JP Morgan Share Discussion Threads

[moonblue] 15/10/2002 06:14

looks nice short b4 results

[magic] 14/10/2002 23:52

Not a happy bank ... I wonder if they will need to raise some capital at some time?

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A Potential Pothole on Rally Road

By Aaron L. Task
Senior Writer
10/11/2002 03:00 PM EDT

But he also cited the "extreme levels at which the global debt and equity securities and derivatives are currently trading," which have been and presumably continue to put stress on J.P. Morgan's proprietary trading and derivatives portfolios.

Prior to Thursday's advance, yields on investment-grade corporate bonds were at their widest spread to Treasuries in a decade, while the S&P Speculative Grade Index, which mirrors the trend in spreads between high-yield bonds and Treasuries, hit an all-time high of 1573.9 on Thursday. S&P's Investment Grade Credit Index also hit a record high on Thursday.

Corporate default rates are up markedly this year and Fitch Investors reported 40% of junk bonds issued from 1997 to 1999 are now in default. (RealMoneyPro.com's Brian Reynolds observed that corporate spreads were "narrowing significantly" Friday morning, which would be welcome news for the corporate bond market and J.P. Morgan in particular if it continues.)

In broad terms, Puplava expressed concern that because of its lowered credit ratings, J.P. Morgan is facing increased borrowing costs, as well as the potential diminishment of revenue from its derivatives business. The combination could put further pressure on the bank's profitability, causing further downgrades and more problems with its derivatives business, and so on and so on.

[biomax] 09/10/2002 22:37

42 bln debt whereas turnover is only 6 bln, hmmmm,
JPM itself is Enron in the making

[brave] 09/10/2002 21:38

the real crooks are the M&A crew who have systematically destroyed many good businesses, destroyed hundreds of thousands of jobs, in their never ending quest for a 'good deal' and the fees that go with them.

how many of these deals work? not many. how many produce greater shareholder value? not many.

the greatest outcome of a huge market crash would be the decimation of the financial sector.

yes, we need liquid and efficient capital markets.

no, we dont need parasites and leeches sucking out huge amounts of money.


i remember being on a graduate training program in NYK in 1991 and meeting some of my counterparts at JPM...all JPM wanted to be was a AAA rated entity...that was their whole goal.

look at them now.....who had the great idea to merge?

another story of ego, greed and pure hubris.

[m.t.glass] 09/10/2002 21:16

Moody's Investors Service said it has cut the long-term 'Aa3' rating of JP Morgan Chase & Co debt to 'A1' to reflect concerns about the outlook for the bank's earnings.

In a statement, Moody's cited "concerns regarding the medium-term outlook for JPM Chase's business performance, in the context of longer-term concerns about the prospects for the successful execution of JPM Chase's investment banking and capital markets strategies".

The bank's has lagged its similarly-rated peers through this cycle, said the agency.

Moody's is now concerned that the bank's recent problems could interfere with its effort to execute its capital market strategy, which has so far met with only partial success.

"The execution challenges are heightened by the downturn in the primary and secondary capital markets. The bank may need to cut costs and reduce investment further in order to maintain acceptable profitability in the short run," said the agency.

However, in JPM Chase's case, such cuts could eliminate revenue-generating capacity when markets eventually recover, it said.

JP Morgan Chase last month issued a severe profit warning for the third quarter which it attributed to spiralling commercial credit costs and a very poor trading quarter.

Moody's agreed that the bank's core profitability has been modest compared to its peers, partly because of low yields on some of its commercial loans.

Today's rating downgrade incorporates possible losses on Enron-related surety bonds and letters of credit. Its stable outlook assumes that the bank will defend itself against secondary exposures stemming from further probes of its relationship with Enron and WorldCom.

The bank's liquidity remains strong and risk weighted capital ratios are "good".

"Moody's assumes that management will remain committed to its policy of maintaining strong capital ratios as it determines future dividend policy," said the statement.

