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JP Morgan Key Results And Outlook
JP Morgan earlier reported better than expected earnings on weaker than expected results. While the 9 am conference call will provide additional data, here are the key data points from the provided slide deck.
- Tier 1 Capital ratio increases by 0.9% sequentially to 11.1%; $133 billion Tier 1 capital on $1.2 trillion in risk-weighted assets (a decline of $40 billion from prior quarter, while total assets declined by only $10 billion).
- Total firmwide credit reserves of $32.5 billion, loan loss at 5.51%
- JPM estimates impact of FAS 166/167 on Tier 1 of 40 bps.
- More aggressive loan reserving compared to peers
- Loan-loss reserves/NPLs drops to 180%
- Outlook is cautious: "If economy weakens further, additional reserving actions may be required"
- Chase losses could approach 11% by 1Q10 including the adverse timing effect of payment holiday of approximately 60bps
- WaMu losses could approach 24% +/- over the next several quarters
- Anticipate net income reduction from legislative changes of $500-$750mm; CDS clearinghouse transition seems like should cost JPM more.
- Credit environment remains uncertain: Signs of stability ≠ improvement
JPM earnings webcast begins at 9 am.
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So they posted a 23% eps beat, 3.3B in earnings, and added 1B in the Q to loan-loss reserves, which stand at 32.5B.
How do they not just continue to beat eps every Q from here? I banking is picking up and JPM is in the best position in that space (no Goldman stigma, no Citi competition).
What happens when credit losses slow dramatically (cycle) and they have $40B in loan-loss reserves that they dont need?
To stop "increasing" reserves alone would've added another +25% to the Q earnings.
Also, eps for 2009 yr were roughly +100% vs 2008 yr.
$2 Trillion balance sheet
What happens when credit losses slow dramatically (cycle) and they have $40B in loan-loss reserves that they dont need?
There once were three bears.
FASB 157 bear....too hot.
FASB 166/167 bear.... too cool (for now thanks to FDIC)
Bank short bears... just right.
I do agree that jpm is one of the best if not the best of the tbtf crew, notwithstanding the mass derivative destruction potential.
The real reason that Uncle Stupid is mad at the banks right now and is making scary threats (ha ha say the banks):
To help stabilize the economy, the Fed decided to secretly pump the markets using printed money. Their intentions were many. One was to lend the appearance of stability and shore up the wealth effect, lowering potential transfer payments and potentially raising tax revenues from capital gains.
For the banks, this was intended to be a gift of trading capital. They were to use HFT and a blind SEC to pump the markets and make a profit that was to be substantially earmarked for capital. Ben the Bubble was planning to say “We didn’t have to make no stinking zomby banks … we allowed free enterprise to recapitalize the banks without government intervention. I saved the world, thanks to my scholarly understanding of stuff.”
Well, ha ha on Ben the Bubble, say the Banks. Thanks for the free money. It makes a great bonus for our masterful ability to steal whatever we want but, amazingly, nothing we do is illegal. Let’s do it again. This time we promise to use the profits for capital instead of 2010 bonus money. Really.
Now Uncle Stupid, in the form of Obama, is getting serious. He is threatening to consider asking Congress to talk about raising taxes on these guys. I bet they’re just pissing in their pants right now (from laughing).
The Banks whooped Uncle Stupid at his own game (not hard) and now Uncle Stupid is mad about looking stupid. This is why Obama is yelping like a pissy pants at the monster he and Ben the Bubble created and fed.
and here I thought it was all just a show for the proletariat - you know, let them know that the government is aware of the bonuses the banks are paying, with all that money donated to them by the taxpayers, and by golly, they're not just going to stand by and let that happen, not without giving those bankers a serious talking to.
And they made most of their 4Q09 from debt underwriting? I guess the REIT and dividend recap business is booming.
U.S. REITs Poised to Boost Dividends After Raising $33 Billion:
http://www.bloomberg.com/apps/news?pid=20601087&sid=awIzwGdigOUQ&pos=6
POooooNZI
What about the concentrated short position in the Comex Silver market against which there is no collateral? 97% of the o/i is JPM. WTF...
tax was 600 mln vs 1.6B Last quarter... entire source of "beat". TL miss and low quality EPS = stock down
(almost) free money and trillions in unrecognized derivative losses. Yea we "made" 3b alright.....thanks taxpayers....suckers.
MS
WE THE PEOPLE (Have Had Enough)
Wall Street may effectively own Washington DC and the politicians but they do not own us.
WE THE PEOPLE ARE UNDER NO OBLIGATION TO ACCEPT THIS.
WE HAVE RIGHTS.
WE THE PEOPLE have the freedom to associate - or not.
WE THE PEOPLE have the right to demand legal tender in payment of debts owed us.
WE THE PEOPLE have the right to demand that these institutions eat their own cooking on each and every one of the loans they securitized and peddled during these years without fair and full disclosure to the buyers that these loans were rife with fraud.
WE THE PEOPLE have the right - and the ability - to take personal, lawful action with specific, lawful political and business-oriented goals, including permanent structural changes that will end "too big to fail" and "rip off the consumer on demand" policies, including the full reinstatement of Glass-Steagall which will END financial speculation and dealing in all of its forms by firms that have access to Federal Reserve credit and/or any sort of public backstop.
Make this message - this post - viral. Send it to your associates. Send it to the media. Send it to politicians. Get involved and do it now.
http://tinyurl.com/yacqusb
But the new season of American Idol is just starting, and football playoffs are underway, and besides, taking my money out of the TBTF banks and moving it to a local bank would be a real hassle. Seems like an awful lot of work, just to try and preserve some semblance of freedom and democracy.
They are still losing money in residential mortgage lending? That business never makes money.
UPDATES:
http://www.zerohedge.com/forum/market-outlook-0
In early 2007 I warned of an impending stockmarket crash.
I confirmed a bottom by April 2009.
In mid 2009 I warned of an impending USD rally.
The uptrend since March 2009 has been a bear market rally contained within a much larger bear cycle that started in 2000.