Posts Tagged ‘JPM’

  • JPMorgan Easily Beats Estimates
    , October 12th, 2012 at 1:04 pm

    JPMorgan Chase ($JPM) reported its Q3 earnings this morning and as I expected, they easily surpassed Wall Street’s consensus. For July, August and September, the bank raked in $5.7 billion or $1.40 per share which was 18 cents above the Street’s forecast. Profits were up 34% and revenues rose 6% to $25.9 billion. The Street had been expecting $24.5 billion for the top line.

    More good news is that the losses from the London Whale debacle are basically ending. JPM execs said that the trade is still unwinding and the red ink has been reduced to a “modest” loss for Q3. All told, the trade cost them $6.2 billion. JPM said that core loans rose by 10% and mortgages were up by 29%. Overall, this was a very good quarter for JPM.

    “I would hope for America’s sake we start to fix the things that make the mortgage underwriting too tight,” Mr. Dimon said on a conference call with reporters.

    Throughout its core lending businesses, JPMorgan showed signs of strength. The commercial banking group reported record revenue. The volume of credit card sales jumped 11 percent over the previous year, bolstering the broader unit. The card services and auto business posted profits of $954 million, up 12 percent.

    With the improving credit environment, JPMorgan set aside less money to cover potential losses. In the mortgage banking business, the bank cut the amount of reserves by $900 million. Across the bank, JPMorgan set aside $1.79 billion of such funds, compared with $2.41 billion a year earlier.

    The stock gapped up earlier today but has since pulled back to the mid-$41 area which is where it was during the first part of this week.

  • CWS Market Review – October 5, 2012
    , October 5th, 2012 at 8:12 am

    “The best stock to buy may be the one you already own.” – Peter Lynch

    I’m writing today’s CWS Market Review early on Friday morning so I don’t have the results of September’s jobs report (be sure to check the blog for complete coverage). The jobs report will probably be out by the time you’re reading this. But I can say that Wall Street has very modest expectations. The consensus is for a gain of 115,000 jobs. While that’s better than nothing (or a loss), it’s not very robust growth. The rule of thumb is that you need at least 150,000 new jobs each month to bring down the unemployment rate. The ADP report on Wednesday was better-than-expected so that may be a positive omen for today’s report.

    The stock market seems, for the time being, to have regained its footing. The S&P 500 has rallied all four days this week, and on Thursday, the index closed at its highest level since September 14th. The stock market is a mere 0.3% away from closing at a 57-month high. A good jobs report could carry us across the line.

    Unfortunately, I can’t sound the “all clear” siren just yet. We still have an election to get through, plus more drama in Europe, and most importantly, third-quarter earnings season is only a few days away. I still believe that we’re in for a few bumpy weeks, and I urge investors to be especially cautious right now. But there is some good news to report: Analysts on Wall Street had spent much of this year paring back their earnings forecasts, which the market has mostly ignored, but estimates have stopped trending downward recently. That’s good to see.

    In this issue of CWS Market Review, I want to say a few words about politics and its impact on the stock market. I don’t like to write about politics but I will discuss mistakes investors make, and a biggie is letting your political views interfere with a sound investment strategy. I’ll also let you know which stocks on our Buy List look especially attractive right now. (Here’s a preview: Expect to see a very impressive earnings beat from JPMorgan next week.) But first, let’s look at why elections aren’t so important in the eyes of your stock portfolio.

    Don’t Let Politics Interfere With Your Investing

    You wouldn’t know it from reading much of the financial commentary but the stock market has had an amazing run. In one year and one day from the 2011 low, the S&P 500 has gained nearly 32% while the Dow has added a cool 2,920 points. That’s more than the whole thing was worth 25 years ago.

    I’m also happy to report that our Buy List has continued to thrive. Over the last nine weeks, our Buy List has gained 10.65% compared with just 7.06%. And on Thursday, Buy List standouts Fiserv ($FISV), Medtronic ($MDT) and Hudson City ($HCBK) all hit fresh 52-week highs. Plus, Sysco ($SYY) and Harris ($HRS) made news highs earlier this week. If you recall from last week’s newsletter, I urge you to focus on high-yielding Buy List stocks.

    I was amused this week when I heard market pundits attribute Thursday’s rally to Mitt Romney’s debate performance. Sure, that could be the reason, but honestly, I doubt it. For one, this theory conveniently skips over the fact that the market opened slightly on Thursday. The rally continued throughout the day, well after the market had the opportunity to digest the outcome of the debate.

