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What a horrible day for the markets today to go red from being up so much so early. Keep an eye on the 50 DMA for the s&p.
Does this mean the "Crash JP Morgue" effort was.... nothing?
Not exactly nothing, though. Right? There is one thing we can learn from this: Sprott and those on his payroll can launch an ETF like Obama can run a presidential campaign.
JPM is above other TBTF banks now. JPM replaced Goldman Sach as America's the premier franchise.
Connections to note:
Criminal organization, just like the FED and the White House.
History repeating 100 years later...
In 1912, the Pujo committee found that a cabal of financial leaders were abusing their public trust to consolidate control over many industries: the partners of J.P. Morgan & Co. controlled aggregate resources of $22.245 billion...equivalent to the value of all the property in the states west of the Mississippi River
Still, it must be a comfort to JPM and the other TBTF banks that they live in a heads-I-win (we profit we keep it), tails-you-lose (we lose money the taxpayer bails us out) world.
Mark-To-Market (true measures) would make 37% of all U.S. financial institutions insolvent overnight (i.e. unable to meet threshold capital reserve requirements), and put another estimated 22% in imminent jeopardy of insolvency.
Where would JP Morgan fit in this box? No doubt somewhat better, due to its insider status and ability a long time ago to put off toxic shit in front end bucket loaders full of bad paper into 33 Liberty for markups of around 1900% over fair value.
why should i invest in JPM when i can buy best of breed? that would be WellsFargo/Wachovia who is the clear leader in laundering drug money. keeps them solvent. about $379 Billion between 2004 and 2007. I think they know what they're doing and so i'm with the leader.
fah-q this is frustrating.
SPY is now down 5 consecutive days on half the volume of the March decline.
I'm going to start laddering in to some more dividend stocks starting right now.
On my list:
INTC, NUE, DUK, MSB, PPL, HBC
Your market timing approach epitomizes the dumb shit momo mentality of Fast Money... congrats.
don't forget to have a stop-loss on that MSB robo.
Eat shit and die Robo.
BREAKING NEWS!! WHOA! RADIOACTIVE STRONTIUM DETECTED OVER 20 MILES FROM FUKUSHIMA!
THATS A BIG DEAL!!!
TOO BAD WE CAN;T SEND ROBOT TRADER THERE!
...the free market will have the final say on the future of the banking sector.
...the free market will have the final say on the future of the banking sector.
Free market? Where? Where.....
Bank earnings mathematics remain unchanged. Begin with the desired result and wiggle your way backwards. King Kashflow be damned.
JPM/Chase is making a killing off of Wamu's assets. The sad part of it all is that the shareholders of WMI are fighting WMI in order to receive compensation. WMI is trying to gift another $2 billion in tax refunds to JPM/Chase so the shareholders of WMI do not see anything. Right now the shareholders of WMI are fighting over approx. $10 billion in NOL's against the hedge funds who bought the debt for pennies on the dollar. The NOL's will be used in the reorganized company. The shareholders are in good hands with the EC and a valuation hearing is coming up in a little less than 2 months.
The big question with JPM is how did Blythe's group do? They've been shorting gold and silver like crazy, so simplistically I'd expect to see significant losses there. Realistically, they've probably managed to cover these up. And the key question is how they managed to do that. Anyone know?
direction of asset prices? where ever they need them to be.
mark to model accounting has changed everything.
I guess that plot to drive them into bankruptcy ain't going so well.
As the numbers of foreclosures rise, as the number of poorly conceived loan mods fail, and as the number of underwater homes rise faster (as a result of the coninuing decline in values), bank losses connected to houing will grow. I don't have enough info to know if it will cripple the system, but I do know that the 'big shit' has yet to happen.
So when you all gonna take back yer country...???
Why is this important and why does the whole earnings circus on Wall Street piss me off? Because most investment money managers (big fund managers, etc), financial advisors, stockbrokers and media morons look only at the headlines reported and assume that a company like JPM is telling the truth and they grab onto the headline information and spread it as gospel. 99% of all money managers and financial advisors, even the ones with fancy initials of accolade after their names, do not understand how to thoroughly dissect an SEC financial filing. That skill is not required for them to be licensed to lose your money and take a lot fees in the process. To be sure, some Wall Street analysts will go thru JPM's numbers like I just did and put together an analytic report that might highlight some red flags, but 99% of them will reiterate a "buy" recommendation and the portfolio managers, financial advisors and stockbrokers will grab onto those reports without reading them and justify loading up on JPM stock. The whole circus is really a complete tragedy that will not end well in the long run.
So with that as a preface, let's jump into a "drive-by" look at what JPM reported and see if it makes sense and if the quality of earnings is solid or fraudulent. Everything will be compared on a 1st quarter 2011 vs. 1st quarter 2010 basis. Total revenues declined by 8.7%. Not sure I would call that positive. Net income, however, surged to $5.6 billion this quarter from $3.3 billion in 2010. Well, when you are looking at a trillion dollar balance sheet, it only takes a small "adjustment" of bad loan assumptions to generate a couple billion in accounting income. I am sure many of the assets JPM holds because they can't unload them - i.e. the toxic assets - were marked up in price to generate even more "paper income." The disclosure on that latter source of "income" in the 8-K is very poor. So how the hell did they report a huge jump in net income which was in excess of consensus expectations?
