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JPMorgan (NYSE: JPM) Talks $11 Billion Settlement; Q3 Earnings at Risk

By Diane Alter, Contributing Writer, Money Morning - September 27, 2013

JP MorganChase & Co. (NYSE: JPM) finds itself in front of regulators yet again for misdeeds.

Chief Executive Officer (CEO) James Dimon was in Washington yesterday (Thursday) attempting to broker a settlement over the bank's sale of substandard mortgages.

Dimon met with U.S. Attorney General Eric Holder about a possible $11 billion settlement in attempts to end criminal and civil charges over JPM's questionable mortgage practices. The U.S. Justice Department said earlier in the week it could file a lawsuit over one of the bank's pending mortgage cases.

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Stock Market Today Boosted by Better-than-Expected Bank Earnings

By Diane Alter, Contributing Writer, Money Morning - July 12, 2013

U.S. equities marched higher - by a smidge - in the stock market today, one day after benchmarks logged fresh records.

The Dow Jones Industrial Average finished at 15,464.07, up 3.15 points, or 0.02%. The Standard & Poor's 500 Index ended at 1,680.19, up 5.17 points, and the Nasdaq closed at 3,600.08, up 21.78 points.

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The 5 Worst CEOs of 2012 and Why They Should Be Fired

By kdowdle, Money Morning - January 23, 2013

Among others, Mark Zuckerberg of Facebook Inc. (Nasdaq: FB), Brian Dunn of Best Buy Co. Inc. (NYSE: BBY) and Andrew Mason of Groupon Inc. (Nasdaq: GRPN) all had a rough year.

Money Morning's experts picked through the list of disappointing names and came up with the five worst CEOs of 2012.

Here are the finalists, along with our experts' reasons why these weak performers should be given the axe in 2013:

Ben Bernanke, Chairman of the U.S. Federal Reserve - Picked by Chief Investment Strategist Keith Fitz-Gerald:
Bernanke is the CEO of the biggest private institution on the planet, the Fed.
Despite overwhelming evidence that the theories and methods he is using have not worked, are not working and have never worked since the dawn of recorded history, he continues to plow ahead with more of the same failed monetary and fiscal policy that got us into this mess.
In the process, he risks unspeakable damage to the United States and to the global financial system while only kicking the proverbial can down the road.

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JPMorgan Chase (NYSE: JPM) Earnings: 34% Profit Gain Thanks to this Business

By Diane Alter, Contributing Writer, Money Morning - October 12, 2012

JPMorgan Chase (NYSE: JPM) reported third-quarter earnings today (Friday) of $1.40 a share, beating increased estimates of $1.21 a share.

JPM, the largest U.S. bank by assets, earned a record $5.7 billion in the quarter, 34% higher than the $4.3 billion or $1.02 reported for the same period a year ago. The strong revenue results also easily topped forecasts.

The impressive numbers were thanks to the bank's robust and growing mortgage and credit business. Mortgage volume was up 29%, and core loan growth grew 10%.

The notable uptick in both segments bodes well for the housing market and U.S. economy, suggesting the real estate market is staging a recovery and consumers are getting more comfortable spending.

"Importantly, we believe the housing market has turned the corner," CEO Jamie Dimon said in a statement.

As a result of improved mortgage and credit conditions, JPM reduced its reserves (cushion) for loan losses by $900 million.

"All in, we think it's a good quarter for JP Morgan Chase, and other banks should see some of the same benefits," Glenn Schoor, an analyst at Nomura Securities told the Financial Times.

Here's a closer look into the third quarter.

JPM Earnings: London Whale Trade Still a Big Deal

Still under scrutiny from the dicey derivative bets made in the bank's London Chief Investment Office, the bank's losses from the failed hedge strategy grew in the third quarter by $449 million.

Since the trade, dubbed the London Whale, was uncovered in the second quarter, losses have cost JPM some $6 billion. Under the worst case scenario, the bank said the losses could widen by $1.7 billion.

