I have always challenged Loan Loss Reserve accounting due to the fact that it enables a bank (and lots of other companies) to take revenues that have already been stated (and already moved the stock) out of Cash (showing a loss as needed for taxes, housecleaning, and so on) and then back to profits when they feel like it (to boost the stock price or conserve a quarter). Specifically for Businesses that have the ability to purchase back their own stock when the rate is depressed due to a loss they intentionally triggered and after that, when they want to offer more stock or take benefits– they merely re-recognize the incomes as needed. What a fraud!
What we have at JPM is a substantial “beat” as earnings were forecasted to be $3.10 per $154 share for the quarter and now its $4.50– practically 50% higher than predicted. Even if we assume the bank goes back to “normal” $8Bn quarters, were still looking at a $40Bn year and you can buy the whole bank for $473Bn– not bad. We already have Goldman Sachs (GS) in our Long-Term Portfolio (LTP) so were not going to add JPM and GS also knocked it out of the park. We were fretted about JPM since they have common banking (chase) and we didnt rely on those stimulus checks to create so much company however they did– generally because the Government wired the cash to your bank and didnt just send you a check to invest. We were far too conservative with GS when we made it a Top Trade Idea for our Members on October 14th:.
Bank incomes are good..
Well, Goldman Sachs (GS) and JP Morgan (JPM) are good, Wells Farge (WFC)– not a lot. And Im not exactly sure I d call JPM “good” as $5.2 Bn of the quarters $14.3 Bn in profit originated from the release of loan reserves that were reserved last year to cover awaited loan defaults. Because the Federal Government threw $6Tn at the economy ever since– it turns out they didnt require the $5.2 Bn to cover bad loans so now the money (which was always in the bank) is transferred to the earnings side of the journal.
