Tuesday, 12 April 2011 09:10

Weakening Revenue Streams in US Banks Will Make Them More Susceptible To Contingent Risks

As anticipated last October, reality is catching p with the banking industry and JP Morgan in particular. From CNBC:

JPMorgan, BofA Earnings May Show Weaker Revenue

U.S. banks such as JP Morgan Chase & Co. and Bank of America Corp. may report weak revenue for the first quarter after lending by the industry dropped in almost every category.

I discussed the inevitability of this occurrence on CNBC's Squawk on the Street - 10/19/2010

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JP Morgan's share price has increased, and they have been authorized to reinstitute their dividends, despite the following minor issues:

  1. Residential housing, where the vast majority of JPM's loans reside, has not only resumed its downward slide in terms of price but has also exacerbated it - In Case You Didn’t Get The Memo, The US Is In a Real Estate Depression That Is About To Get Much Worse and The Latest Case Shiller Index – Housing Continues Freefall In Aggressive Search For Equilibrium
  2. JPM's lawsuits and aggregate legal exposure has literally ballooned - see JP Morgan Purposely Downplayed Litigation Risk That Spiked 5,000% Last Year & Is Still Severely Under Reserved By Over $4 Billion!!! Shareholder Lawyers Should Be Scrambling Now and Less Than 24 Hours After My Warning Of Extensive Legal Risk In The Banking Industry, The Massachusetts Supreme Court Drops THE BOMB!
  3. Shadow inventory in the states is being compounded by the foreclosure issues, of which JPM is at the forefront - The 3rd Quarter in Review, and More Importantly How the Shadow Inventory System in the US is Disguising the Equivalent of a Dozen Ambac Bankruptcies!
  4. Despite a materially worsening housing market wherein JPM is a major lender, legal issues up the whazoo, and a spike in prospective shadow inventory, JP Morgan as reduced its risk reserves - An Unbiased Review of JP Morgan’s Q1 2010 Results Yields Less Roses Than the Maintream Media Presents“…

More on the topic:

JP Morgan Purposely Downplayed Litigation Risk That Spiked 5,000% Last Year & Is Still Severely Under Reserved By Over $4 Billion!!! Shareholder Lawyers Should Be Scrambling Now Wednesday, March 2nd, 2011

Hey, JPM is managed by the best and the brightest, right? Nothing shall become of them. Of course this mantra is much harder to believe after I put their Q3-10 earnings into perspective - JP Morgan’s 3rd Quarter Earnings Analysis and a Chronological Reminder of Just How Wrong Brand Name Banks, Analysts, CEOs & Pundits Can Be When They Say XYZ Bank Can Never Go Out of Business!!! You true believers have been Had! You’ve Been Took! Hoodwinked! Bamboozled! Led Astray! Run Amok! This Is What They Do! Everyone should be asking themselves if Another Banking Crisis Inevitable? Hey, I don’t believe the last one ever ended. It was just painted over with trillions of global, inefficient stimulus that is now showing its age.

The full JPM Q2 2010 review can be downloaded by subscribers (click here to subscribe) here: File Icon JPM 2Q10 review

Subscribers should also review our forensic valuation reports, which have (thus far) proven to be right on the money in terms of JP Morgan:

The JP Morgan Professional Level Forensic Report (subscription only)

The JP Morgan Retail Level Forensic Report (subscription only)

Those that don’t subscribe still have a lot of BoomBustBlog JPM opinion and analysis to chew on, including a free, condensed (but still about 15 pages) version of the forensic analysis above. You can find it below this pretty graphic from “An Unbiased Review of JP Morgan’s Q1 2010 Results Yields Less Roses Than the Maintream Media Presents“…

  1. An Independent Look into JP Morgan (subscription content free preview!)
  2. If a Bubble Bubble Bursts Off Balance Sheet, Will Anyone Be There to Hear It?: Pt 2 – JP Morgan
  3. Is JP Morgan Taking Realistic Marks On Its WaMu Portfolio Purchase? Doubtful!
  4. Anecdotal observations from the JP Morgan Q2-09 conference call
  5. Reggie Middleton on JP Morgan’s Q309 results
  6. Reggie Middleton on JP Morgan’s “Blowout” Q4-09 Results
  7. Is the US Government About to Forgive Mortgage Debt? Let’s Crowdsource Our Way Through a Scenario or Two!
  8. Pay Attention to the National Association of Realtors and Their Chief Marketing Agent At Your Own Risk!
  9. Why the Case Shiller Index, Although Showing Another Downturn Coming, is Overly Optimistic and Quite Misleading!
  10. Yes, Housing Prices Have Much Farther to Fall. We’re Talking Years…
  11. Because 105% LTV On Depreciating Property Wasn’t Good Enough for the US Taxpayer…
  12. I Told You Housing Was Going to Take a Downturn for the Worse. I’ll Tell You Something Else, We Are in a Housing Depression! It’ll Get Worse Until Market Forces Rule Over Government Bubble Blowing!
  13. As I Made Very Clear In March, US Housing Has a Way to Fall
  14. It’s Official: The US Housing Downturn Has Resumed in Earnest
  15. The Great Global Macro Experiment, BoomBust Cycles, and the Refusal to See the Truth: Bubble Economics in the Mainstream Media
Last modified on Tuesday, 12 April 2011 09:28
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