For purposes of this exercise I am just evaluating the credit statistics at a macro level. My work is not precise but it's for sure within the bounds of "horseshoes and handgrenades." To begin with, the "provision for credit losses" was $7 billion in Q1 2010 vs. only $1.2 billion this quarter. Is this reasonable? To be sure, if the 2010 number was large relative to the actual amount of losses experienced, it makes a lot of sense to reduce the provision recorded this year. "Provision" means an "estimate" of "potential" losses. You can imagine that there's a lot of "wiggle" room in the assumptions made to calculate this "estimate," especially if Jamie Dimon leans heavily on his lieutenants to come up with some accounting earnings so they can beat the street and justify Dimon's HUGE bonus this year. Let's just say that IF they had used a more reasonable 50% of the provision taken last year, it would have created a $3.5 billion accounting provision and that would have produced, roughly, only $3.3 billion of net income this year, which would have been a huge earnings miss. I think it's safe to assume that if they "over reserved" for losses last year, they "under reserved" this year. To be frank, if the Fed were not buying up toxic assets and if the Government were not guaranteeing a lot of bank assets, these provisions would much higher. Especially given that we know for sure that deliquency and default rates on mortgages are still climbing. Roughly 30% of JPM's assets are home-related loans (primary mortgages, home equity loans, home equity secured non-credit card loans, etc). It's up to you to decide if JPM is being honest here, but I will unequivocally state that they did not take a high enough provision against credit losses by a couple multiples.
Here's another interesting source of earnings management that I found. They have mortgage repurchase liability on a lot of the mortgages they underwrote and then sold off to mortgage trusts. That liability increased in 2011 to $3.3 billion from $2.3 billion last year. This despite the mortgage foreclosure moratorium we have had. That statistic alone justifies my statement in last sentence of the previous paragraph. HOWEVER, despite an increase in this liability, the provision against this liability, i.e. the amount JPM has reserved for GAAP accounting purposes, was only $420 million vs. $1.4 billion last year. That's a whopping $1.04 billion dollar swing in the expense line (lowering expenses by that much) and thus boosted net income by a little less than that, adjusting for taxes. That number is about 26 cents of the 29 cents of earnings generated from lower write-offs referenced in the headline earnings summary (see any press release). As you can see, it takes a very small change in bad-loan write-off assumptions to generate a big increase in GAAP-reported accounting earnings.
One more little statistic that will never be reported in the press or analyzed by your financial advisor or retirement fund money manager is the percentage of non-performing loans as a percent of the total amount of outstanding loans plus deriviatives. This is a HUGE area of earnings manipulation because it's data that gets buried in the bowels of financial filings and Wall Street analyst reports. This number for JPM is absurdly low, as I'm sure it is for all banks. But we know that JPM has an inordinate market share of entire derivatives market, and thus should probably be using higher assumptions for non-performing loans. Ha ha haaa. For this year, JPM is reporting $15 billion in non-performing assets vs. total loans outstanding of $685 billion. This would be 2% of total loans. They are reporting a total balance sheet of $1.2 trillion, which includes loans plus derivatives. So it's total reported non-performing loans represents only 1.3% of the entire balance sheet.
Does this make sense? You tell me. I find that number to be retarded, especially given the highly volatile nature of derivatives. But let's say they are only light .5%. Again, that is retarded. But if they became only .5% less retarded and .5% more honest, that would create a $6 billion charge against earnings on a $1.2 trillion portfolio. If this was their only mea culpa to the accounting gods - and none of the above mentioned areas of manipulation were adjusted toward the truth - they would have reported, roughly, a small loss for the quarter. Imagine how big shareholders would howl in that case given the recently reported massive bonus Jamie Dimon awarded himself. And believe me, I've been involved in quarter end games with trading desk assets in which we hid positions and had some positions marked way too high in order to increase the size of our bonus pool. This was just on one small desk in the 1990's. Imagine how large that fraud is across a big $1.2 trillion bank.
I could go on forever with this analysis but I would have to spend a week going thru JPM's public disclosures to ferret out some part of the golden truth. Rest assured that what is disclosed publicly and can be put together with some forensic accounting is still based on "massaged fraud." I would bet my last nickel that JPM is technically insolvent and that a very large percentage of its balance sheet is worth less than 50% on the dollar.
Here is the link to the latest 8-K if anyone wants to peruse it for themselves Fraud-K Since I don't get paid to do this work, I have to get back to doing what I do get paid for. Ciao.
Thank you for this learning moment on managed earnings. Again and again the bankster earnings accounting strategy becomes clearer and clearer... begin with the desired result and work your way backwards
I just increased my Q1 earning by %120. Yes, that is right.....I stop paying my credit cards and now have some extra cash.
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