I was thinking about a short term (3 or 4 day) short trade somewhere in either the BKX or one of the components; but the technical action of the BKX and the overall market continues to be strong enough that I think I'll give this idea a miss.
Mike Mayo has a good reputation on the street as an independent minded analyst, interesting to see he still has a sell on JPM
Prudential’s respected banking analyst Mike Mayo still rates J.P Morgan Chase a sell despite the sharp decline in the price of its shares. “The upside potential does not seem as strong as at other investment banks, whereas downside risks remain,” says Mayo.
JPM's % of bad commercial loans to total business loans is not bad at 1.9%. I don't think we'll see many if any more Enron's out there in the next 6 months, but we'll see.
I'm not as cautious on JPM as the article is but it's a good one, thanks for posting it.
at’s more, notes J.P. Morgan Chase spokesman Mike Golden, bad commercial loans to total business loans are at just 1.9%, which is below levels at many premier banks.
Nevertheless, a few more Enrons, and J.P. Morgan Chase could lose its quality debt rating, which would drive up the cost of borrowing and hit earnings.
To be sure, few, if any, analysts expect more than a one-notch cut in its credit rating, which wouldn’t be enough to do serious damage. Tanya Azarchs, the Standard & Poor’s debt analyst who follows J.P. Morgan Chase, for example, says nonperforming commercial loans could increase by roughly 30% (from $4.3 billion to $5.6 billion) before the bank’s credit rating would be at risk. Another area she is watching closely: more signs that the bank’s risk management procedures aren’t working well.
I'm not as cautious on JPM as the article is but it's a good one, thanks for posting it.
John |