CEO Dimon said in a conference call that the bank doesn't anticipate further losses of that enormity and added that the bank has appreciatively reduced the scope of risks in the underlying portfolio.

Anxious to put the matter to rest and behind him, Dimon called renewed focus on the losses a "sideshow" in an otherwise stellar quarter.

"Hopefully we're not going to be talking about it anymore," he said in a statement.

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Stock Market Today: Banks Net Record Profits, But Stocks Slip

By kdowdle, Money Morning - October 12, 2012

The stock market today is trying to end what has been a negative week on a positive note.

Markets have traded down all week on global economic concerns and today are being held back by JPMorgan Chase & Co. (NYSE: JPM) and Wells Fargo & Co. (NYSE: WFC) even though the two financial giants posted record earnings.

Here's what's bringing those stocks down and why consumer sentiment is at a five-year high:

Banks slide amid record earnings- JPMorgan and Wells Fargo each reported record quarterly profits but neither stock is surging on the results. Wells reported third-quarter net income of $4.94 billion, or 88 cents per share, up from $4.06 billion, or 72 cents a year ago and JPMorgan announced third-quarter earnings of 5.71 billion, or $1.40 a share, up from $4.26 billion, or $1.02 a share a year earlier. The record results were spurred by homeowners taking advantage of lower interest rates in order to refinance their mortgages. "The one big positive is clearly mortgage origination revenues," Richard Staite, an analyst at Atlantic Equities LLP in London, told Bloomberg News in an interview before results were announced. "Rates will remain at this level or potentially drop further and ultimately that will drive a recovery in the housing market."

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JPMorgan (NYSE: JPM) Earnings Preview: Five Things to Watch

By Diane Alter, Contributing Writer, Money Morning - October 11, 2012

The JPMorgan Chase (NYSE: JPM) earnings report due tomorrow (Friday) gives CEO Jamie Dimon a chance to put the huge trading losses from the "London Whale" behind him.

The "London Whale" trades are the are hedged strategy that went bad and cost the bank nearly $6 billion. JPM took the majority of the hit in the second quarter.

JPM stock tumbled in the weeks that followed after details were uncovered and trading losses swelled. Since then, shares have staged a notable recovery rising from $34.59 on July 11 to the recent price of $42.25.

Now JPM earnings have a chance to shake off the scandal and impress investors.

Expectations have grown for Friday's numbers, with the consensus estimate raised from $1.16 per share to projections of $1.21 per share. Estimates have increased in the last three months from $1.04.

Analysts are predicting earnings of $4.74 per share for the fiscal year, with revenue for the year to come in at $97.76 billion.

The fresh forecasts are 18.6% better from the same quarter a year ago when JPM posted earnings of $1.02 per share.

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JP Morgan (NYSE: JPM) Earnings Pinched by Trading Blunder

By Diane Alter, Contributing Writer, Money Morning - July 13, 2012

Despite a $4.4 billion loss stemming from bad credit bets, JPMorgan Chase (NYSE: JPM) still posted a profit of $4.96 billion for the second quarter.

Total losses from the botched trades have reached $5.8 billion, according to Dough Braunstein, JP Morgan's CFO. And it's not over - CEO Jamie Dimon said in the earnings conference call Friday (today) that the fiasco could result in $700 million to $1.7 billion in further losses.

"We learned lessons that will make a stronger company," a contrite Dimon said.

And what expensive lessons they were. The company revealed that the loss on credit derivatives executed by traders in its London's chief investment office (CIO) swelled to $4.4 billion in the second quarter, up from the $2 billion loss it first reported in May when the trading gaffe was exposed.

Dimon nevertheless assured the analysts that JP Morgan has the crisis under control.

"We think we've boxed this," Dimon said.

