Thursday, 15 July 2010 08:14

JP Morgan, One of the First Big Banks to Report, Is Setting a Bad Precedent

In a nutshell, a cursory glance of JP Morgan's recent earnings announcement is middling, and that's putting it optimistically. Revenue and profits have fallen nearly across the board, and the earnings beat is a result of moving capital from reserves to the earnings column. Even this may be suspect, for while credit metric trends appear to be improving (largely a result of massive government stimulus), the core, underlying cause of this malaise looks to be on the move downward again. See As I Made Very Clear In March, US Housing Has a Way to Fall.

I will be coming out with a detailed review of JPM's results shortly. In the meantime and in between time, refresh your collective memories with past analysis and opinion:

An Unbiased Review of JP Morgan’s Q1 2010 Results Yields Less Roses Than the Maintream Media Presents

An Independent Look into JP Morgan (subscription content free preview!)

The JP Morgan Professional Level Forensic Report (subscription only)

The JP Morgan Retail Level Forensic Report (subscription only)

If a Bubble Bubble Bursts Off Balance Sheet, Will Anyone Be There to Hear It?: Pt 2 – JP Morgan

Is JP Morgan Taking Realistic Marks On Its WaMu Portfolio Purchase? Doubtful!

Anecdotal observations from the JP Morgan Q2-09 conference call

Reggie Middleton on JP Morgan’s Q309 results

Reggie Middleton on JP Morgan’s “Blowout” Q4-09 Results

Last modified on Thursday, 15 July 2010 08:37


  • Comment Link Reggie Middleton Friday, 16 July 2010 05:53 posted by Reggie Middleton

    Yeah, it looks bad. I wonder where this leaves the private lawsuits.

  • Comment Link maybebaby Friday, 16 July 2010 01:07 posted by maybebaby

    your boy obama and his team sure are making those bankers quake in their boots. goldman hit with a paltry fine that amounts to about 2 weeks worth of work. incredible. laughable. all this hullabaloo for 2 weeks' dock of pay!?! what kind of tragi-comedy is this? how many ill-gotten billions has this outfit taken in over the years? im looking at this whole episode as farce. bread and circuses my friend. all we have is bread and circuses. this country is owned by the financial elite and mr. change-we-can-believe-in is a part of the sham.
    analysts estimate goldman's tuesday earnings to come in around $2.25/share. the last 4 qtrs, gs has beaten estimates by an average of 40%. essentially, should they top estimates by their usual amount, the fine will have been nicely taken care of by their normal quarterly outperformance. everything goes back to being peachy. fire up those program trading engines fellas. good times are here again.

  • Comment Link Reggie Middleton Thursday, 15 July 2010 13:59 posted by Reggie Middleton

    Bove has a very strong point. It is quite risky to shrink reserves in front of decreasing housing prices because government interference caused a temporary blip in credit metrics.

    Then again, it is scary to be agreeing with him :-)

  • Comment Link jarret Thursday, 15 July 2010 10:52 posted by jarret

    Interesting to see Bove who is typically very bullish on the banks come out pretty negatively with JPM and their earnings. Here is the interview if you havent seen you think he read your blog before going on :-)

  • Comment Link Reggie Middleton Thursday, 15 July 2010 09:23 posted by Reggie Middleton

    JP Morgan has competent management, but I truly question the wisdom of reducing reserves in front of another downturn in housing.

  • Comment Link Cplus Thursday, 15 July 2010 08:29 posted by Cplus

    A timely note, indeed.
    In October, the view of Reserves will be quite different.

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