    This argument beings me to a mistake that too many investors make—they let their political opinions seep into their investing strategy. I like to call this the “Larry Kudlow Fallacy,” after the CNBC pundit and former Reagan official who can always find his political views confirmed by whatever happened on Wall Street that day.

    Don’t mistake me as saying that the market doesn’t care about policy. Public policy can have a major impact on the financial markets. But the market is surprisingly indifferent to the standard back-and-forth bickering of partisan politics. Stock prices are chiefly concerned with earnings and interest rates, and very little else.

    The stock market has performed well under Republicans and Democrats. The market has performed poorly under both as well. And of course, just because one party controls the executive mansion doesn’t mean that they have absolute power. Presidents routinely find their agendas frustrated by Congress or the courts or even public opinion. Any investor who bailed out when President Obama took office missed one of the greatest rallies in history.

    I’ll give you an example of a small story that’s probably far more important to stocks and bonds than anything discussed at the debates. The minutes from the FOMC’s September meeting indicate that several members believe the Fed ought to tie their interest rate policy to some economic metric. The minutes didn’t specify which metrics were discussed. If they mean employment, that probably means that short-term rates will stay low for quite some time. This would be a huge benefit for dividend-paying stocks, and companies like Nicholas Financial ($NICK) that rely on short-term funding.

    In fact, a bigger event for U.S. stock prices may not even be happening in this country. Over the past few days, the Iranian currency has completely fallen apart. The Iranian rial plunged 59% in one week. I won’t even try to guess what the fallout will be.

    Let’s remember the important lesson: The key for being a successful investor is being disciplined. You need to be disciplined in the stocks you select. Disciplined in when you sell. And most importantly, you must be disciplined in holding on during lousy markets. All of these involve holding your emotions at bay, and people can be very passionate about politics. Don’t let the elections rattle you or change your strategy of investing in high-quality stocks. Once the election passes, I see a strong year-end rally forming especially for our stocks on the Buy List.

    Expect an Earnings Beat from JPM

    Here are a few notes on some of our Buy List stocks. I continue to like Ford ($F) a lot. If you can get it below $10 per share, then you’ve gotten a very good deal. Truck sales at Ford are pace for their best year since 2007. Ford is a buy up to $12.

    The fraud suit brought against JPMorgan Chase ($JPM) made a lot of news this week, but there’s less there than meets the eye. I think this was a bit of political grandstanding before the election. Plus, all this happened with Bears Stearns which the government pleaded with JPM to buy.

    Look for another good earnings report from JPM next Thursday, October 11. Wall Street currently expects earnings of $1.21 per share. My numbers say that JPM will easily beat that. JPMorgan is a good buy up to $43 per share.

    One of the best values on our Buy List is Moog ($MOG-A). At $38, the stock is a very strong buy. I rate Moog a strong buy up to $45.

    Before I go I want to say that I was impressed by this week’s ISM report which finally ticked back over 50. The report came in at 51.5. Any number above 50 means that the manufacturing sector is expanding. This was the best report since May.

    That’s all for now. We’ll get some early earnings reports next week. The first Buy List stock to report will be JPMorgan which reports on Thursday. Look for a big earnings beat. I’ll also be curious to see the Fed’s Beige Book which comes out on Wednesday. Be sure to keep checking the blog for daily updates. I’ll have more market analysis for you in the next issue of CWS Market Review!

    – Eddy

  • The S&P 500’s First 1% Drop in Two Months
    , September 26th, 2012 at 9:27 am

    For the first time in two months, the S&P 500 lost more than 1% yesterday. The market didn’t start out so poor yesterday but traders got nervous after Charles Plosser, the head of the Philadelphia Fed, said that QE3 won’t work. Specifically, Plosser said that by pinning so much on the policy, the Fed is risking its credibility. My initial reaction is that I’m afraid that happened a long time ago.

    The market slowly moved down towards yesterday’s closing bell. Financial stocks were particularly hard hit. Members of our Buy List like AFLAC ($AFL), JPMorgan Chase ($JPM) and Nicholas Financial ($NICK) were surprising losers.

    The market is still nervous about events in Europe. The austerity policies have led to more riots in Greece. There are also protests in Spain and bond yields there are back over 6%. The government there is prepared to ask for a bailout. In China, the Shanghai Composite has fallen to a 3.5-year low.