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JPMorgan (NYSE: JPM) Earnings: What to Watch
By Diane Alter, Contributing Writer, Money Morning - July 12, 2012
It's fitting the JPMorgan (NYSE: JPM) earnings report will be delivered on Friday the 13th, since this has been a scary quarter for the bank and its stock.

Ever since JPMorgan, the largest U.S. bank by assets, revealed a trade gone bad in London that caused billions of dollars in losses, shares have waned and industry forecasters have grown more bearish on shares.

The consensus estimate heading into Friday's release has dropped over the last three months to 79 cents a share from 91 cents.

Those mean estimates would be a 36.2% drop in earnings from the same period a year ago, when JPMorgan turned in an impressive $1.27 a share amid a struggling U.S. economy. Revenue is predicted to stumble 20% year-over-year to $21.93 billion for the second quarter, coming in at $96.58 billion for the year.

Investors and regulators will be most interested Friday in the bank's update on the full extent of the trading losses incurred in what has now been dubbed the "London whale trade." The losses are predicted to be sustainably larger than previously reported, now somewhere in the range of $4 billion to $6 billion.

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JPMorgan (NYSE: JPM) Earnings and Five Others That Could Surprise You
By Larry D. Spears, Contributing Writer, Money Morning - July 10, 2012
Earnings season begins in earnest this week as financial giants JPMorgan Chase & Co. (NYSE: JPM) and Wells Fargo & Co. (NYSE: WFC) report for the April-to-June period.

A flood of reports from other corporations follows next week before gradually slowing to a trickle by the month's end.

How investors perceive those numbers could well kick off an up- or downtrend in share prices that will continue for weeks, or even months.

That is especially true if there is an "earnings surprise."

An "earnings surprise" occurs when the revenues and profits a company reports differ significantly from analyst expectations.

Positive surprises - earnings that beat the pre-report forecasts - tend to drive stock prices higher, while negative surprises send them lower.

The bigger the surprise, the more rapid and dramatic the move becomes.

Will JPMorgan (NYSE: JPM) Earnings Surprise?
One prime candidate for an earnings surprise in this cycle is JPMorgan Chase.

Usually considered one of the strongest companies in the financial sector, JPM would normally be expected to surpass the pre-report estimates. After all, the company has beat earnings in three of the past four quarters - including an 11% surprise in the January-March period, when earnings came in at $1.31 a share vs. a projected $1.18.

However, the company has been rocked by controversy following revelations that it suffered more than $4 billion in trading losses on what JPM called a "hedging strategy" but others described as an outright "bet" on interest rates.

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Inside JPMorgan's (NYSE:JPM) Magical Fun Palace
By Martin Hutchinson, Global Investing Specialist, Money Morning - June 1, 2012
The financial system wasn't fixed after 2008, and it won't be fixed anytime soon.

The unexpected $2 billion - or is it $5 billion? -- loss incurred by JPMorgan Chase (NYSE:JPM) "whale" trader Bruno Iksil shows only too clearly the flaws in Dodd-Frank and other regulatory activity.

Big banks are still taking risks they simply don't understand. Worse, there's no reason to believe the regulators understand them, either.

While the banks do employ "quant" mathematicians to analyze risk, the problem is the quants are also paid to help maximize the profits from the banks' trading desks.

Not only is this a bit of a conflict, but they are working off a market model that has failed repeatedly in the past.

It's a dangerous mix for investors and taxpayers alike.

The Failed Trade at JPMorgan (NYSE:JPM)
JPM's trade that failed had been to build up a major bullish position on corporate debt defaults -- in other words, betting there wouldn't be many of them.

In a sensible financial system JPM would do this simply by going out and lending lots of money to corporations, or by buying their bonds.

However, according to The Wall Street Journal, in the magical fun palace of today's trading room, JPM achieved this instead by buying an obscure credit derivatives index known as CDX.NA.IG.9.

The key is that this is a "mature" index. Conceived of 10 years ago, the index JPM bought only had 5 years of life remaining.

