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Wednesday, April 14, 2010

Delinquencies Down; JP Morgan 1Q Profits Rise; Hiring to Follow

What a difference a year can make. The improving economy in 2010 now has J.P. Morgan Chase & Co.'s (JPM) growing earnings again, with loan delinquencies declining, and steadily decreasing allocations for bad loans.

On Wednesday the second-largest bank in the U.S. said that its net income rose by 55% from a year earlier and that its provisions for credit losses on all the loans it manages shrunk by 30% -- an improving metric that helped overall results in several of its business units.

"There is clear and broad based improvement" in the economy in the U.S. and around the world, possibly resulting in a "strong recovery," said JPM Chairman Jamie Dimon. "Chances of a double dip [recession] are rapidly going away."

But perhaps the best news for the battered financial sector was Dimon's announcement that J.P. Morgan has plans to hire at least 9,000 new staff in the U.S., and aims for further additions worldwide.

With these types of results, it is not hard to imagine an economy that is on track to net more than 4M new jobs by year end.


  1. What's your take on the Goldman SEC charges? Do you think it will start a new financial crisis if more firms are charged and the market loses confidence in trading?

  2. Bill,

    It is doubtful that we will see another economic downturn of the magnitude we saw in late 2008 and early 2009 for quite some time. Using centuries of history as our guide, it will likely at least be another generation before we see something worldwide like the crisis just past... and unfortunately like the mid-70s crisis, most will have forgotten the socio-economic implications by the time the next "crisis" comes around.

    I think it is possible that further SEC charges may follow with other firms held accountable for their actions. This is really not new news -- and is something that the SEC has been threatening for quite some time. However, my personal belief is that continued positive earnings results will ultimately drive trading behavior for the individual investor... there really is nothing in the current environment which will reverse a trend that now in general has U.S. corporate earnings growth accelerating Q over Q.


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