At 2.24 pm, JP Morgan shares were trading down 70 cents, or 4.3%, at $15.88.

[m.t.glass] 09/10/2002 21:14

Moody's Investors Service said it has cut the long-term 'Aa3' rating of JP Morgan Chase & Co debt to 'A1' to reflect concerns about the outlook for the bank's earnings.

In a statement, Moody's cited "concerns regarding the medium-term outlook for JPM Chase's business performance, in the context of longer-term concerns about the prospects for the successful execution of JPM Chase's investment banking and capital markets strategies".

The bank's has lagged its similarly-rated peers through this cycle, said the agency.

Moody's is now concerned that the bank's recent problems could interfere with its effort to execute its capital market strategy, which has so far met with only partial success.

"The execution challenges are heightened by the downturn in the primary and secondary capital markets. The bank may need to cut costs and reduce investment further in order to maintain acceptable profitability in the short run," said the agency.

However, in JPM Chase's case, such cuts could eliminate revenue-generating capacity when markets eventually recover, it said.

JP Morgan Chase last month issued a severe profit warning for the third quarter which it attributed to spiralling commercial credit costs and a very poor trading quarter.

Moody's agreed that the bank's core profitability has been modest compared to its peers, partly because of low yields on some of its commercial loans.

Today's rating downgrade incorporates possible losses on Enron-related surety bonds and letters of credit. Its stable outlook assumes that the bank will defend itself against secondary exposures stemming from further probes of its relationship with Enron and WorldCom.

The bank's liquidity remains strong and risk weighted capital ratios are "good".

"Moody's assumes that management will remain committed to its policy of maintaining strong capital ratios as it determines future dividend policy," said the statement.

At 2.24 pm, JP Morgan shares were trading down 70 cents, or 4.3%, at $15.88.

[m.t.glass] 08/10/2002 01:27

A bit more on the same story, magic:

AFX-Focus) 2002-10-08 01:08 GMT: JP Morgan to lay off up to 4,000 more staff - reports
HONG KONG (AFX-ASIA) - JP Morgan Chase & Co is preparing a fresh round of up to 4,000 layoffs in the coming weeks, people familiar with the matter told the Wall Street Journal.
The job cuts will affect highly paid bankers -- including managers -- in areas such as lending, underwriting and mergers and acquisitions, as well as staff in areas including marketing, communications and computer support, the sources said.

Each affected division will lose as much as 25 pct of its staff.

In Hong Kong, the South China Morning Post quoted sources as saying the programme will involve substantial cuts at the bank's Asian operations.

A spokeswoman for JP Morgan told the Journal the bank already signalled its intention to reduce staff last month, but she said the details have yet to be set.

[e-mail]

jms

[magic] 05/10/2002 10:51

Nice article from FT, I wonder how much a cut in div is already factored into the price?

----------------------
JP Morgan Chase to eliminate more bankers
By Gary Silverman in New York
Published: October 5 2002 0:35 | Last Updated: October 5 2002 0:35

JP Morgan Chase is moving to cut approximately 4,000 more jobs in its wholesale banking operations as it responds to rising credit losses and falling trading revenues.

The cuts were signalled earlier this month when JP Morgan warned that its third-quarter earnings would be lower than Wall Street analysts had predicted.

At that time, William Harrison, chairman and chief executive of JP Morgan, said the company would have to make further lay-offs, but he did not specify how many.

The earnings warning shocked investors already concerned about JP Morgan's involvement in the collapse of Enron and its susceptibility to the rising tide of problem corporate loans.

JP Morgan shares on Friday fell $1.08, or 6 per cent, to $16.54, bringing their fall for the year to 54 per cent.

JP Morgan's market value stood at less than $33bn, or roughly what Chase Manhattan paid for JP Morgan in late 2000 to create the current company.

The company said on September 17 that its credit losses would reach $1.4bn in the third quarter, up from $302m in the previous quarter, reflecting "adverse developments" at telecommunications and cable companies.

