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 JPM - Double-speak, double-truth, double-books, double-GAAP View next topic
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bdc63
Schumpeter Reincarnate


Joined: 16 Feb 2007
Posts: 4392
Location: Maryland

JPM - Double-speak, double-truth, double-books, double-GAAP
PostPosted: Thu Oct 13, 2011 3:21 pm Reply with quoteBack to top

These guys are so smart! -- I bet if you put ground chuck in front of them they would figure out how to turn it into filet mignon.

When I grow up I wanna be a BANK!

Quote:
So what does JPM do? Why it pulls the "Fair Value Option" card, discussed recently in the context of Morgan Stanley when we speculated whether the bank's biggest asset was their debt. Turns out we had the concept right, but the bank wrong, because $0.29 of EPS Net Income, or $1.9 billion pretax, was a "benefit from debit valuation adjustment (“DVA”) gains in the Investment Bank, resulting from widening of the Firm’s credit spreads." That's right: the fact that JPM spreads blew out in the quarter, and its default risk soared, for one reason or another actually served to "generate" not only net income but also revenue! And now you see why American banks can never lose - in a good quarter, they release reserves; in a bad quarter they take FVO benefits in the form of Debit Valuation Adjustments, or in this case both! Winner, winner, always a chicken dinner for Jamie Dimon.


Quote:
So what happens when one excludes the ridiculous benefit from the DVA? From the earnings presentation:

Net income of $1.6B on revenue of $6.4B; DVA gains of $1.9B pretax ($1.2B after-tax)
Fixed Income Markets revenue of $3.3B; Revenue ex. DVA of $2.8B, down 34% QoQ
Equity Markets revenue of $1.4B; Revenue ex. DVA of $1.0B, down 9% QoQ
Credit Portfolio revenue of $578mm; DVA gains of $979mm

Said otherwise, JPM's Investment Banking earnings were negative on a rational human being basis, when the bank's overall credit deterioration is not used as a source of Earnings. This means the firm missed not only its EPS but its top line by about $1.9 billion!


"on a rational human being basis" -- LOL

JPMorgan Uses Surge In Its Default Risk As A $1.9 Billion "Source" Of Revenue And Net Income
http://www.zerohedge.com/news/.....me[/quote]

_________________
"Socialism only works in two places: Heaven where they don't need it and h*ll where they already have it." -- Ronald Reagan
"Everybody, sooner or later, sits down to a banquet of consequences." -- Robert Louis Stevenson
“Gold is money. Everything else is credit.” -J.P. Morgan, testifying to Congress in 1912
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MaggieYork
Dud?


Joined: 18 Nov 2011
Posts: 1

Re: JPM - Double-speak, double-truth, double-books, double-GAAP
PostPosted: Fri Nov 18, 2011 9:10 am Reply with quoteBack to top

Wow! JP Morgan is a genius. Recently, I read from here, New JPMorgan report predicts consumer spending will rise that JP Morgan gives forecast on economic aspect of America. JP Morgan Chase, one of the country's biggest lending institutions, predicts that the economic forecast in the United States might not be as dire as it seems. The firm, one of the nation's largest lenders, recently unveiled a report on consumer spending. The report says that, despite the housing crisis, increasing prices and high unemployment, United States businesses should have a plan ready for an increase in consumer spending. The report also indicates that business can drive the trend.
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achtung
Nitroglycerin


Joined: 03 Jun 2010
Posts: 716
Location: Germany

Re: JPM - Double-speak, double-truth, double-books, double-GAAP
PostPosted: Sat Nov 19, 2011 1:25 am Reply with quoteBack to top

MaggieYork wrote:
Wow! JP Morgan is a genius. Recently, I read from here, New JPMorgan report predicts consumer spending will rise that JP Morgan gives forecast on economic aspect of America. JP Morgan Chase, one of the country's biggest lending institutions, predicts that the economic forecast in the United States might not be as dire as it seems. The firm, one of the nation's largest lenders, recently unveiled a report on consumer spending. The report says that, despite the housing crisis, increasing prices and high unemployment, United States businesses should have a plan ready for an increase in consumer spending. The report also indicates that business can drive the trend.


I hope this post was sarcasm at its finest

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dreamer
Demolition Man


Joined: 09 Aug 2007
Posts: 2101
Location: Northern California

Re: JPM - Double-speak, double-truth, double-books, double-GAAP
PostPosted: Fri Dec 09, 2011 7:12 pm Reply with quoteBack to top

Quote:
"He who permits himself to tell a lie once, finds it much easier to do it a second and a third time, till at length it becomes habitual; he tells lies without attending to it, and truths without the world's believing him. This falsehood of the tongue leads to that of the heart, and in time depraves all its good disposition." --Thomas Jefferson (1785)

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