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JP Morgan's "Ooops" Chart... Or All Praise FAS 115

Tyler Durden's picture





 

We broke down JPM's conventional earnings picture earlier (which was not pretty in any way with NIM plunging, mortgage business slowing down, and trading revenues down from last year), however the real story is not in any of the traditional P&L items but in a little discussed line item released in the earnings supplement called Accumulated Other Comprehensive Income (AOCI), which is the last remaining vestige of Mark to Market.

As we reported two weeks ago, it is here that the recent surge in yields would flow through, impacted by JPM's duration-exposure, and while it may not be hitting Net Income courtesy of a very pliable accounting board which several years ago came up with FAS 115 allowing the classification of securities as Trading, Available for Sale (the relevant category in this case) and Held-To-Maturity, it does impact net equity. Sure enough, as we showed a few days ago in "Taper Fears Lead To Biggest Monthly Loss In Bank Securities Portfolios Since Lehman", JPM just reported the biggest hit to its AOCI line since Lehman, which plunged from $3.5 billion to a miserable $0.4 billion. All we can say is hurray that Mark to Market is dead. Or rather, all Jamie Dimon can say...

Putting this number in context, JPM's entire Q1 Net Income was 6.5 billion. If accounting still worked as it should, half of it would have just been wiped away.

 


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Fri, 07/12/2013 - 08:21 | Link to Comment doomandbloom
doomandbloom's picture

"miserable" 0.4 billion.. hehe

Fri, 07/12/2013 - 08:40 | Link to Comment ihedgemyhedges
ihedgemyhedges's picture

Yeah, but I bet ya they kicked ass in their short silver marks......

Fri, 07/12/2013 - 08:23 | Link to Comment Cdad
Cdad's picture

I'm sure the folks over at The BlowHorn [CNBC] are busily doing their due diligence, and shall be reporting this factoid shortly....'cause the stock is rising on another "great earnings report" from JPM, and The BlowHorn is all about the truth.

 

Fri, 07/12/2013 - 08:33 | Link to Comment sudzee
sudzee's picture

Yes, yes, yes. Blowhorn says JPM slays the "whale" as profits beat. The cup is either half full or overflowing.

Fri, 07/12/2013 - 09:30 | Link to Comment CCanuck
CCanuck's picture

JP's Cup is a lot like the "two girls' cup" overflowing is right.

 

Fri, 07/12/2013 - 08:49 | Link to Comment NeedleDickTheBu...
NeedleDickTheBugFucker's picture

The clowns at CNBS couldn't find AOCI on the financial statements if you gave them a FASB compass.  Anyway, it's irrelevant in their minds because it's an earnings report, not a balance sheet report.

Fri, 07/12/2013 - 08:27 | Link to Comment Cursive
Cursive's picture

You can't say that about Jamie's Fortress Balance Sheet.

Fri, 07/12/2013 - 08:29 | Link to Comment 101 years and c...
101 years and counting's picture

economic "growth" is a period to stockpile your Balance Sheet with garbage.  Recessions are a period where you cleanse all the crap.  ie, all the "1 time charges" that truly destroy earnings.  Its very easy to get record earnings when GAAP/FAS no longer matters.

Fri, 07/12/2013 - 08:29 | Link to Comment colin
colin's picture

that is 20million oz of silver. an afternoon trade that is

Fri, 07/12/2013 - 08:31 | Link to Comment PaperBear
PaperBear's picture

Couldn’t have happened to a more evil corporation.

Fri, 07/12/2013 - 08:34 | Link to Comment Its Only Rock N Roll
Its Only Rock N Roll's picture

When it becomes serious, you have to lie

Fri, 07/12/2013 - 08:37 | Link to Comment Rainman
Rainman's picture

What I find to be super disgusting is that ratings agencies and the Big 4 accounting firms aid and abet the ongoing blatant fraud spewed forth from corporate balance sheets. " Earnings " are a hide and seek  joke ....but the algos only care about the mumblings of Chairsatan. It's one fukked up system.

Fri, 07/12/2013 - 08:56 | Link to Comment ATM
ATM's picture

Ratings agencies are there to protect the system, not to expose the corruption.

Fri, 07/12/2013 - 08:39 | Link to Comment I am Jobe
I am Jobe's picture

More MBA's needed to keep the scheme going.

