JP Morgan Tricks and Sleight of Hand. Need Proof in Dividend $JPM

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.

JP Morgan and Nitroglycerine are now Exactly the Same. $JPM $XLF

JP Morgan (NYSE:JPM) beat off the governance rebels and upheld the olde order. Jamie Dimon will get to keep his job as CEO and Chairman. After some heavy lobbying, arm twisting and God only knows what kind of IOU’s are now out there Jamie Dimon stays in.

I’m not sure the right side won but it is one share one vote which means the big institutions rule. OK so Jamie Dimon’s skills at infighting have triumphed for the present. Business and risk à la Jamie Dimon continue.

Here’s the rub. Financial Institutions are highly leveraged and accident prone at times. No one on JP Morgans Board has significant banking or derivatives/trading experience. They can listen to all the presentations and still not fathom the crux of the matter. They have to trust.

The Board has to trust that nothing will go wrong for a long time. (Long time is defined by how much longer Jamie Dimon wants to stay on) Things do go wrong at financial institutions. London whale debacles have happened to almost every institution in one way or another. The next time something big goes wrong the market will have another crisis of confidence. Everything will boil to the surface. Everything will get second guessed. Large institutional investors will loss heart and come back with a vengeance.

So investing in JP Morgan in addition to the normal risks one would expect from a large financial institution is now like walking with a large jar of nitroglycerine. One false step and it all blows. It blows if you trip. It blows if someone bumps into you. Investing is a blood sport and more than a bump can and will occur.

George Gutowski writes from a  caveat emptor perspective.