thus stifling enthusiasm for refinancing. Although rates started to fall again in the final days of the third quarter - and the Fed recently said “it would be prudent to await further evidence of progress before” curtailing the stimulus - the average rate for a 30-year fixed mortgage stands at 4.22 percent, up from a low of 3.34 percent in early 2013.

The rising rates will probably take a disproportionate toll on Wells Fargo. The bank’s fortunes rise and fall with its lending business, by virtue of creating roughly a third of all mortgages in the country.

Wells Fargo and JPMorgan Chase kicked off bank earnings season. The banks’ results could signal a slowdown for the broader lending industry. Citigroup, Bank of America and other Wall Street giants report earnings next week, and the mortgage market is expected to weigh down results for all the banks.

Morning Agenda: JPMorgan Swings to Loss

JPMorgan Chase reported a third-quarter net loss on Friday of $380 million, or 17 cents a share, as regulatory and legal woes dragged down the bank’s results. Excluding the one-time costs, JPMorgan’s earnings were $1.42 a share, or $5.8 billion, beating analysts’ expectations of $4.65 billion, or $1.21 a share. The bank’s earnings were weighed down by a legal expense of $9.2 billion.

“While we had strong underlying performance across the businesses, unfortunately, the quarter was marred by large legal expense,” Jamie Dimon, the bank’s chief executive, said in a statement. A conference call to discuss the results is being held at 8:30 a.m.

MOMENTARY RELIEF, THEN SKEPTICISM  | Stocks on Thursday were propelled to their biggest gains since January on a Republican proposal to push back the government’s debt ceiling deadline for six weeks. But investors’ relief that a political compromise might avert a default on government debt was soon tempered by the realization that a fiscal deal was not yet at hand, Nathaniel Popper reports in DealBook.

United States stock index futures were slightly lower after the market closed, and the price of oil, which rose earlier in the day, fell modestly in the evening, Mr. Popper reports. Wall Street remains focused on any indications of progress in the talks in Washington. “The political situation has gone from horrible to bad, but we’re still a long way from a constructive resolution,” said Michael Purves, chief global strategist at Weeden & Company.

Though President Obama and House Republicans failed to reach an agreement on Thursday, the two sides kept talking, and the offer from Republicans was seen as an initial step toward ending the budget standoff, Jackie Calmes and Ashley Parker report in The New York Times. “People familiar with the meeting said that Mr. Obama pressed Republicans to reopen the government, and that Republicans raised the possibility that financing could be restored by early next week if terms for broad budget negotiations could be reached.”

The standoff in Washington is causing less hand-wringing in Asia than previous budget struggles, Keith Bradsher reports in The New York Times. Two years ago, in the previous debt ceiling fight, Chinese Internet users poured scorn on their own government for having invested so much of their country’s savings in Treasury securities. But this time, even as the Chinese media has actively covered the standoff and a vice minister of finance expressed concern about it on Monday, the Chinese Internet has not lit up with the same energy, Mr. Bradsher writes.

ON THE AGENDA  | Wells Fargo reports earnings at 8 a.m. The Reuters/University of Michigan consumer sentiment index is released at 9:55 a.m. Peter A. Sands, the chief executive of Standard Chartered, is on Bloomberg TV at 8:30 a.m. Timothy J. Sloan, chief financial officer of Wells Fargo, is on Bloomberg TV at 4:05 p.m.

SUIT REVIVES GOLDMAN CONFLICT ISSUE  | At a March 2012 meeting, a group of examiners at the Federal Reserve Bank of New York agreed that Goldman Sachs had inadequate procedures to guard against conflicts of interest, voting to downgrade a confidential rating that could have spurred costly enforcement actions and other regulatory penalties, Susanne Craig and Jessica Silver-Greenberg report in DealBook. But the former examiner who pushed for a downgrade, Carmen M. Segarra, now contends in a lawsuit filed on Thursday that just weeks after the vote â€" which could have been a big blow for Goldman â€" her superiors asked her to change her findings on Goldman and fired her after she refused.

“The lawsuit, along with a review by The New York Times of confidential government documents and internal e-mails, raises questions about the success of Goldman’s efforts to police potential conflicts,” Ms. Craig and Ms. Silver-Greenberg write. “The lawsuit also provides a look into the often-opaque relationship between federal regulators and Wall Street. After the financial crisis, banking regulators faced criticism that they were too cozy with the banks that they were overseeing â€" a familiarity that failed to thwart some of the risky behavior precipitating the housing crisis and ensuing recession.”

