If You Ever Needed Proof….
…..that the market is driven by perception rather than fact, today is a good day for you to pay attention.
That’s because a few mediocre earnings reports have led to a big rally as investors interpret them to mean that perhaps the worst is past.
We covered Intel’s solid but not spectacular report yesterday.
JP Morgan’s (JPM) results are, if anything, less exciting than Intel’s (JPM Earnings Release).
JP Morgan’s profits were cut in half as they took $2.6 billion in writedowns on mortgage backed securities, leveraged loans and CDOs.
Most importantly, their core businesses are not performing well:
- Investment banking fees were off 30% from the year ago period, including a 58% drop in debt underwriting fees.
- Non performing loans, net charge offs and 30+ day delinquency rates are all higher on their $202 billion retail loan portfolio.
- Charge off and delinquency rates continue to trend up in their $151 billion credit card portfolio.
That don’t impress me much.
Disclosure: Top Gun has no position in Intel (INTC) or JP Morgan (JPM) shares.