net interest margin
Earlier today, Jefferies which is now a part of Leucadia, provided this much anticipated glimpse into how the rest of Wall Street is doing. The answer, if Jefferies is any indication, is "quote horribly" because just like two of the past four quarters, Q3 was also a disaster and indicative of nothing short of a trading bloodbath on Wall Street in the past three months of trading and especially August. In fact, it was so bad for Jefferies, it reported a massive 31% plunge in total revenues down to $579 million resulting in net income of a tiny $2.5 million as a result of what may be only its first negative fixed income revenue print since the financial crisis.
As the chart below shows, from oil to bunds, to US HG and Convertible debt, to USTs and even to Developed Market stocks, turnovers are virtually non-existant, while the only place where there has been a transitory surge in turnover has something to do with Chinese stocks, where volume however has been quite muted in recent months ever since the bubble died.
Unlike previous quarters when JPM's earnings release was a jumble of legal addbacks, MBS charge offs and loan-loss reserve releases, this time it was positively tame by comparison.
Bank of America Revenue Drops, Misses Due To Declining Trading Revenues, Loan Creation And Net Interest MarginSubmitted by Tyler Durden on 04/15/2015 08:02 -0400
One look at BofA's earnings report shows why contrary to popular opinion, the bank that bailed out insolvent Merrill Lynch is far better off to be pnealized with tens of billions in legal fees than running its business unbothered by the racketeering government. The reason: a year after BofA reported $6 billion in litigation charges, moments ago Bank of America announced only $0.4 billion in legal fees, which meant it barely had any credible addbacks. So when looking at its numbers on a realistic, GAAP basis, BofA once again missed EPS, with the bottom line printing at $0.27, or below the $0.29 estimate.
Stocks Gyrate Wildly Following Two Consecutive Stop Hunts, Close With A Whimper Despite More Fed DovishnessSubmitted by Tyler Durden on 04/08/2015 16:08 -0400
If there is one word to describe today's market, as well as the market of the past week, past month, and perhaps all of 2015, it is "stop hunts." Well, technically it's two words.
Following disappointing results from JPM and Wells Fargo yesterday, it was Bank of America's turn to "surprise" investors with its disclosure just how bad its quarter was. And with the bank reporting a 50% collapse in its sales and trading from Q3, down $600 million from a year ago to just $1.7 billion in Q4, it should come as no surprise that the bank just reported Net Income, before the usual spate of amusing addbacks, of $0.25 well below the $0.31 expected. And while one may argue whether ot not BofA's EPS deserve non-GAAP adbacks, it was the Revenue of $18.96 billion, which missed expectations of $21.03 billion by over $2 billion (!) and down $2.7 billion from a year ago, that was truly a showstropper and shows that without the Fed's visible hand manipulating markets every day, banks are a ticking time bomb just waiting to blow.
Earlier today, during the JPM conference call, when Jamie Dimon wasn't busy explaining why the Q4 earnings presentation was sorely missing the page showing JPM's latest Net Interest Margin, a staple placeholder page in the presentation appendix, he found time to lament something totally different. As Bloomberg reports, Dimon lashed out at U.S. regulators for putting his bank "under assault." We don't know how American, or how fair, or how complex, but we know why. The reason: JPMorgan and the rest of the world's banks have now become the world's biggest organized crime syndicate. The evidence? $178 billion in government kickbacks to keep their criminal scheme going for the past 5 years: something which none other than the BCG called a "cost of doing business" - criminal business that is.
Looks like the Jefferies earnings harbinger were right, because with another quarter down, and here is another painful report by JPM, which just launched the Q4 earnings season for financials with a miss on both the top and bottom line, reporting $1.19 in EPS, well below the $1.32 consensus, and just barely above the lower estimate of $1.16. This was a decline from both the previous quarter (by 17 cents) and from a year ago (by 11 cents). Revenues missed as well, with JPM reporting $23.552 billion in top line, a decline of $560 million from a year ago ($1.6 billion lower than Q3), and below the $24.0 billion consensus. And while JPM's latest recurring, non-one time "one-time, non-recurring" charge came as a surprise to most (although how over $30 billion in legal charges can be considered one-time is beyond us), at the same time JPM once again resorted to the oldest trick in the book, taking the benefit of some $704 million in loan loss reserve releases, nearly offsetting the entire negative impact of the legal charge.
Remember when banks said to ignore "one-time, non-recurring" legal fees because they are going away? Well, JPM yesterday showed they aren't. But it was Bank of America today which was slammed with the latest whopping $5.3 billion pretax litigation charge, which pushed its EPS once again into the red. But wait, there's great news: the loss of $0.01 is really a $0.42 non-GAAP adjusted profit if one "adds back" the $0.43 in litigation charges.
We have shown this chart before. We will show it again because, to nobody's surprise, nothing has changed.
Moments ago, the Goldmanite in charge of the European Central Bank delivered yet another speech, this time seeking to offset some of the hawkish comments over the weekend from his comrades, all of which suggested that no more easing, or public QE, was coming any time soon. It was, as usual, full of the same lies that have pushed European stocks to highs not seen since Lehman even as Europe's economy is now slumping into a triple-dip recession. Here is a choice selection of his comments, properly annotated.
Bank of America's $10 Billion In 2014 Legal Charges Mask Ugly Trends, Net Interest Margin Drops To Lowest On RecordSubmitted by Tyler Durden on 07/16/2014 08:00 -0400
Another quarter down, another desperate attempt by Bank of America to mask a serious underlying business deterioration using bells, whistles, and gimmicks.
Steep curve, lots of Net Interest Margin, buy banks, inflation's coming, rates have to rise... no! The US Treasury curve (specifically the spread between the 5Y yield and 30Y yield) has tumbled to its lowest since February 2009 as the long-end dramatically outperforms the Fed-pressured front-end amid concerns that the next cycle will be anything but exuberant and the new normal rates will be notably lower than consensus believes. On a side note, 5 years ago, US bond markets implied a 10Y yield now of 4.6% - almost double what it is; it seems the future (now) is not as rosy as everyone expected then...
The boom is unsustainable. Investment and consumption are higher than they would have been in the absence of monetary intervention. As asset bubbles inflate, yields increase, but so do inflation expectations. To dampen inflation expectations, the Fed withdraws stimulus. As soon as asset prices start to fall, yields on heavily leveraged assets are negative. As asset prices decline, increasingly more investors are underwater. Loan defaults rise as mortgage payments adjust up with rising interest rates. When asset bubbles pop, the boom becomes the bust.