It also said its trading revenues had fallen sharply. Since then, several investment banks have reported earnings for the quarter ending in August and none seems to have experienced a decline on the JP Morgan scale.

The setbacks have stirred speculation about whether Mr Harrison will be able to hang on to his job and whether his strategic vision for the company has been correct.

He created a company that would be able to provide complex solutions - including elaborate financings - for big groups. However, his efforts have been hampered by increasing credit problems at blue-chip companies and growing doubts about structured finance following Enron's failure.

The job cuts will be concentrated in the bank's wholesale operations but there will also be cuts in asset management.

The corporate and investment banking operations of JP Morgan employed 22,000 people at the start of the year; that number has declined since then.

Some operations in the wholesale bank will be cut 20 to 25 per cent and the total number of lay-offs could wind up being even more than 4,000.

The company is scheduled to report earnings on October 16.

At the time of its earnings warning, JP Morgan said it expected to maintain the level of its dividend "provided that capital ratios remain strong and earnings prospects exceed the current dividend".

However, some analysts on Wall Street say they doubt JP Morgan will be able to maintain its dividend, particularly given the uncertain conditions in the capital markets.

[moonblue] 04/10/2002 00:13

thats cheep

[velvetide] 02/10/2002 20:24

nov $15 puts on offer at 70c - is this a good purchase?

[ahkeen] 29/9/2002 12:41

Moonblue,

21st October is a full moon too!

When will the panic selling start?

Andy.

[moonblue] 29/9/2002 10:05

"We thought that everyone was 'liberating' the equity in their homes to pay off their credit-card debt," Kasriel says. "Instead, they are liberating home equity, which is an insidious form of dis-saving, and putting more purchases on their credit cards."

[moonblue] 29/9/2002 06:58

The Dow Jones Industrial Average went from a low of 191 in early 1928 to a high of 300 in December,
1928 and peaked at 381 in September 1929. Due to the anticipation of continued increases in earnings and
dividends,Price/Earnings ratios rose from a conservative 10 or 12 to 20, and higher for the market's favorite
stocks. Many observers believed that stock market prices in the first six months of 1929 were overpriced,
while some perceived that stocks were cheap. On October 3, the Dow began to drop, declining throughout
the week of October 14.

The night of Mondy October 21,1929, margin calls were heavy, and numerous Dutch and German sell calls
came in overnight for the Tuesday morning opening. On Tuesday morning, out-of-town banks and
corporations called in $150 million of call loans, and Wall Street was in a panic before the New York Stock
Exchange opened.

On October 24, 1929, people began selling their stocks as fast as they could. Sell orders flooded market
exchanges. On a normal day, only 750-800 members of the New York Stock Exchange started the
Exchange. However, there were 1100 members on the floor for the morning opening. Furthermore, the
Exchange directed all employees to be on the floor since there were numerous margin calls and sell orders
placed overnight and extra telephone staff was arranged at the members' boxes around the floor.
The Dow Jones Industrial Index closed at 299 that day.

October 29 was the beginning of the Crash. Within the first few hours the stock market was open, prices
fell so far as to wipe out all the gains that had been made in the previous year. The Dow Jones Industrial
Index closed at 230. Since the stock market was viewed as the chief indicator of the American economy,
public confidence was shattered. Between October 29 and November 13 (when stock prices hit their
lowest point) over $30 billion disappeared from the American economy. It took nearly twenty-five years
for many stocks to recover.

[moonblue] 29/9/2002 06:54

The Dow Jones Industrial Average went from a low of 191 in early 1928 to a high of 300 in December,
1928 and peaked at 381 in September 1929. Due to the anticipation of continued increases in earnings and
dividends,Price/Earnings ratios rose from a conservative 10 or 12 to 20, and higher for the market's favorite
stocks. Many observers believed that stock market prices in the first six months of 1929 were overpriced,
while some perceived that stocks were cheap. On October 3, the Dow began to drop, declining throughout
the week of October 14.