Mergers & Acquisitions »

Del Monte Foods Sells Consumer Products Division for $1.68 Billion  |  Del Monte Foods said it planned to rename itself to reflect its focus on pet food brands like Meow Mix and Kibbles ‘n Bits. DealBook »

2 Founders of BlackBerry Weighing a Takeover Offer  |  Mike Lazaridis and Douglas E. Fregin say that they are weighing a bid for 92 percent of the company that they don’t already own. DealBook »

Delaware Court Lifts Injunction on Activision Blizzard’s Deal With Vivendi  |  The deal by Activision Blizzard to buy back most of Vivendi’s stake in the videogame maker for $8.2 billion is now expected to close next week. DealBook »

A New Boss for Hulu  |  Hulu, the Internet video streaming service, “is close to naming Fox executive Mike Hopkins as its chief executive officer, two people with knowledge of the matter said,” Bloomberg News reports. BLOOMBERG NEWS

Orange Leaf Looks for Deals Ahead of I.P.O.  |  Orange Leaf Holdings, an operator of a frozen yogurt chain, is looking for possible takeovers as it prepares for a potential initial public offering, the chief executive said, according to Bloomberg News. BLOOMBERG NEWS

KIK Custom Products to Buy Unit of Chemtura Corporation  |  KIK Custom Products, a contract manufacturer backed by the private equity firm CI Capital Partners, said it had agreed to acquire the consumer products business of the Chemtura Corporation for $315 million in cash. PRESS RELEASE

INVESTMENT BANKING »

Twitter Message From the Past Roils a Modern-Day Market  |  Oil traders were jolted on Thursday by a Twitter post from the Israeli military that seemed to suggest it had bombed Syrian airports. In fact, the post, part of a series commemorating a conflict, referred to events that happened 40 years earlier. REUTERS

Twitter Determines Bank Fee for I.P.O.  |  “Twitter Inc. is seeking to raise more than $1 billion in an initial public offering and plans to pay bankers a fee of about 3.25 percent, people with knowledge of the matter said,” Bloomberg News reports. BLOOMBERG NEWS

Mobile Banking Players Are Shaking Up China’s Cozy Oligopoly  |  Alibaba and Tencent are making incursions into the country’s financial services market and savers should be glad, John Foley of Reuters Breakingviews writes. REUTERS BREAKINGVIEWS

Filming the ‘Wolf of Wall Street’  |  Martin Scorsese, Leonardo DiCaprio and Jonah Hill talk to The Wall Street Journal about the making of their upcoming film based on a memoir by the former brokerage boss Jordan Belfort. WALL STREET JOURNAL

PRIVATE EQUITY »

Despite Lackluster Returns, Pension Adds to Private Equity Bets  |  “In one of the few things Republicans and Democrats can agree on in North Carolina, the state is adding to its lagging bets on private equity and real estate to pump up its $80 billion public-worker pension fund,” Bloomberg News reports. BLOOMBERG NEWS

In Asia, Private Equity Collects Dividends  |  “Private equity firms in Asia Pacific are increasingly paying special dividends to themselves funded by refinancing debt of the businesses they own,” Reuters reports. REUTERS

HEDGE FUNDS »

After Prostitution Arrest, Hedge Fund Investors Flee  |  Investors with Common Sense Investment Management in Portland, Ore., have requested to redeem more than 90 percent of the $3.2 billion that the firm managed when the founder was arrested in August in a prostitution sting, CNBC reports. CNBC

London Hedge Fund Said to Plan New York Office  |  Odey Asset Management, which was founded in 1992 by Crispin Odey, is expanding to New York with a new office, Fortune reports. FORTUNE

I.P.O./OFFERINGS »

Shares of Royal Mail Soar in Trading Debut  |  The stock of the British postal service Royal Mail rose nearly 40 percent on its first day of trading, “leading to criticism that taxpayers have been deprived of needed revenue,” The Wall Street Journal reports. WALL STREET JOURNAL

After High Demand, Royal Mail Shares Are Priced at High End  |  Shares were priced at £3.3, or $5.28. That values the company at £3.3 billion, or $5.28 billion, the biggest privatization since the government sold the railroads in the 1990s. DealBook »

VENTURE CAPITAL »