Fuck MBA degree holders

JPM bend over

Fri, 07/12/2013 - 09:06 | Link to Comment salimmk
salimmk's picture

MBA's are the worst type of people, so arrogant and ignorant

Fri, 07/12/2013 - 10:12 | Link to Comment HalinCA
HalinCA's picture

In 1981 at Harvard a few of us tried to get the curriculum amended to include classes on ethics.  Didn't go over too well, but they did start including discussions of the moral effect of business decisions in the case work.  Problem is by the time someone gets to a place like Harvard or Stanford, their personal code of honor is cast in stone.  Few graduates wanted to go into manufacturing.  Everyone wanted the big buck of Bain or Goldman Sachs.

A few of the older professors knew what was coming.  A whole generation of business and finance executives had been slammed by the effects of the oil crisis of '73 and were still floundering for a way to increase returns to keep the value of their stock high enough to keep their jobs.  Places like Harvard and people like Porter gave executives tools, but the nation never reached a consensus on how to compete globally and keep American manufacturing jobs.  When they left, the American dream went with them: blue collar families could not raise their children to the white collar world through hard work and education.

And here we are today, totally f--ked by financial wizards who don't act like they have any allegiance at all to the culture that created the nation.

Society has to reject the venal pursuit of puerile gratification before this will turn around.  

An EMP blast over Hollywood would be a great way to start.

 

Fri, 07/12/2013 - 08:39 | Link to Comment bugs_
bugs_'s picture

nothing to worry about - we've all got JPM's back.

Fri, 07/12/2013 - 08:49 | Link to Comment buzzsaw99
buzzsaw99's picture

JPM is taking Klarman's advice to "...consume principal for awhile." I think JPM is drinking the fed's own "things will get better" kool-aid. Either that or they are just psychos looting the company which is the much simpler explanation.

Fri, 07/12/2013 - 09:01 | Link to Comment ATM
ATM's picture

They can get free principal from the Fed whenever they wish. So where's the problem?

Oh yeah, that free principal will also end up being worthless principal.

Fri, 07/12/2013 - 09:25 | Link to Comment buzzsaw99
buzzsaw99's picture

I predict that the gubbermint will sell the mortgage agencies to jpm for a pittance. That will help with earnings. And yes, they will probably borrow the money interest free from the fed or the gubbermint on a 30 year money back if we don't make a killing contract.

Fri, 07/12/2013 - 08:48 | Link to Comment Mr. Hudson
Mr. Hudson's picture

ZH is all about doom and gloom. That is alright by me because our future is "doom and gloom". But, let's say we send someone from ZH to Congress who can't be bought and sold? Someone who is on our side? You know they would be murdered. Even their family members are at risk. This person would have to be looney. Real looney. But, real honest. We need an honest person in Congress.

Are you that person? Are you a "loon"? Are you willing to die for a cause that cannot be won? Adam Kokesh is an idiot. While I agree with assumptions, the way he is going about it is retarted. Real dumb. What good is he going to serve the public when he is doing 10 years in prison?

Fri, 07/12/2013 - 09:01 | Link to Comment ATM
ATM's picture

TPTB don't care if a person like you describe gets elected to congress. They will simply destroy that person through name calling, planting stories, NSA background mining and impose a muzzle on them by so no media covers anything they ever do or say.

It's called character assasination and they are experts at it.

Fri, 07/12/2013 - 09:25 | Link to Comment CCanuck
CCanuck's picture

Ask Ron Paul, he can tell you what being honest gets you.

Fri, 07/12/2013 - 08:56 | Link to Comment NEOSERF
NEOSERF's picture

Is this the Manhattan gold vault number?

Fri, 07/12/2013 - 09:02 | Link to Comment Lmo Mutton
Lmo Mutton's picture

They don't need EPS, they have a printer.

Maybe they spent 6.5 on ink?

Fri, 07/12/2013 - 10:13 | Link to Comment NoTTD
NoTTD's picture

Good thing none of this matters.

 

Bullish!

Fri, 07/12/2013 - 10:23 | Link to Comment Elio Costa
Elio Costa's picture

Let's wait to see September

We need a new metric now, the NIACAOCI

Net Income After Change in Accumulated Other Comprehensive Income

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