In other words, not only did JPM use this foolish roundabout as a way to take a position on credit, but it did so through an old index, which could be expected to be less liquid than a newer index that attracted the most trading volume.

Then sharks began to circle.

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JPMorgan (NYSE: JPM) Stock Price Falling as Losses Could Hit $7 Billion
By Diane Alter, Contributing Writer, Money Morning - May 21, 2012
Since the company announced May 10 that it lost billions on a bad trade, the JPMorgan (NYSE: JPM) stock price has dropped about 20%.

And it may have more to go.

CNN Money reported on Monday afternoon that the trading losses are closer to a range of $6 billion to $7 billion, citing several sources who work on trading desks that specialize in the derivatives JPMorgan Chase used to make its trades.

Investors at the Deutsche Bank Global Financial Services Investor Conference in New York drilled CEO Jamie Dimon with questions Monday about how the chief investment office (CIO) racked up the sizable losses.

The biggest U.S. bank by assets, JPMorgan is under pressure from investors and regulators alike to enlighten them on how the CIO, which is in charge of managing excess cash while minimizing risk, made dicey and costly bets on illiquid credit derivatives, some so big they misrepresented market prices.

The $350 billion portfolio managed by the CIO, Dimon reiterated, has a very short duration and an average credit rating of AA designed to "very conservatively handle" interest-rate risks. The heart of the losses, Dimon explained, was the synthetic credit derivative, and just "a part" of the broader portfolio.

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JPMorgan (NYSE: JPM) Losses Keep Unraveling
By Guest Editorial, Money Morning - May 18, 2012
JPMorgan Chase (NYSE: JPM) beleaguered CEO Jamie Dimon will not be happy when he reads through Friday's papers.

The Financial Times reported that more than a dozen senior traders and credit experts know that JPMorgan is in a lot more trouble than just suffering $2.3 billion - and counting - in losses.

Turns out the unit at JPMorgan that's responsible for the loss has been the biggest buyer of European mortgage-backed bonds and other complex debt securities in all markets for three years.

Now JPMorgan has built up positions totaling $100 billion in the same risky financial products that triggered the financial crisis in 2008.

But anyone who followed Money Morning's Shah Gilani as he covered the topic knew this was a likely hidden truth.

You see, Gilani told us last Sunday, just days after news of the losses broke, that there was more to these trades than one hedge-gone-wrong.

"The idiots at the bank wanted to hedge against European credit exposure that they had," Gilani wrote last to his Wall Street Insights and Indictments readers. "They are idiots because the money that's shepherded by the Chief Investment Office (some $379 billion, yeah, that number is right) is money that the bank has and hasn't lent out, or technically is "available" to play with. And instead of parking it in U.S. government bonds (Citi has $293 billion of the same float and has 87% of it parked in "governments"), they parked a lot of it in Europe's crappy credit markets."

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JPMorgan Chase (NYSE: JPM) Earnings: The Best of the Big Banks?
By Diane Alter, Contributing Writer, Money Morning - April 12, 2012
JPMorgan Chase & Co. (NYSE: JPM) delivered on expectations it would set the bar high for financial companies' earnings when it reported numbers today (Friday).

The nation's largest bank earned $1.31 a share in the first quarter of the year, compared with $1.28 a share in the same period a year earlier. Revenue rose 6% to $26.7 billion from $25.2 billion.

First-quarter net income slipped slightly from a year ago, dipping to $5.4 billion from $5.6 billion. The difference was attributed to stock buybacks, which reduced the number of outstanding shares by 4% compared to a year ago.

Analysts were looking for $1.16 a share for the quarter on revenue of $24.7 billion. The company was buoyed by improved capital market activity, in addition to a solid recovery in consumer credit and business lending.

In recent weeks, several firms raised their ratings on JPMorgan, and the stock has enjoyed a strong rally to date in 2012, rising from $33 in December to its current $44 share price.