Alibaba Invests in Amazon Rival  |  The Chinese Internet giant Alibaba Group led a $206 million investment in ShopRunner, a rival to Amazon.com, in a deal that values the company at about $600 million, The Wall Street Journal reports. WALL STREET JOURNAL

LEGAL/REGULATORY »

Two Brazilian Brothers to Pay Nearly $5 Million in Insider Trading Case  |  The S.E.C. says that Rodrigo and Michel Terpins of Brazil acted on inside information about the H.J. Heinz takeover to turn $90,000 into $1.8 million. DealBook »

Currency Privilege of the Dollar at Risk  |  With the political standoff continuing over whether to raise the debt ceiling, Floyd Norris provides historical context in his High & Low Finance column in The New York Times. NEW YORK TIMES

On Debt Ceiling, Warren and Wall Street Find Common Ground  |  “I don’t always see eye-to-eye with Wall Street C.E.O.’s, but on this one we agree,” Senator Elizabeth Warren, Democrat of Massachusetts, writes on her Web site. “We can’t run out on the bill and cause financial calamity for working families.” ELIZABETH WARREN

SunTrust to Pay $1.2 Billion in Mortgage Settlements  |  SunTrust Banks agreed to pay nearly $1.2 billion to resolve investigations from a number of federal authorities into its mortgage practices. REUTERS

Italian Airline Staves Off Bankruptcy With Help From Post Office  |  “Italy’s government recruited help from the state-owned postal service to inject capital into Alitalia, saving the struggling airline from imminent bankruptcy,” The Wall Street Journal reports. WALL STREET JOURNAL

Morning Agenda: JPMorgan Swings to Loss

JPMorgan Chase reported a third-quarter net loss on Friday of $380 million, or 17 cents a share, as regulatory and legal woes dragged down the bank’s results. Excluding the one-time costs, JPMorgan’s earnings were $1.42 a share, or $5.8 billion, beating analysts’ expectations of $4.65 billion, or $1.21 a share. The bank’s earnings were weighed down by a legal expense of $9.2 billion.

“While we had strong underlying performance across the businesses, unfortunately, the quarter was marred by large legal expense,” Jamie Dimon, the bank’s chief executive, said in a statement. A conference call to discuss the results is being held at 8:30 a.m.

MOMENTARY RELIEF, THEN SKEPTICISM  | Stocks on Thursday were propelled to their biggest gains since January on a Republican proposal to push back the government’s debt ceiling deadline for six weeks. But investors’ relief that a political compromise might avert a default on government debt was soon tempered by the realization that a fiscal deal was not yet at hand, Nathaniel Popper reports in DealBook.

United States stock index futures were slightly lower after the market closed, and the price of oil, which rose earlier in the day, fell modestly in the evening, Mr. Popper reports. Wall Street remains focused on any indications of progress in the talks in Washington. “The political situation has gone from horrible to bad, but we’re still a long way from a constructive resolution,” said Michael Purves, chief global strategist at Weeden & Company.

Though President Obama and House Republicans failed to reach an agreement on Thursday, the two sides kept talking, and the offer from Republicans was seen as an initial step toward ending the budget standoff, Jackie Calmes and Ashley Parker report in The New York Times. “People familiar with the meeting said that Mr. Obama pressed Republicans to reopen the government, and that Republicans raised the possibility that financing could be restored by early next week if terms for broad budget negotiations could be reached.”

The standoff in Washington is causing less hand-wringing in Asia than previous budget struggles, Keith Bradsher reports in The New York Times. Two years ago, in the previous debt ceiling fight, Chinese Internet users poured scorn on their own government for having invested so much of their country’s savings in Treasury securities. But this time, even as the Chinese media has actively covered the standoff and a vice minister of finance expressed concern about it on Monday, the Chinese Internet has not lit up with the same energy, Mr. Bradsher writes.

ON THE AGENDA  | Wells Fargo reports earnings at 8 a.m. The Reuters/University of Michigan consumer sentiment index is released at 9:55 a.m. Peter A. Sands, the chief executive of Standard Chartered, is on Bloomberg TV at 8:30 a.m. Timothy J. Sloan, chief financial officer of Wells Fargo, is on Bloomberg TV at 4:05 p.m.