    The key metric that’s on everyone’s mind is the bond market in Europe. The authorities there have made it clear that they intend to defend the euro. That would lead me to believe that yield spreads would tighten. That had been happening but now the yields are moving in the other direction.

  • CWS Market Review – September 14, 2012
    , September 14th, 2012 at 8:23 am

    Last week, it was thank you, Mario. This week, it’s thank you, Ben!

    The stock market surged to its highest close in four years on Thursday when it was reported that that the Federal Reserve is embarking on another round of quantitative easing. The last time the S&P 500 was this high was on the final day of trading in 2007. The market had a great day on Thursday, and several of our Buy List stocks like Medtronic ($MDT), DirecTV ($DTV), Hudson City ($HCBK) and Harris Corp. ($HCBK) all broke out to new 52-week highs.

    I’m also pleased to announce that—after many of you requested it—I’ve added a “Buy Below” column to our Buy List page. I think you’ll like it a lot. Now you’ll be able to know exactly what I think is a good entry point for all the stocks on our Buy List. It’s important for investors to stay disciplined and never chase after stocks. My Buy Below prices will help you do exactly that.

    In this week’s CWS Market Review, I’ll explain what the Fed news means, and I’ll try to keep it jargon free. I’ll also discuss what this policy means for the economy and our portfolios. I’ll also highlight upcoming Buy List earnings reports from Oracle ($ORCL) and Bed Bath & Beyond ($BBBY). But first, let’s look at why stocks are so happy with the Bearded One.

    The Federal Reserve Embarks on QE-Infinity

    I have to confess some embarrassment with the Fed’s news, because I had long been a doubter that the central bank would pursue more quantitative easing. I even said last week that this week’s policy meeting would be a snoozer. In fact, I was afraid the market was setting itself up to be disappointed. Instead, the market celebrated the news.

    Now let’s look at what exactly the Federal Reserve did. The central bank said it will buy $40 billion per month of agency mortgage-backed securities (MBS). What will happen is the Fed will swap assets with a bank. The Fed will get a risky MBS while the bank will get low-risk reserves, which, I should add, are held at the Federal Reserve.

    Here’s the problem: Since interest rates are already near 0%, the Fed can’t cut them any further. But the hope is that by buying MBS, the Fed can push down mortgage rates, which will boost the housing market, which in turn will boost the overall economy. At least, that’s the plan. Remember that the housing sector is a key driver of new jobs, and I noted on Thursday that the stocks of many homebuilders gapped up on the news.

    The Fed Changes Course

    The problem with the two earlier rounds of bond purchases is that while they certainly helped the financial markets, their impact on the economy was probably pretty slight. Some critics said that the Fed simply wasn’t being bold enough. What’s interesting is that this round of bond buying is smaller than the previous rounds.

    But here’s the key: The Fed said something very different this time.

    To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens.

    In other words, this time the Fed’s plan is unlimited. Implicit in the above sentence is the Fed’s admission that its previous policy just wasn’t working. With the earlier bond buying, the Fed just said that they’re going to buy X dollar amount of bonds, and that’s that. There was no goal.

    An idea gaining popularity among economists is that the Fed should buy bonds until some metric like the unemployment rate or nominal GDP hits a specific target. With today’s news, the Fed has clearly moved towards that position without expressly saying so. The Fed said that the bond buying would continue until the labor market improved “substantially” and “for a considerable time after the economic recovery strengthens.” The $40-billion-per-month figure is almost irrelevant in context of an open-ended policy. All told, the Fed will be pumping $85 billion into the economy each month.

    What This All Means

    I may sound overly cynical, but I suspect the Fed will buy bonds until the bond market shuts them off. (Remember when I talked last week about how the Spanish bond market scared the bejesus out of the European Central Bank?)

    The Fed also said that it will keep interest rates near 0% through at least 2015. That’s very good news for a company like Nicholas Financial ($NICK). Another buried angle on today’s news is that the Fed is, in my opinion, giving up on the fiction that it has a dual mandate (low inflation and full employment). When it truly matters, the Fed only cares about employment.

    Will this QE-Infinity work? I honestly can’t say. One fear is that mortgage rates are already low, and that hasn’t done much to boost the economy. Looking at the track of previous quantitative easings doesn’t make me overly optimistic that a third version will do the trick.

    Let’s look at the probable outcomes for the market. I suspect that in the near term, cyclical stocks and financial stocks will get a nice boost. That’s what happened after the first two rounds of bond buying and Operation Twist. JPMorgan Chase ($JPM), for example, soared to $41.40 on Thursday, which effectively erased its entire loss since the London Whale trading loss was announced in May.

