Good morning, Quartz readers!
These are exciting times for fans of the footnote. Earnings season for big banks usually offers rich pickings to those brave enough to dig into the banks’ financial statements. This quarter, uniformly awful results for the world’s financial titans give the diggers an extra incentive.
It doesn’t take long to discover that bond-trading desks shouldered some of the blame for weak earnings, as they were wrong-footed by the Fed’s decision not to taper its US bond purchases in September. But much juicier details, with potentially longer-term consequences, can be found in arcane disclosures about banks’ ongoing legal travails.
Billions of dollars in fines, settlements and provisions linked to past misdeeds are weighing heavily on banks from JPMorgan to Deutsche Bank, UBS and others. Rabobank just paid a $1 billion fine for its part in rigging interest rates and its CEO quit, while markets braced for big penalties at Bank of America and Wells Fargo over US mortgage-backed securities. Not to be outdone, Japan’s largest banks are under fire for links with the yakuza.
It could get worse. The burgeoning investigation into alleged manipulation of exchange rates has ensnared just about every big bank, and many liken it to the Libor rigging scandal. In JPMorgan’s full 228-page quarterly earnings report published Friday, confirmation that its foreign-exchange traders are under investigation is relegated to page 203.
In total, “Note 23—Litigation” in JPMorgan’s report runs to nine densely worded pages. Some of these cases may fizzle out; others may explode into the next billion-dollar scandal. It is not everyone’s idea of light weekend reading, but there are plenty of eye-opening twists and turns in banks’ financial statements these days, if you can stand the small print. —Jason Karaian
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Five things on Quartz we especially liked
What Apple could learn from McDonald’s: architecture. Apple liked its design for Apple stores so much, it trademarked it. But even the best things go stale. Phil Stephenson illustrates the risks via a short but illuminating history of the burger giant’s mansard roof.
How the tech industry is changing the geography of London. Tech startups want short, flexible leases that give them room to move and grow; property developers want long-term, reliable tenants. Leo Mirani explains how the attempt to reconcile these needs is sparking a wave of real-estate innovation in Britain’s capital.
Meet the new Japan. It’s called Europe. Just when you thought you’d never again see the word “deflation” outside a dictionary, Matt Phillips argues that while Japan is clawing its way out of a two-decade deflationary spiral, Europe is dangerously close to falling into one.
Did you know the US used to have 300 time zones? And even the current four are too many, says Allison Schrager, who makes the economic case for having just two time zones, one hour apart, and getting rid of daylight saving time altogether.
What Halloween does for Big Candy, in charts. October is the biggest month of sales for candy makers everywhere in the world. David Yanofsky takes you on a graphical tour of the world’s sweet tooth.
Five things elsewhere that made us smarter
The NSA files, decoded. The Guardian, which has led the reporting on documents leaked by former US contractor Edward Snowden, has put together an impressive interactive guide to what they mean for you. We don’t actually know yet how much smarter this made us, because it’ll take most of the weekend to read.
The right way to tax corporations. Marty Sullivan, a tax economist whose columns are must-reads for the Washington policy set, was one of the first to identify how companies like Apple evade taxes by keeping money overseas. A Washington Post profile of him by Steven Pearlstein also looks at his proposed solutions.
More economic growth requires less economic inequality. Bill Gross, founder of investment giant Pimco, takes a well-aimed broadside at the rich and at large corporations, making the case for why capital should be taxed at the same rate as labor to help rebalance and rejuvenate the US economy.
Think you understand Amazon’s business model? You don’t. Eugene Wei, an entrepreneur who once worked at Amazon, argues that the company’s famous lack of profitability isn’t because it’s keeping prices low but because it’s investing massively in growth—and so its competitors should be even more scared than they already are.
What we did before Microsoft Windows. Believe it or not, “files” used to be actual things made of paper. Each office had its own way of organizing them and devoted vast amounts of time to doing so. Shannon Mattern at the Reanimation Library muses upon the logic, psychology and paraphernalia of the filing system, with some great diagrams.
Our best wishes for a productive and thought-filled weekend. Please send any news, comments, time-zone proposals, and old filing systems to to hi@qz.com. You can follow us on Twitter here for updates during the day.
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