Chillin' out till it needs to be funded
J P Morgan comes out with results for Q3 later in the day , the street expecting a $1 EPS ( analysts: $0.96) from one of the few expected to stay a behemoth and also probably the ‘strawman’ for Project new BAC to emulate. It is expected to suffer less from rationalisation and cost cutting even as the Mortgages business struggles to discover and add new business while Wealth spreads the gospel to the retail and investment banks to get more bang for the buck and shore up margins.
With revenues of $25 billion and no racy headlines from the bank despite continuing pressure from State Attorney Generals and others at the SEC, J P Morgan has beaten the trading specialists at long last. Bank results season will continue to be quite popular on the web and in investment markets as banks struggle with bigger Capital questions and JPM leads in establishing the new era slowly and steadily, Jes Staley’s team marginalising Europeans like DB and HSBC, American trading banks and deal specialists at niche banks and at the ‘mortgaged’ balance sheets of Citi, BofA and the untainted Wells Fargo which is still struggling to establish a global investment bank.
However, Fee Advisory is not growing by leaps and bounds, deposits and mortgages remain a challenge and the G7 is doomed to a period of slower growth.
Also a large amount of the profits may yet come from $1.6 bln in loss reserves, a large portion of the buybacks unused because it was an ugly ride for the markets and though JP Morgan may not have significant European/GIPSI exposures stuck with it, buyback investments this quarter would have only given it pricing power in the number of shares to be bought as bank sentiment refuses to return to an even keel to resume as an engine of growth for the economy