SUIT REVIVES GOLDMAN CONFLICT ISSUE  | At a March 2012 meeting, a group of examiners at the Federal Reserve Bank of New York agreed that Goldman Sachs had inadequate procedures to guard against conflicts of interest, voting to downgrade a confidential rating that could have spurred costly enforcement actions and other regulatory penalties, Susanne Craig and Jessica Silver-Greenberg report in DealBook. But the former examiner who pushed for a downgrade, Carmen M. Segarra, now contends in a lawsuit filed on Thursday that just weeks after the vote â€" which could have been a big blow for Goldman â€" her superiors asked her to change her findings on Goldman and fired her after she refused.

“The lawsuit, along with a review by The New York Times of confidential government documents and internal e-mails, raises questions about the success of Goldman’s efforts to police potential conflicts,” Ms. Craig and Ms. Silver-Greenberg write. “The lawsuit also provides a look into the often-opaque relationship between federal regulators and Wall Street. After the financial crisis, banking regulators faced criticism that they were too cozy with the banks that they were overseeing â€" a familiarity that failed to thwart some of the risky behavior precipitating the housing crisis and ensuing recession.”

Mergers & Acquisitions »

Del Monte Foods Sells Consumer Products Division for $1.68 Billion  |  Del Monte Foods said it planned to rename itself to reflect its focus on pet food brands like Meow Mix and Kibbles ‘n Bits. DealBook »

2 Founders of BlackBerry Weighing a Takeover Offer  |  Mike Lazaridis and Douglas E. Fregin say that they are weighing a bid for 92 percent of the company that they don’t already own. DealBook »

Delaware Court Lifts Injunction on Activision Blizzard’s Deal With Vivendi  |  The deal by Activision Blizzard to buy back most of Vivendi’s stake in the videogame maker for $8.2 billion is now expected to close next week. DealBook »

A New Boss for Hulu  |  Hulu, the Internet video streaming service, “is close to naming Fox executive Mike Hopkins as its chief executive officer, two people with knowledge of the matter said,” Bloomberg News reports. BLOOMBERG NEWS

Orange Leaf Looks for Deals Ahead of I.P.O.  |  Orange Leaf Holdings, an operator of a frozen yogurt chain, is looking for possible takeovers as it prepares for a potential initial public offering, the chief executive said, according to Bloomberg News. BLOOMBERG NEWS

KIK Custom Products to Buy Unit of Chemtura Corporation  |  KIK Custom Products, a contract manufacturer backed by the private equity firm CI Capital Partners, said it had agreed to acquire the consumer products business of the Chemtura Corporation for $315 million in cash. PRESS RELEASE

INVESTMENT BANKING »

Twitter Message From the Past Roils a Modern-Day Market  |  Oil traders were jolted on Thursday by a Twitter post from the Israeli military that seemed to suggest it had bombed Syrian airports. In fact, the post, part of a series commemorating a conflict, referred to events that happened 40 years earlier. REUTERS

Twitter Determines Bank Fee for I.P.O.  |  “Twitter Inc. is seeking to raise more than $1 billion in an initial public offering and plans to pay bankers a fee of about 3.25 percent, people with knowledge of the matter said,” Bloomberg News reports. BLOOMBERG NEWS

Mobile Banking Players Are Shaking Up China’s Cozy Oligopoly  |  Alibaba and Tencent are making incursions into the country’s financial services market and savers should be glad, John Foley of Reuters Breakingviews writes. REUTERS BREAKINGVIEWS

Filming the ‘Wolf of Wall Street’  |  Martin Scorsese, Leonardo DiCaprio and Jonah Hill talk to The Wall Street Journal about the making of their upcoming film based on a memoir by the former brokerage boss Jordan Belfort. WALL STREET JOURNAL

PRIVATE EQUITY »

Despite Lackluster Returns, Pension Adds to Private Equity Bets  |  “In one of the few things Republicans and Democrats can agree on in North Carolina, the state is adding to its lagging bets on private equity and real estate to pump up its $80 billion public-worker pension fund,” Bloomberg News reports. BLOOMBERG NEWS

In Asia, Private Equity Collects Dividends  |  “Private equity firms in Asia Pacific are increasingly paying special dividends to themselves funded by refinancing debt of the businesses they own,” Reuters reports. REUTERS

HEDGE FUNDS »

After Prostitution Arrest, Hedge Fund Investors Flee  |  Investors with Common Sense Investment Management in Portland, Ore., have requested to redeem more than 90 percent of the $3.2 billion that the firm managed when the founder was arrested in August in a prostitution sting, CNBC reports. CNBC

