First Intel, Next Up is JPMorgan Chase

Frankly, the Intel (INTC) surprise wasn’t that hard to figure out. I think the next candidate for a big earnings surprise is JPMorgan Chase (JPM).
The case for the monster bank, however, is a bit harder than Intel’s. First is that JPM is indeed a monster bank — they have over $2 trillion in assets. Second is that the Street hasn’t been anywhere close to getting JPM’s earnings right over the past few quarters. These big banks can be a bit of a black box. We never know exactly what Dimon & Co have been doing until the numbers come out. I’m certain Greece hasn’t been pleasant but I just don’t know how much so.
The Street is expecting earnings of 71 cents a share for Q2 which is slightly less than what they made for the first quarter. If there are more clues of a double-dip, it will be found in the numbers for these large banks. The bank also faces some special taxes and charges. The good news is that fixed-income trading should do very well. There’s nothing quite like a steep yield curve to bail out a bond trader. Think of it as a government bailout under another name.
There’s also the case that JPM is the first of the big banks to report. If they hit it big, we can expect the other banks to do well. This may also have a broad impact if it causes the double dip thesis to fade.
What would be truly inspiring is if JPM announced a big-ass dividend increase. Back when the world was falling apart, the bank slashed its quarterly dividend from 38 cents a share to just five cents a share. Their balance sheet is plenty strong to bring it back to, say, 25 cents a share. But if they did, it would be major news that the banks are confident again.

Posted by on July 14th, 2010 at 11:56 am


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.