Saturday, December 3, 2022
HomeStockReport-Excessive Wednesday – Dow 33,600, S&P 4,140, Nasdaq 14,000

Report-Excessive Wednesday – Dow 33,600, S&P 4,140, Nasdaq 14,000


Financial institution earnings are good.  

Nicely, Goldman Sachs (GS) and JP Morgan (JPM) are good, Wells Farge (WFC) – not a lot.  And I am undecided I might name JPM “good” as $5.2Bn of the quarter’s $14.3Bn in revenue got here from the discharge of mortgage reserves that have been put aside final 12 months to cowl anticipated mortgage defaults.  Because the Federal Authorities threw $6Tn on the economic system since then – it seems they did not want the $5.2Bn to cowl dangerous loans so now the cash (which was all the time within the financial institution) is moved to the revenue facet of the ledger.

I’ve all the time objected to Mortgage Loss Reserve accounting as a result of it permits a financial institution (and plenty of different corporations) to take earnings which have already been declared (and already moved the inventory) out of Money (displaying a loss on demand for taxes, housecleaning, and many others.) after which again to earnings after they really feel prefer it (to spice up the inventory value or save 1 / 4).  Particularly for Companies which can be capable of purchase again their very own inventory when the worth is depressed resulting from a loss they purposely triggered after which, after they wish to promote extra inventory or take bonuses – they merely re-recognize the earnings on demand.  What a rip-off!

So what we now have at JPM is a big “beat” as earnings have been projected to be $3.10 per $154 share for the quarter and now it is $4.50 – nearly 50% increased than projected.   Even when we assume the financial institution goes again to “regular” $8Bn quarters, we’re nonetheless a $40Bn 12 months and you should buy the entire financial institution for $473Bn – not dangerous.  We have already got Goldman Sachs (GS) in our Lengthy-Time period Portfolio (LTP) so we’re not going so as to add JPM and GS additionally knocked it out of the park.  We have been frightened about JPM as a result of they’ve peculiar banking (chase) and we did not depend on these stimulus checks to generate a lot enterprise however they did – primarily as a result of the Authorities wired the cash to your financial institution and did not simply ship you a examine to spend.  We have been far too conservative with GS once we made it a High Commerce Concept for our Members on October 14th:


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