The night of Mondy October 21,1929, margin calls were heavy, and numerous Dutch and German sell calls
came in overnight for the Tuesday morning opening. On Tuesday morning, out-of-town banks and
corporations called in $150 million of call loans, and Wall Street was in a panic before the New York Stock
Exchange opened.

On October 24, 1929, people began selling their stocks as fast as they could. Sell orders flooded market
exchanges. On a normal day, only 750-800 members of the New York Stock Exchange started the
Exchange. However, there were 1100 members on the floor for the morning opening. Furthermore, the
Exchange directed all employees to be on the floor since there were numerous margin calls and sell orders
placed overnight and extra telephone staff was arranged at the members' boxes around the floor.
The Dow Jones Industrial Index closed at 299 that day.

October 29 was the beginning of the Crash. Within the first few hours the stock market was open, prices
fell so far as to wipe out all the gains that had been made in the previous year. The Dow Jones Industrial
Index closed at 230. Since the stock market was viewed as the chief indicator of the American economy,
public confidence was shattered. Between October 29 and November 13 (when stock prices hit their
lowest point) over $30 billion disappeared from the American economy. It took nearly twenty-five years
for many stocks to recover.

[astonv8] 29/9/2002 02:57

ash

would you superimpose the swc chart upon the jp morgan chart

no slight intended

just curious how they compare

i'm very intereseted in buying swc

but the american market is interlinked with this

cheers

brendy

[ahkeen] 28/9/2002 23:25

moonblue

Scary, quite near the date of previous stock market crashes, ie around the end of October!

Maybe JPM could be the straw that breaks the market's back?

Andy.

[mr ashley james] 28/9/2002 21:57

Watch out people allegedly JPM figures out 17th October 2002!

[moonblue] 28/9/2002 21:17

17th oct results

[sinso] 17/9/2002 23:06

J.P. Morgan warns on 3Q

Investment bank says that third-quarter profit will come in below 2Q level.
September 17, 2002: 5:58 PM EDT



NEW YORK (CNN/Money) - Bad loans and sluggish trading took a bite out of third-quarter profits at J.P. Morgan Chase as the investment bank Tuesday became the latest high-profile company to say quarterly results will fall short.

J.P. Morgan warned that third-quarter profits will fall "well below" earnings in the second quarter, when profits were 58 cents a share. Analysts surveyed by First Call had been expecting the company to earn 54 cents a share in the third quarter, on average.

"I am very disappointed with our results and take full responsibility for them," CEO William B. Harrison, Jr, said during a conference call with analysts.

Still, the company stopped short of offering specific third-quarter earnings per share guidance.

Harrison said the loan losses, which are expected to increase by approximately $1 billion, were particularly troublesome because the company had taken steps to cut its exposure to troubled telecom companies.


"In hindsight, we had too much concentration in the telecom space," Harrison said.

The company did not mention WorldCom, Adelphia or Global Crossing, three telecom firms that went bankrupt this year.

Total trading revenues fell to $900,000 for the first two months of the quarter, compared with trading revenues of $1.1 billion in the second quarter. Investment securities gains of $300 partly offsetting the trading figures.

The company's shares fell 16 cents to $21.55 Tuesday ahead of the news, which was released after the market closed. They are down 40 percent this year.

J.P. Morgan is the latest Dow component to pre-announce shortfalls for the September quarter. Both McDonald's (MCD: Research, Estimates) and Honeywell (HON: Research, Estimates) have disappointed investors this month.

After the warning, a credit rating agency, Fitch, downgraded Morgan's $42.4 billion in debt..

Like other Wall Street firms, J.P. Morgan has suffered because of its associations with Enron. Several Morgan company officers were called before Congress last month because of their alleged role in helping Enron hide debt.

In the same press release used to lower its profit forecasts, the company declared a quarterly dividend of 34 cents per share payable on Oct. 31 to shareholders of record as of Oct. 5.