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To: 4figureau who wrote (6697)	9/18/2002 2:07:30 PM
From: Jim Willie CB	Read Replies (1) \| Respond to of 89467

Pressure on JP Morgan CEO as Losses Mount Wednesday September 18, 1:42 pm ET By Mary Kelleher [Harrison might not make $40M this year, but wont miss a meal] NEW YORK (Reuters) - J.P. Morgan Chase & Co. Inc. (NYSE:JPM - News) Chief Executive William Harrison -- considered one of Wall Street's stars when he helped create the country's No. 2 banking company -- now is fighting for his professional life. The top bank's sharp profit warning, which knocked the stock down as much as 13 percent on Wednesday, caps a stream of bad news from J.P. Morgan Chase since its December 2000 merger and puts pressure on upper management to turn results around. "What's a gracious way of saying the bank has had trouble generating reliable earnings? ... At some point the board is going to demonstrate some concern on that subject," UBS Warburg analyst Diane Glossman said. "If you get either a continued weakness in capital markets and/or execution problems, it wouldn't be surprising to see management changes." J.P. Morgan Chase on Tuesday night said its third-quarter earnings would be well below the second quarter's due to steep losses on loans to telecommunications and cable firms and misplaced trading bets. Its stock pared initial losses but was down 9 percent, or $1.93 to $19.62 on Wednesday afternoon. Its bonds fell too. Rating agency Standard & Poor's, which cut its rating on the bank's debt on Tuesday -- making it more expensive for J.P. Morgan Chase to borrow money -- said the bank could face another downgrade if a trading slump persists past the fourth quarter. "We don't think the worst is over for the company," said S&P analyst Tanya Azarchs. "There is considerable risk there will be a repeat of another bad quarter in the future." J.P. Morgan Chase's earnings warning was just the latest hit absorbed by Wall Street's biggest firms. J.P. Morgan Chase has faced fire for questionable financings it set up for bankrupt energy trader Enron Corp. (Other OTC:ENRNQ.PK - News). It has lost money in Argentina, in its own investment portfolio, in trading and in capital markets areas like advising on stock offerings. The stock is down nearly 70 percent from a peak hit a month after its merger closed at the end of 2000. "This is definitely a merger that has not worked out," said Beni Gradwohl, managing director, disciplined investment group, at money manager J. & W. Seligman & Co. "The timing was bad with the economy taking a tailspin." RATING CUTS Prolonged difficult conditions and continued internal slip-ups at the bank ultimately could force J.P. Morgan Chase into a merger, UBS's Glossman said. The combination of J.P. Morgan and Chase Manhattan at the time was heralded as the creation of a powerful buyer of other companies, not a seller. Debt rating agencies S&P and Fitch cut their rating on J.P. Morgan Chase debt after the warning, and analysts on Wednesday slashed earnings estimates and recommendations. The bank's announcement also shook the U.S. financial industry, raising concerns about telecom loan and trading losses at other banks and brokers. Stocks of rivals like Citigroup (NYSE:C - News), Bank of America (NYSE:BAC - News), and Merrill Lynch & Co. Inc. (NYSE:MER - News) dropped, though not as sharply. "A lot of these problems are not new, whether it's weakness in capital markets or ongoing corporate loan losses, but I do think the depth and length that the problems will persist looks longer," Prudential Securities analyst Mike Mayo said. Harrison on a Tuesday conference call with analysts apologized for the results and said he took full responsibility. But, in an editorial in Wednesday's Wall Street Journal, he said banks have been unfairly chastised for contributing to recent corporate scandals and contended banks were instead the biggest victims of corporate fraud. "After every bubble, there is a search for a scapegoat," Harrison wrote. But many of the loan losses and faulty trading bets that will hurt J.P. Morgan Chase in the third quarter are its own problems, putting pressure on the bank's board to deliver better results or overhaul management, analysts said. "A lot of this stuff has not been new news for a while and the fact that it's significantly bigger than what everyone was expecting raises some issues about confidence in senior management," said Jim Mitchell, an analyst at Putnam Lovell. "Investor confidence in senior management is important for the long-term value of the stock, so it has definitely got to put some pressure on the board to think about this in a serious way."

To: 4figureau who wrote (6697)	9/18/2002 2:09:14 PM
From: Jim Willie CB	Read Replies (1) \| Respond to of 89467