    Since the Fed is willing to turn a blind eye toward inflation for the time being, I suspect that hard assets (like gold) and commodity-based stocks will do well. I also think that higher-risk assets will gradually gain favor. For example, spreads between junk bonds and Treasuries will continue to narrow. This will also give a lift to many small-cap stocks, especially small-cap growth stocks. In the long run, I’m not convinced the Fed’s decision this week will have a major impact on the economy. Perhaps the best outcome is that a Fed-induced burst of enthusiasm will give the economy and labor market more time to right themselves. Until then, I urge all investors to own a diversified portfolio of high-quality stocks such as our Buy List.

    Earnings from Oracle and BBBY

    Next week, we have two earnings reports due. Bed Bath & Beyond ($BBBY) reports on Tuesday, September 18, and Oracle ($ORCL) reports the next day. This will be an interesting report for BBBY because three months ago, traders gave the stock a super-atomic wedgie after the company warned Wall Street that their fiscal Q2 would be below expectations. Wall Street had been expecting $1.08 per share, but BBBY said that earnings would range between 97 cents and $1.03 per share. Traders totally freaked and sent shares of BBBY from $74 all the way down to $58.

    For fiscal Q1 (which ended in May), I predicted that BBBY could earn as much as 88 cents per share, which was four cents above Wall Street’s consensus. In fact, the company reported earnings of 89 cents per share. Nevertheless, the weak earnings guidance was too much to overcome.

    In the CWS Market Review from June 22, I said that the selling was “way, way WAY overdone.” Fortunately, I was right. Since bottoming out in late-June, shares of BBBY have steadily rallied. On Thursday, the stock closed above $70 for the first time in three months. BBBY is still a good stock, and business is going well, but let’s be smart here and not chase it. I’m keeping my Buy Below price at $70.

    Oracle has been one of our best stocks this year. The company beat expectations in March and June, although the stock had a terrible month in May. This earnings report will be for their fiscal Q1. The company said that earnings should range between 51 and 55 cents per share, which is almost certainly too low. They earned 48 cents per share for last year’s Q1. Look for an earnings surprise. I’m raising my Buy Below price on Oracle to $35 per share.

    That’s all for now. Don’t forget to check out the new “Buy Below” column on the Buy List page. I’ll have more market analysis for you in the next issue of CWS Market Review!

    – Eddy

  • Bed Bath & Beyond Breaks $70
    , September 11th, 2012 at 10:59 am

    The stock market is creeping higher this morning after taking some losses yesterday. All eyes are on the Federal Reserve, which meets tomorrow and on Thursday. Ben Bernanke is also due to meet the press on Thursday after the meeting.

    Wall Street almost universally expects more quantitative easing. I continue to be a skeptic. Perhaps the Fed will do something, but I doubt it will be much. In fact, I think Wall Street is setting itself up to be disappointed.

    The good news is that our Buy List is doing well. I’m happy to see that Bed Bath & Beyond ($BBBY) has finally pierced $70 per share. The company is due to report earnings again on September 18th. I’m also pleased to see our financial stocks are doing well. Hudson City ($HCBK) is up to a new 52-week high, and JPMorgan Chase ($JPM) is close to breaking through $40 per share. Medtronic ($MDT) is also at a new 52-week high.

  • JPMorgan to Float Five-Bonds
    , August 13th, 2012 at 1:32 pm

    JPMorgan Chase ($JPM) is looking to float some five-year bonds. The bank is hoping to lock-in a yield of 137.5 basis points above similar Treasury bonds. The five-year Treasury currently goes for 0.69%, so that translates to roughly 2.065%.

    What’s interesting is that JPM bumped up its quarterly dividend to 30 cents per share. At the current price, the stock yields about 3.5%. In other words, the company can make an instant profit by issuing debt to buy their own stock.

    Obviously if the company tried to sell enough debt to take themselves private, the yield would be much higher than 2.065%. But it’s interesting that the risk in owning equities is so high that it creates an obvious arbitrage opportunity for any company, especially the largest bank in America.

  • JPMorgan Chase Earns $1.21 Per Share
    , July 13th, 2012 at 7:05 am

    JPMorgan just released their earnings report. For the second quarter, the bank earned $1.21 per share. They said that the botched trade in London lost $5.8 billion including $4.4 billion during the second quarter. They said that the trader was misleading them so they’ll have to restate Q1 earnings. Their income for Q1 will be $459 million less than originally reported.

