Displaying items by tag: JP Morgan

I was perusing ZeroHedge the other day (a fine, rabble rousing rag after my own heart), when I came across a guest post accusing JP Morgan of some funny stuff. Those that follow me know that I really believe JPM to be highly overrated. In reviewing the authors allegations, he may actually be on to something in regards to portions of the AML stuff. In order to truly ascertain the extent, if any, I would have to dig a little further, which I don't have the time to do right now.

I feel he is jumping the gun on the general liquidity argument though. No disrespect intended to the man, for anyone willing to break out a calculator and dispel the "this is the best thing since sliced bread" propaganda and disinformation is cool in my book.

I, Reggie Middleton, challenge the mainstream media to think independently. I challenge them to dig down, past the sterilized, politically correct soundbites proffered by popular corporate management, you know - the "in crowd". I challenge the MSM to pull out a calculator, run through the reported numbers, and actually ascertain if what is being proferred by managment actually correlates with the numbers offered to the regulatory agencies. I know some of the finance stuff can get arcane, but their are many objective parties to turn to for assistance. Unfortunately, they are very rarely consulted. I see the favored names in the media, but rarely do I see objective opinion. 

Below is a snippet of headlines that I pulled from a Google news search for the phrase JP Morgan.

• msnbc.com - ‎The market's expectations for bank earnings increased after JPMorgan set a high bar Wednesday with a surprisingly strong profit that helped propel the Dow ...
• JPMorgan scores big in latest quarter CNNMoney.com
• JPMorgan Chase Reports Strong Profit of $3.6 Billion New York Times - ‎Oct 14, 2009‎: A year after the financial system was brought to its knees, a resurgent JPMorgan Chase reported a second consecutive quarter of surprisingly ...
• JPMorgan profits lift Dow past 10000 Financial Times Two Reasons the Dow's Rally to 10000 Will Keep Moving Ahead‎ - A blowout third quarter for jpmorgan Chase & Co. (NYSE: JPM) sent its shares and more than 600 other stocks 52-week highs. jpmorgan delivered its strongest ...

JP Morgan - 3Q09 Results and Outlook

Our modelled results were pretty much on point with JP Morgan's actual Q309 reported results - see

• JPM Public Excerpt of Forensic Analysis Subscription (free)
• JPM Report (092209) Final - Professional (subscription)
  
• JPM Forensic Report (092209) Final- Retail (subscription).
  

The tough economic environment is still gripping the traditional banking operations of US banks and JP Morgan's 3Q09 fail to provide light at the end of the tunnel. As a matter of fact, if is arguable that for those that do perceive a light, it is that of a freight train coming to run over the observer. The credit deterioration impact on JP Morgan, however, has been moderated by the gains from trading revenues which provided more than adequate cushion to absorb the high credit losses from the traditional banking operations.

The major support for JP Morgan came from increase in revenues from principal transactions (including trading revenues of investment banking and corporate/private equity division) which led non-interest revenue to increase to $13.8 billion in 3Q09 from $12.9 billion in 2Q09 and $5.7 billion in 3Q08. In 3Q09, non interest revenues accounted for 52.2% of the total net revenues against 50.6% in 2Q09 and 39.0% in 3Q08. 

I, Reggie Middleton, challenge the mainstream media to think independently. I challenge them to dig down, past the sterilized, politically correct soundbites proffered by popular corporate management, you know - the "in crowd". I challenge the MSM to pull out a calculator, run through the reported numbers, and actually ascertain if what is being proferred by managment actually correlates with the numbers offered to the regulatory agencies. I know some of the finance stuff can get arcane, but their are many objective parties to turn to for assistance. Unfortunately, they are very rarely consulted. I see the favored names in the media, but rarely do I see objective opinion. 

Below is a snippet of headlines that I pulled from a Google news search for the phrase JP Morgan.

• msnbc.com - ‎The market's expectations for bank earnings increased after JPMorgan set a high bar Wednesday with a surprisingly strong profit that helped propel the Dow ...
• JPMorgan scores big in latest quarter CNNMoney.com
• JPMorgan Chase Reports Strong Profit of $3.6 Billion New York Times - ‎Oct 14, 2009‎: A year after the financial system was brought to its knees, a resurgent JPMorgan Chase reported a second consecutive quarter of surprisingly ...
• JPMorgan profits lift Dow past 10000 Financial Times Two Reasons the Dow's Rally to 10000 Will Keep Moving Ahead‎ - A blowout third quarter for jpmorgan Chase & Co. (NYSE: JPM) sent its shares and more than 600 other stocks 52-week highs. jpmorgan delivered its strongest ...

JP Morgan - 3Q09 Results and Outlook

Our modelled results were pretty much on point with JP Morgan's actual Q309 reported results - see

• JPM Public Excerpt of Forensic Analysis Subscription (free)
• JPM Report (092209) Final - Professional (subscription)
  
• JPM Forensic Report (092209) Final- Retail (subscription).
  

The tough economic environment is still gripping the traditional banking operations of US banks and JP Morgan's 3Q09 fail to provide light at the end of the tunnel. As a matter of fact, if is arguable that for those that do perceive a light, it is that of a freight train coming to run over the observer. The credit deterioration impact on JP Morgan, however, has been moderated by the gains from trading revenues which provided more than adequate cushion to absorb the high credit losses from the traditional banking operations.