One of the biggest advantages for JPM was a low interest-rate environment that encouraged homeowners to refinance, boosting JPMorgan's mortgage-related revenue.

"This is going to be a strong quarter for anyone who has a big mortgage lending or trading business," Paul Miller, an analyst at FBR Capital Markets, told Bloomberg News before results were released. "It might be the best quarter in a long time."

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Using Options to Make a Quick Profit on J.P. Morgan (NYSE:JPM) Earnings
By Larry D. Spears, Contributing Writer, Money Morning - April 10, 2012
It's earnings season again!

Among the most eagerly awaited results will be the financial earnings, many of which are still struggling to fully recover from the 2008-2009 financial collapse.

The projections released so far look pretty rosy.

First up is J.P. Morgan Chase & Co. (NYSE: JPM). The heavily watched investment bank reports this Friday the 13th.

According to Zacks Investment Research, J.P. Morgan will earn $1.14 a share versus just 90 cents in the final quarter of 2011.

Other financial earnings winners projected by Zacks include:

Citigroup Inc. (NYSE: C) expected to report earnings of 98 cents next Monday, up from 38 cents the prior quarter;
Goldman Sachs Group Inc. (NYSE: GS) projected to report $3.22 next Tuesday, up from $1.84 last time;
Morgan Stanley (NYSE: MS) expected to report 47 cents on Thursday, April 19, up from a loss of 14 cents in the last quarter.
Of course, life isn't totally golden for all the financials. A few are expected to release less-than-stellar results.

They include:

Wells Fargo & Company (NYSE: WFC) which also reports on Friday the 13th (is that a bad omen?), is expected to show flat results - 72 cents a share versus 73 cents last quarter;
Bank of America Corp. (NYSE: BAC) is projected to see a drop from 15 cents to 12 cents when it reports April 19.
The point is, the mixed projections reflect the fact there's still a lot of uncertainty surrounding the outlook for the financials.

Even those with good numbers this time could face storm clouds ahead.

The Financial Earnings Season Game Plan
For starters, J.P. Morgan, Citigroup, Wells Fargo and BofA, along with Ally Financial Inc., all face future hits thanks to the $25 billion settlement reached in February regarding foreclosures and malfeasance in handling mortgages left worthless by the housing crisis.

J.P. Morgan must also pay new federal penalties as a result of a settlement last week in the civil suit over actions it took that helped lead to the collapse of Lehman Brothers in 2008.

On the other hand, Wells Fargo, JPM, BAC and many others could get a significant boost from the new and improved version of the Home Affordable Refinance Program (HARP 2.0) adopted last month.

So, given all this, how can you hope to profit from any move in the financial stocks in the wake of their upcoming earnings releases?

Obviously, simply buying the stocks ahead of the reports is not the answer.

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NYSE: FB vs. Nasdaq: FB, And the Other Big Facebook IPO Questions
By Kerri Shannon, Associate Editor, Money Morning - February 1, 2012
Investors were on high alert today (Wednesday) for a Facebook IPO, which has rumored to reserve both NYSE: FB and Nasdaq: FB as possible ticker symbols.

A New York Post article reported the two listing companies were in "hot debate" for Facebook.

"Facebook won't significantly change the listing revenues for these companies but there could be a real halo effect wherein other companies decided to list with whichever wins Facebook," Larry Tabb, founder of capital markets advisory firm Tabb Group, told The Post.

Besides the ticker, the biggest questions on investors' minds include:

How much does Facebook want to raise? The latest rumors say the filing will set a preliminary goal of $5 billion, which can be raised if enough investor interest is shown.

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Article Index

JPM Earnings: London Whale Trade Still a Big Deal

Will JPMorgan (NYSE: JPM) Earnings Surprise?

The Failed Trade at JPMorgan (NYSE:JPM)

The Financial Earnings Season Game Plan

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