    Here’s the earnings report:

    JPMorgan Chase & Co. (NYSE: JPM) today reported second-quarter 2012 net income of $5.0 billion, compared with net income of $5.4 billion in the second quarter of 2011. Earnings per share were $1.21, compared with $1.27 in the second quarter of 2011. The Firm’s return on tangible common equity for the second quarter of 2012 was 15%, compared with 17% in the prior year.

    Jamie Dimon, Chairman and Chief Executive Officer, commented on financial results: “Importantly, all of our client-driven businesses had solid performance. However, there were several significant items that affected the quarter’s results – some positively; some negatively. These included $4.4 billion of losses on CIO’s synthetic credit portfolio, $1.0 billion of securities gains in CIO and a $545 million gain on a Bear Stearns-related first-loss note, for which the Firm now expects full recovery. The Firm’s results also included $755 million of DVA gains, reflecting adjustments for the widening of the Firm’s credit spreads which, as we have consistently said, do not reflect the underlying operations of the Firm. The Firm also reduced loan loss reserves by $2.1 billion, mostly for the mortgage and credit card portfolios. These reductions in reserves are based on the same methodologies we have used in the past – the good news is that these reductions reflected meaningful improvements in delinquencies and estimated losses in these portfolios. We continue to maintain strong reserves.”

    Dimon continued: “Since the end of the first quarter, we have significantly reduced the total synthetic credit risk in CIO – whether measured by notional amounts, stress testing or other statistical methods. The reduction in risk has brought the portfolio to a scale that allowed us to transfer substantially all remaining synthetic credit positions to the Investment Bank . The Investment Bank has the expertise, capacity, trading platforms and market franchise to effectively manage these positions and maximize economic value going forward. As a result of the transfer, the Investment Bank’s Value-at-Risk and Risk Weighted Assets will increase, but we believe they will come down over time. Importantly, we have put most of this problem behind us and we can now focus our full energy on what we do best – serving our clients and communities around the world.”

    Commenting further on CIO, Dimon said: “CIO will no longer trade a synthetic credit portfolio and will focus on its core mandate of conservatively investing excess deposits to earn a fair return. CIO’s $323 billion available-for-sale portfolio had $7.9 billion of net unrealized gains at the end of the quarter. This portfolio has an average rating of AA+, has a current yield of approximately 2.6%, and is positioned to help to protect the Firm against rapidly rising interest rates. In addition to CIO, we have $175 billion in cash and deposits, primarily invested at central banks.”

    “The Firm has been conducting an extensive review of what happened in CIO and we will be sharing our observations today. We have already completely overhauled CIO management and enhanced the governance standards within CIO. We believe these events to be isolated to CIO, but have taken the opportunity to apply lessons learned across the Firm. The Board of Directors is independently overseeing and guiding the Company’s review, including any additional corrective actions. While our review continues, it is important to note that no client was impacted.”

    Commenting on the balance sheet, Dimon said: “Our fortress balance sheet remained strong, ending the second quarter with a strong Basel I Tier 1 common ratio of 10.3%. We estimate that our Basel III Tier 1 common ratio was approximately 7.9% at the end of the second quarter, after the effect of the final Basel 2.5 rules and the Federal Reserve’s recent Notice of Proposed Rulemaking.”

    Dimon concluded: “Through the depth of the financial crisis and through recent events, we have never stopped fulfilling our mission: to serve clients – consumers and companies – and communities around the globe. During the first half of 2012, we provided $130 billion of credit to consumers. Over the same period we provided nearly $10 billion of credit to small businesses, the engine of growth for our economy, up 35% compared with the same period last year. For America’s largest companies, we raised or lent over $720 billion of capital in the first six months to help them build and expand around the world. Even in this difficult economy, we have added thousands of new employees across the country – over 62,000 since January 2008. In 2011, we founded the “100,000 Jobs Mission” – a partnership with 54 other companies to hire 100,000 U.S. veterans by the year 2020. We have hired more than 4,000 veterans since the beginning of 2011, in addition to the thousands of veterans who already worked at our Firm. I am proud of JPMorgan Chase and what all of our employees do every day to serve our clients and communities in a first-class way.”

    Excluding all adjustments, the bank earned 67 cents per share last quarter.

