JP Morgan (NYSE:JPM) came up with a beat the street for latest quarterly earnings. When you think about it Jamie Dimon after all the controversy at the AGM about his role as Chairman and CEO could not come up with less than expected. But buddy you cheatin a bit. As a bank you warn us that loan growth is soft. Then we all hear that mortgage refi and the housing market is not as strong as we want it to be. Then you make the numbers by cutting back on your loan loss reserves. If you had not cut back on loan loss you would have had a big miss. The four-year trend looks like the slope of a double black diamond skill hill. Dangerous.
So the operations are not carrying themselves as well as they should. Investors are starting to get tired of the magic trick. We all know banks will lose money somewhere, somehow and for sure. So why cut back and manufacture pretty profits for today. The profits are like cut fresh flowers. They eventually wilt.
The real proof is in the dividend. In God we trust all others including Jamie Dimon pay cash. When they pop the dividend that’s when you start to believe. In the meantime from the folks that brought you the London Whale and then made earnings by dropping loan loss provisions it’s a real caveat emptor moment. No need to rush in.
George Gutowski writes from a caveat emptor perspective.