JP Morgan came out with good numbers today, much better than the market expected. The stock was up about 6% in pre-market trading. I'm skeptical about this short-term “showing”. JPM is as subject as any bank to the inversion of interest rates. They may have gained as depositors fled from regional banks and deposited with JPM. JPM still has to deal with the issue that MM’s rates are much higher than bank deposit rates.
I’ve never been a big fan of banks as there is too much wiggle room for management to manage their numbers. The amount added to or removed from loan loss reserves is especially concerning. The magic of accounting is always entertaining!
Most stocks were down today with a general fall in the indices. It seems to me that they have lost their momentum on the upside. For a long time, bad news has been perceived as a temporary setback and an opportunity to add more equities. The problem with this is that valuation metrics have gotten really stretched out and you can only stretch out so much before the rubber band breaks. While no one knows how far the rubber band can stretch before being destroyed, it has got to be close to that breaking point.
So much of recent gains on the S&P 500 is concentrated in only a handful of stocks. Without those stocks, my understanding is that the S&P would be a loss. This isn’t a good omen for the future.
Be smart, be well-read, be aware and be successful.
“excessive optimism is a dangerous thing,”