The major support for JP Morgan came from increase in revenues from principal transactions (including trading revenues of investment banking and corporate/private equity division) which led non-interest revenue to increase to $13.8 billion in 3Q09 from $12.9 billion in 2Q09 and $5.7 billion in 3Q08. In 3Q09, non interest revenues accounted for 52.2% of the total net revenues against 50.6% in 2Q09 and 39.0% in 3Q08. 

Note to readers: a formatting issue caused the 2nd half of this article to get cut off. I urge interested parties to reread the article to get the full message.

Since I write for a diverse audience, I will start this off with an overview of securitization. If you are in the industry or are just a smart ass dude, feel free to skip down to the JP Morgan specific section below. I also have a 30 part series on this Asset Securitization Crisis for those who are interested in my take on this from the beginning. It is a lot of reading, but it tells it like it is.

Overview

Securitization is still a very significant source of leverage and opacity in the US and European economies, in spite of its predominant role in the most recent global financial turbulence. It is a practice where loans and other debt instruments are aggregated in a pool and thereby used to issue new securities. Banks and financial institutions started establishing Special Purpose Vehicles (SPV) and Qualifying Special Purpose Entity (QSPE) under the FASB rules to securitized loans and thereby reducing, from an accounting perspective (but more accurately put), or transferring from an economic perspective, financial risks on their balance sheets. Although these new founded QSPE's were rated by rating agencies (Moody's, Fitch, S&P among the few) prior to the issuance of securities, the underlying ratings failed to capture the actual economic value of the underlying collateral. Furthermore, the ratings established by the rating agencies are an assurance of performance.

Note to readers: a formatting issue caused the 2nd half of this article to get cut off. I urge interested parties to reread the article to get the full message.

Since I write for a diverse audience, I will start this off with an overview of securitization. If you are in the industry or are just a smart ass dude, feel free to skip down to the JP Morgan specific section below. I also have a 30 part series on this Asset Securitization Crisis for those who are interested in my take on this from the beginning. It is a lot of reading, but it tells it like it is.

Overview

Securitization is still a very significant source of leverage and opacity in the US and European economies, in spite of its predominant role in the most recent global financial turbulence. It is a practice where loans and other debt instruments are aggregated in a pool and thereby used to issue new securities. Banks and financial institutions started establishing Special Purpose Vehicles (SPV) and Qualifying Special Purpose Entity (QSPE) under the FASB rules to securitized loans and thereby reducing, from an accounting perspective (but more accurately put), or transferring from an economic perspective, financial risks on their balance sheets. Although these new founded QSPE's were rated by rating agencies (Moody's, Fitch, S&P among the few) prior to the issuance of securities, the underlying ratings failed to capture the actual economic value of the underlying collateral. Furthermore, the ratings established by the rating agencies are an assurance of performance.

The full report is ready for download for subscribers. The professional version is roughly twice the length of the public preview (see below). Any institutions who are contemplating a subscription may reach out to me (Reggie Middleton) access a sample.

The full report is ready for download for subscribers. The professional version is roughly twice the length of the public preview (see below). Any institutions who are contemplating a subscription may reach out to me (Reggie Middleton) access a sample.

The JP Morgan forensic preview is now available. Remember, this is not subscription material, but a "public preview" of the material to come. I thought non-subscribers would be interested in knowing what my opinion of the country's most respected bank was. There is some interesting stuff here, and the subscription analysis will have even more (in terms of data, analysis and valuation). As we have all been aware, the markets have been totally ignoring valuation for about two quarters now. It remains to be seen how long that continues.

Click graph to enlarge

From Reuters - Thu Sep 17, 2009 7:49pm: "Option" mortgages to explode, officials warn

The federal government and states are girding themselves for the next foreclosure crisis in the country's housing downturn: payment option adjustable rate mortgages that are beginning to reset.

"Payment option ARMs are about to explode," Iowa Attorney General Tom Miller said after a Thursday meeting with members of President Barack Obama's administration to discuss ways to combat mortgage scams.
...
In Arizona, 128,000 of those mortgages will reset over the the next year and many have started to adjust this month, the state's attorney general, Terry Goddard, told Reuters after the meeting.

"It's the other shoe," he said. "I can't say it's waiting to drop. It's dropping now."

Rewind the blog's database 8 and a half months:

Option ARMs: The Banking Backdrop of 2009 (January 04, 2009)

The problem ahead: According to Fitch, of the nearly $200 bn of option ARMs outstanding, roughly $29 bn of loans are expected to recast by 2009. Of this $6.6 bn constitute 2004 vintage (that would be recast as a result of completion of the end of five-year term in 2009) and $23 bn constitute 2005 and 2006 vintage loans that would recast early due to the 110% balance cap limit.
Further an additional $67 bn is expected to recast in 2010, of which $37 bn belong to 2005 vintage (that would be recast as a result of completion of the end of five-year term in 2010) and the balance $30 bn consist of 2006 and 2007 vintage loans that would be recast early due to the 110% balance limit cap

 Who are the current option ARM kings due to acquisition?

The JP Morgan forensic preview is now available. Remember, this is not subscription material, but a "public preview" of the material to come. I thought non-subscribers would be interested in knowing what my opinion of the country's most respected bank was. There is some interesting stuff here, and the subscription analysis will have even more (in terms of data, analysis and valuation). As we have all been aware, the markets have been totally ignoring valuation for about two quarters now. It remains to be seen how long that continues.

Click graph to enlarge