JP Morgan Fudges the Numbers

JP Morgan

JP Morgan

JP Morgan has done its usual good job of posting quarterly results beating both top and bottom line expectations. However, it would have sorely missed if it had not engaged in some accounting trickery (legal but morally reprehensible). This time around, net income was enhanced by nearly $2 billion thanks to a gain in what is known as “Debit Value Adjustment”, or DVA from widening credit spreads as the markets went haywire last quarter. Without this adjustment JP Morgue would have missed estimates by 19-cents a share. Perhaps Wall Street is tired of the tricks? The stock is a scosh lower in pre market trading. I can’t wait to see what BofA will pull out of the hat in an effort to pretend things aren’t as bad for them as they truly are. Goldman Sachs will be another interesting train wreck to pick through. This JP Morgan report is a mirror directly into the tattered and torn investment banking business model of the banking cartel.

If Occupy Wall Street had any clue, they would be protesting in Englewood Cliffs, NJ, the home of CNBC. This headline from its web site shows that CNBC is not an agent for its readers, but a shill for its advertisers: “JP Morgan Quarterly Profit Falls, But Beats Forecasts”. Not that I want to be so harsh, but that headline masks the special accounting changes that went into the supposed JP Morgan earnings “beat”. The story itself, only briefly delves into the accounting change and features a high up quote of JP Morgan CEO Jamie Dimon proclaiming in a news release, “All things considered, we believe the firm’s returns were reasonable given the current environment.” Gee, thanks, Jamie for giving yourself an A grade. And thanks CNBC for being the wonderful Wall Street propagandist entity that you a are! Lol.

Google reports earnings after the bell today. This may not mean anything, but an interesting tweet on the Stocktwits stream: RT @OptionRadar $GOOG – Larry Page, CEO, Selling Google Shares Days Before Earnings: http://stks.co/bQo. For these “insiders” such selling is customary, but the timing of this seems a little odd. On a separate note, rumors that Akamai could be a Google takeover target are being dispelled by an article in BloombergBusinessweek.

December gold was rejected yesterday at the $1690 level. It’s now trading in the $1670 area. I can’t understate how important the dollar’s movement will be to the near term sentiment surrounding gold and other metals. Until gold gold decouples from the dollar and does it’s own thing (and that’s a tough proposition since gold is priced in dollars), it and its other counterpart metals will be woodshedded on further dollar strength. The market is conditioned to react this way. Dollar rally stall out and/or fade is the best scenario for gold under the present dis-order of things in the financial markets.

What are the analysts saying this morning?

UPGRADES:
* Broadcom (BRCM) to outperform: Robert Baird
* Dick’s Sporting Goods (DKS) to buy: ThinkEquity
* Infineon (IFX) to add: WestLB
* Louisiana-Pacific (LPX) to outperform: RBC Capital
* Nokia (NOK) to buy: Nordea Bank
* Onyx Pharmaceuticals (ONXX) to outperform: BMO Capital
* Rackspace (RAX) to buy: Goldman Sachs
* Williams-Sonoma (WSM) to buy: BB&T Capital

DOWNGRADES:
* ASML Holding (ASML) to hold: UniCredit
* Affiliated Managers (AMG) to underperform: Macquarie
* Alliance Data Systems (ADS) to neutral: SunTrust Robinson
* Altera (ALTR) to neutral: Robert Baird
* Goodrich (GR) to sector perform: RBC Capital
* Hatteras Financial (HTS) to neutral: Macquarie
* Healthcare Services Group (HCSG) to hold: Duncan Williams
* Infosys (INFY) to hold: KR Choksey
* Kroger (KR) to hold: Jefferies
* Legg Mason (LM) to neutral: Macquarie
* Pzena Investment (PZN) to underperform: Macquarie

INITIATIONS:
* Armstrong World (AWI) new overweight: Barclays
* America Movil (AMX) new overweight: Barclays
* Cytokinetics (CYTK) new outperform: Rodman & Renshaw
* D.R. Horton (DHI) new equal-weight: Barclays
* Dangdang (DANG) new neutral: Roth Capital
* Freeport-McMoran (FCX) new buy: BB&T Capital
* First Busey (BUSE) new neutral: Macquarie
* Guess? (GES) new neutral: BofA Merrill
* Interface (IFSIA) new overweight: Barclays
* KB Home (KBH) new equal-weight: Barclays
* Lennar (LEN) new overweight: Barclays
* Meritage (MTH) new equal-weight: Barclays
* Mohawk Industries (MHK) new equal-weight: Barclays
* NII Holdings (NIHD) new overweight: Barclays
* Owens Corning (OC) new overweight: Barclays
* Pulte (PHM) new overweight: Barclays
* Stanley Black & Decker (SWK) new overweight: Barclays
* Tesoro Logistics (TLLP) new buy: Wunderlich Securities
* Toll (TOL) new overweight: Barclays
* Volcano Corp. (VOLC) new neutral: Goldman Sachs
* York Water (YORW) new neutral: Boenning & Scattergood

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