Cisco Backlog Number Raises Concerns Wednesday September 18, 12:58 pm ET [entire economy could be grinding to a halt soon] CHICAGO (Reuters) - Cisco Systems Inc. (NasdaqNM:CSCO - News), the largest maker of equipment that directs Internet traffic, said Wednesday its backlog of orders fell by 30 percent over the past year, raising concerns the company may not meet revenue expectations in its current quarter. The San Jose, California-based company said in its annual 10-K filing with the U.S. Securities and Exchange Commission that its backlog was about $1.4 billion as of Sept. 9, compared with about $2 billion around the same point the previous year. Backlog includes orders for products to be shipped within 90 days. Cisco had a $3.83 billion backlog in September 2000, and a $922 million backlog in September 1999, a spokeswoman said. "Cisco does not believe that its backlog, as of any particular date, is necessarily indicative of actual net sales for any future period," the company said in the filing. Cisco previously has said it is focused on reducing its product delivery lead time and improving customer satisfaction, and that leads to lower backlog figures. Cisco's stock was off 34 cents, or 2.7 percent, at $12.20 in heavy Nasdaq composite trading Wednesday afternoon. The company said last month that it expects its fiscal first-quarter revenue to be flat to slightly up from the fourth quarter, when it posted sales of $4.8 billion. Analysts expect Cisco to earn 13 cents a share, before one-time items, in its first quarter on revenue of $4.89 billion, according to Thomson First Call. In the same quarter last year, the company had revenue of $4.4 billion. "You have a lower backlog and a higher revenue expectation right now. Obviously, that's a red flag because those two things go counter to each other," Prudential Securities analyst Inder Singh said. He said he had heard Cisco's August business in its two largest segments, routers and switches, was slow, but there was still plenty of time to make up any possible shortfall as more than half the business was expected in the second half of a quarter that ends Oct. 26. "It's still early to completely say that they're not going to make it," said Singh, who has a "buy" rating on Cisco's stock.

To: 4figureau who wrote (6697)	9/18/2002 2:30:47 PM
From: Jim Willie CB	Read Replies (2) \| Respond to of 89467

unexpected fallout from minor ease of Iraqi tensions money might exit the longstanding haven in the USDollar we saw today and yesterday that US Banks are more important perhaps than Iraqi threats I think restricted oil shipments are every bit as important as faltering banking system I have been harping on JPMorgan DISINTEGRATION issues since February, much to the nausea of Voltaire Devotees never did I say JPMorgo will go quickly into the night this will be a multi-staged walking of the plank I expect several critical junctures where JPM will leak money fatally it is beginning the deadcat bounce off 18 to 26 in August was a fool's rally now comes the retest it just might get stuck at 18-22, which is a horrible fate they will fail to meet capital requirements on their derivative book one thing is for sure regarding GOLD visavis JPM when gold explodes, almost no association will be attributed to the banking sector it will be a particular commodity market or Brazil defaulting on humongous $B's in debt or S&P coming down below 7500 or MortBacked Securities reversing to hurt Treasurys these are all linked via derivative (futures contracts) Buffet labels them as "financial sewage" very appropriately to JPM and Gold Cartel soon: oops, you die / jim

To: 4figureau who wrote (6697)	9/18/2002 3:08:53 PM
From: smolejv@gmx.net	Read Replies (1) \| Respond to of 89467

Given the Friday expiration, any idea what's the Max Pain on JPM? Or at least where one can get open interest info for free (I'm a sole provider, with three grown-up kids and a cat...) Had JPM puts on and off, but at this moment they're just prohibitively expensive, so I prefer to let the 150mph Shinkansen pass without getting involved. RegZ dj PS: have not looked close enough quote.cboe.com should be good enough;

To: 4figureau who wrote (6697)	9/18/2002 3:24:42 PM
From: Jim Willie CB	Respond to of 89467

In My Opinion, by James Sinclair September 15, 2002 Kenneth Rogoff, Director of the Research Department of the International Monetary Fund Predicts (even though he does not realize it) A Significantly Lower US Dollar The Economist, August 3, 2002 on page#62 Confirmed Thursday, September 12, 2002 by Mr. Alan Greenspan, Chairman of the US Federal Reserve System Mr. Rogoff, in an interview with The Economist magazine, was asked to survey the challenges facing the global financial system at the start of the 21st century. He listed as number one, the Growing Current Account imbalances which we know means the United States. He rightly said “Rapid Current Account reversals are often accompanied by sharp and potentially disruptive adjustments in exchange rates or worse patterns of growth. But at the same time we begin to think ahead it becomes obvious that the real challenge is not to reduce the Current Account imbalance but to find ways to sustain bigger ones, albeit properly directed.” Last week in public testimony Mr. Greenspan warned of the danger of two additional deficits. Although the press put emphasis on the US Budget Deficit, he warned again of a continued and larger US Balance of Trade Deficit. The fundamental equation for a lower dollar (USDX) is a growing US Trade Deficit that fuels a growing US Current Account Deficit in the environment of US fiscal mismanagement called a growing US Budget Deficit. Therefore, IMO, hang on to your hat, dollar-wise. The dollar is far from its low in this long-term US dollar Bear Market. More than likely, the US dollar has a 21-month window in time in which it could put on a show like the NASDOG collapse. Few establishment economists thought such a collapse of share values was possible in the NASDOG. The same people do not now believe a further and deeper collapse than already witnessed in the US dollar (From 122 on the USDX to 104 on the same measure, now trading at 107.75) is possible in the dollar. It is. Because the dollar can fundamentally and technically go significantly lower, a top should be forming now in US Treasury instruments which portends higher, not lower, interest rates in 2003. That is the next logical step in the fundamental progression of expanding Trade Balance/Current Account Balance/Budget Deficit scenario. Watch Technical Analysis in the USDX now as we have a Fundamental view confirmed. As always, Fundamental Analysis first, timed by Technical Analysis. One without the other is an accident looking to happen! REFERENCE Testimony of Chairman Alan Greenspan: Current Fiscal Issues USDX on StockCharts.com