London Hedge Fund Said to Plan New York Office  |  Odey Asset Management, which was founded in 1992 by Crispin Odey, is expanding to New York with a new office, Fortune reports. FORTUNE

I.P.O./OFFERINGS »

Shares of Royal Mail Soar in Trading Debut  |  The stock of the British postal service Royal Mail rose nearly 40 percent on its first day of trading, “leading to criticism that taxpayers have been deprived of needed revenue,” The Wall Street Journal reports. WALL STREET JOURNAL

After High Demand, Royal Mail Shares Are Priced at High End  |  Shares were priced at £3.3, or $5.28. That values the company at £3.3 billion, or $5.28 billion, the biggest privatization since the government sold the railroads in the 1990s. DealBook »

VENTURE CAPITAL »

Alibaba Invests in Amazon Rival  |  The Chinese Internet giant Alibaba Group led a $206 million investment in ShopRunner, a rival to Amazon.com, in a deal that values the company at about $600 million, The Wall Street Journal reports. WALL STREET JOURNAL

LEGAL/REGULATORY »

Two Brazilian Brothers to Pay Nearly $5 Million in Insider Trading Case  |  The S.E.C. says that Rodrigo and Michel Terpins of Brazil acted on inside information about the H.J. Heinz takeover to turn $90,000 into $1.8 million. DealBook »

Currency Privilege of the Dollar at Risk  |  With the political standoff continuing over whether to raise the debt ceiling, Floyd Norris provides historical context in his High & Low Finance column in The New York Times. NEW YORK TIMES

On Debt Ceiling, Warren and Wall Street Find Common Ground  |  “I don’t always see eye-to-eye with Wall Street C.E.O.’s, but on this one we agree,” Senator Elizabeth Warren, Democrat of Massachusetts, writes on her Web site. “We can’t run out on the bill and cause financial calamity for working families.” ELIZABETH WARREN

SunTrust to Pay $1.2 Billion in Mortgage Settlements  |  SunTrust Banks agreed to pay nearly $1.2 billion to resolve investigations from a number of federal authorities into its mortgage practices. REUTERS

Italian Airline Staves Off Bankruptcy With Help From Post Office  |  “Italy’s government recruited help from the state-owned postal service to inject capital into Alitalia, saving the struggling airline from imminent bankruptcy,” The Wall Street Journal reports. WALL STREET JOURNAL

JPMorgan Reported Third-Quarter Loss on Legal Costs

JPMorgan Chase on Friday reported a net loss of $380 million for the third quarter, as the nation’s largest bank grapples with a raft of regulatory and legal woes.

The added costs dragged down JPMorgan’s results as the bank reported a net loss of 17 cents a share.

JPMorgan’s earnings were eroded, in large part, by a hefty legal expense of $9.2 billion.

“While we had strong underlying performance across the businesses, unfortunately, the quarter was marred by large legal expense,” Jamie Dimon, the bank’s chief executive, said in a statement.

Excluding the one-time costs, JPMorgan’s earnings were $5.8 billion, or $1.42 a share,which beat Wall Street analysts’ expectations of $4.65 billion, or $1.21 a share.

Revenue was $23.9 billion, compared with $25.9 billion in the period a year earlier. Analysts had estimated revenue of of $24.06 billion.

The third-quarter earnings report came as JPMorgan is enmeshed in protracted negotiations with the Justice Department to resolve investigations into questionable mortgage practices.

During the negotiationsâ€"which have occurred in fits and starts-JPMorgan has offered to pay a fine of roughly $7 billion and provide $4 billion in relief for struggling homeowners to wrap up a range of mortgage-related headaches, according to people familiar with the matter. The settlement is still in flux, though, and the monetary penalties could change.

JPMorgan “continues to seek a fair and reasonable settlement with the government on mortgage-related issues - and one that recognizes the extraordinary circumstances of the Bear Stearns and Washington Mutual transactions, which were undertaken at the request or encouragement of the U.S. government,” Mr. Dimon said.

Mr. Dimon’s reference to a “fair and reasonable settlement” evokes his earlier statements, which have called the government’s investigations related to Bear Stearns unfair. JPMorgan purchased the flailing bank during the depths of the financial crisisâ€"a deal that was blessed by the federal government.

Adding to the bank’s legal costs, JPMorgan agreed to pay $1 billion in September to resolve sweeping investigations into the bank’s multibillion-dollar trading loss last May. As part of its $1 billion payout, JPMorgan also settled investigations from the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau into the bank’s credit card products.