Jan 15, 2010: JPM [2]

JP Morgan Chase [JPM:NYSE] was the first financial institution to announce their quarterly earnings this year, and the numbers were much improved compared to last year, but results were well below expectations. The company reported an EPS of $0.74/shr up twelve-fold from last year's EPS of $0.06/shr. However, analysts had expected the company to announce figures near $0.90/shr. The stock finished down $1.01 and closed at $43.68. The company earned $3.3B this quarter and generated record revenues for all of fiscal 2009, with a whopping $11.7B, even though the rest of the nation and financial industry was in dire need of government bailouts. Many traders also wanted to see if JP Morgan was going to hike their dividend, a sign that financial firms are confident in their cash flow, but no dividend increase was proposed, at least not yet. CFO Michael Cavanagh said they were hoping to restore the dividend to 75 cents or even $1 by the middle of 2010. We will have to see. As I mentioned in yesterday's daily market blog, I predicted that if JP Morgan reported bad numbers, we would see a drop in the price of Intel [INTC:NASD] as well, even though the stock was trading higher last night in the after hours session. Today, the stock finished much lower. Yesterday, the stock closed at $21.48 and went as high as $22 and change after hours. The stock would never reach $21.48 today and would close at $20.80, lucky for me, as I was able to close my uncovered calls for a small profit. Not to validate myself, but I was quite happy to see my prediction come to fruition, especially since there were so many variables. Over the next two weeks, the rest of the big US banks will report their earnings, including Bank of America, Citigroup, Goldman Sachs, and Morgan Stanley. Their financial figures will play an important role in the economic recovery. For now, please enjoy your weekend, and for my American readers, have a great long weekend.