  • Dimon Faces Analysts
    , July 11th, 2012 at 9:50 am

    From Bloomberg:

    Jamie Dimon will seek to restore investor confidence this week after a trading loss wiped out $39 billion of JPMorgan Chase & Co. (JPM)’s market value and marred his reputation as one of the industry’s best risk managers.

    In a departure from his customary earnings-day conference call, Dimon will meet analysts for two hours on July 13 at the bank’s New York headquarters to field questions about the loss and what he’s doing to contain the damage. The firm also is being probed over the possible gaming of U.S. energy markets and was subpoenaed in global investigations of interest-rate fixing.

    There has been a “sudden change of perception in the company,” said Nancy Bush, an analyst and contributing editor at SNL Financial LC, a research firm based in Charlottesville, Virginia. “I’ve been watching banks for 30 years now and when they lose the luster, it is extremely hard for them to get it back, particularly when you have someone who was built up and lionized like Dimon.”

    Bush said the 56-year-old chief executive officer did an “admirable job of saying nothing” when he appeared before Congress twice last month to testify about the trading loss, which stemmed from bets on credit derivatives at the firm’s chief investment office in London. “But I don’t know if that can go on,” Bush said.

  • Stocks Modestly Higher on Alcoa’s Earnings
    , July 10th, 2012 at 10:35 am

    The stock market is just slightly higher this morning. There’s some optimism that a German court will approve the eurozone’s new bailout fund. The bad news is that China’s trade growth plunged in June.

    After yesterday’s close, Alcoa ($AA) reported earnings of six cents per share which was one penny ahead of expectations. Since Alcoa is usually the first Dow component to report, its earnings report gets a lot of attention. The problem is that Alcoa is hardly representative of the larger economy.

    On Friday, we’ll get a better idea of how earnings season is going when JPMorgan Chase ($JPM) reports earnings. Obviously, we’ll also get an idea of how badly the bank has been shaken by the big trading losses that came from their London office.

    Bespoke Investment Group has a chart showing how Wall Street has chopped its earnings expectations for JPM. In May, the Street had been expecting $1.24 for JPM’s second quarter. Today it’s down to 79 cents per share. There have been similar drops from Morgan Stanley, Goldman Sachs and other big Wall Street firms.

    I’m hesitant to make any forecasts for JPM’s earnings report because the company has been very tight-lipped about what exactly happened. The key for us will be to see how well the bank’s fundamental business has performed. For the most part, that’s been good this year.

    On the Buy List, I see that Reynolds American ($RAI) has matched its 52-week high this morning. Johnson & Johnson ($JNJ) is only a few pennies away from hitting a fresh 52-week high. JNJ is up by more than 10% since its June 1st close. Not many people saw that rally coming.

  • Goldman Adds JPM to Conviction List
    , June 26th, 2012 at 8:27 am

    Shares of JPMorgan Chase ($JPM) still haven’t fully recovered from the news of the trading losses. Wall Street, however, is starting to realize what a bargain the stock is:

    Goldman Sachs added JPMorgan Chase & Co to its America’s conviction buy list, saying the U.S. bank’s capital position and earnings power can offset its recent hedging loss of at least $2 billion.

    Goldman downgraded Morgan Stanley to “neutral” from “buy,” and removed the stock from its conviction buy list, saying earnings could be hurt by muted capital markets activity.

    While Goldman sees value in Morgan Stanley’s shares at current depressed levels, it expects better returns at JPMorgan.

    The 15 percent decline in JPMorgan share price since the largest U.S. lender by assets announced trading losses at its chief investment office has been “drastic,” given the unit’s 5 percent average earnings per share contribution, Goldman said.

    JPMorgan, which has temporarily halted its $15 billion share repurchase program, may also resume buybacks this year, lending further support to the stock, Goldman analysts said.

    Goldman, however, cut its second-quarter earnings estimates for JPMorgan to 60 cents from 75 cents to reflect a quicker recognition of its trading losses.

    Second-quarter earnings of 60 cents per share is still below Wall Street’s consensus. The view on the Street is for JPM to earn 85 cents per share for the second quarter. Two months ago, the expectation was for $1.24 per share.

    Let’s look at the larger picture. Wall Street expects JPM to earn $5.32 per share for 2013. I’m a little hesitant to make forecasts that far out but you can see that Wall Street has high hopes for Dimon & Co. That means that JPM is going for 6.6 times next year’s estimate. The earnings yield works out to 16%.

    The figure of $5.32 would top what JPM earned in 2006 or 2007 when the stock was over $53 per share. Yesterday, it closed at $35.32.