Archive - Oct 12, 2012 - Story

There is a lot of verbiage in the official JPM Q3 Earnings press release which directs to a bottom line number of $1.40, or $5.7 billion on expectations of $1.24, with revenue of $25.9 billion on expectations of $24.53 billion. The primary reason for the lack of disappointment: no major losses in Corporate from CIO, with corporate generating $221 million in Q3, up from a loss of $(1.777) billion in Q2. And then come the adjustments:  $900 million pretax benefit ($0.14 per share after-tax increase in earnings) from reduced mortgage loan loss reserves in Real Estate Portfolios; $825 million pretax incremental charge-offs ($0.13 per share after-tax decrease in earnings) due to regulatory guidance on certain residential loans in Real Estate Portfolios; $888 million pretax benefit ($0.14 per share after-tax increase in earnings) due to extinguishment gains on redeemed trust preferred capital debt securities in Corporate; $684 million pretax expense ($0.11 per share after-tax decrease in earnings) for additional litigation reserves in Corporate; Then there is a DVA loss of $211 MM in banking. Net-net, after taking into account all one-off adjustments, the Q3EPS was really $1.26. But for all the data fudging, and attempts to make the reported EPS non-comparable to the expected one, following an avalanche of one-time adjustments, the bottom line is this: revenues from trading dropped both sequentially and Q/Q while banking expenses rose, Net Interest Margin dropped to a new record low, even as the firm too a major $967 million loan loss reserve release on its loans to $22.8 billion, even as its total Non-Performing Loans rose by a whopping $1.3 billion to $11.370 billion, the largest quarterly jump in years! Just how JPM can justify such a major contribution to earnings coming from loan losses when NPLs have soared is unclear to anyone with a frontal lobe.

Ladies and gentlemen, we bring you EUtopia (and an early case of Friday humor). " The European Union has been awarded the 2012 Nobel Peace Prize in a nod to the 27-member bloc's "advancement of peace and reconciliation," and to applaud its solidarity as it continues to work to contain the debt crisis hanging over the euro zone. The head of the Norwegian committee, Thorbørn Jagland, said the committee gave the award in an effort to encourage Europe to back away from the "extremism and nationalism" that led to major conflict in years past. "This is, in a way, a message to Europe to secure everything we have achieved and move forward," he said while addressing a packed crowd at the Nobel Norwegian Institute in Oslo on Friday. "Mr. Jagland said it is "up to the European Union" to decide what to do with the approximately $1.2 million in prize money that comes with the award. He also said the EU should decide how the award is ceremonially received." Some other news: Bernard Madoff Investment Securities has not won the Nobel prize in economics yet.