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JPM

Lower rates = worse bank profitability.Hey. I'd like to talk about the effect of lower interest rates on something called 'net interest margin'... In other words, how banks make money. The chart attached shows US commercial banks' net interest margin (blue) versus the target Fed Funds range (white). Net interest margin (NIM) is a measure of the difference between the interest income generated by banks or other financial institutions and the amount of interest paid out to their lenders (for example, deposits), relative to the amount of their (interest-earning) assets. What can we see from the chart? As the Fed Funds target range decreases, bank net interest margin does as well. Currently, there is talk of going negative, and just last week, Fed Funds futures priced in negative rates for the first time ever for the Dec 2020 meeting and the Jan 2021 meeting. This is important. See, if people are of the opinion that lower interest rates will lead to less bank profitability, then they are likely to short financial stocks. And if people are shorting financial stocks, it can lead to a decline in lending and liquidity in the economy - which leads to dampened demand. Over the last few years, a type of bond known as an AT1 (Co-convertible) has been used to try to sure up bank common equity tier 1 (CET1). This gives regulators a gauge of strength of the financial institution in question. It works like this... The investor buys the bond, and if the share price of the bank falls to a certain level, the bond is converted into equity to prop up the CET1 of the bank. The problem is that these investors (mainly hedgefunds and sophisticated investors), are alpha seeking... In other words, they will hedge the delta of the decline in their bond by shorting the bank stock. This creates a bit of a doom loop on two fronts, firstly by removing the validity of the AT1 instrument, but secondly, the decline in net interest margin leading to the shorting of bank stock and the incapability to adequately lend. Markets and economies function on liquidity, and without it, we are in serious trouble - which explains the lengths to which governments and central banks have gone to liquify *everything*... And why equities just keep going up... See lower rates and more QE lead to equity risk premium compression - that is, the premium paid to take the risk of investing into higher risk assets versus simply staying invested in riskless assets (such as government bonds) - and ends up with investors piling money into equity markets. If the perceived risk of investing into equities is a tiny bit greater than staying invested in risk-free assets, then you will get into equities. This is exactly what has happened over the last 10 years - and it's why the market threw a fit when the Fed tried to raise back in '18. Passive long strategies have become the norm - buying ETFs such as $SPY and simply holding - and this also affects bank profitability; less trading = less commissions paid to the dealer. This is one reason why so many banks have moved into high frequency market making activities - Volcker prevented them from prop trading, but allows for market making (which in the high frequency trading area is largely still prop trading, although trying to prove that is tough). Jerome Powell is expected to push back against negative rates tomorrow, and the rhetoric leading into this from Fed members has been that they do not like negative rates. It remains to be seen, but real yields across the curve from 1y-30y are currently priced negative... So what's the difference, really? (tongue in cheek).
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by FinkPro
9
WOW - Remembering all Mr. PresidentsLmao, I did not remember this. It's from long time ago trying to understand a little bit more this bank. Maybe is something irrelevant but it could be helpful to feed the curiosity some people still have and expand their knowledge with a better research. Also if i lose this idea again for some months I'll know where to find it now. There I tried to find correlation between democrat presidents or republican and the action price development from that far, just for educational purposes like I said. Just to be able to dig a bit more and find political causes related to the historical growing of one of the biggest banks on Earth. I found this when I was checking other "too big to fail" banks recent movements, to check the impact with all this infinite stimulus have been announced almost everywhere, and anyone with sufficient authority is printing money now. What a mess, isn't it? Please hope you find your own conclusions from here, always keep that curiosity... and doubt. Thanks!
NYSE:JPM
by harribatu
A very important ER and inside day for JPM and the marketJPM set to report its earning before the market opens today. It closed as an inside day yesterday, and there are dual 0.618 and S/D combination for the sell high @ 116 and the buy low @ 87. Which, makes the direction of the inside day breakout very important! Also, as the world suffers from coronavirus, how do the earning reports perform under the strong pressure is the whole world's focus. and JPM will be the one that ring the 1st bell! Let's see how it goes yo, no matter where it breaks, I'll be interested in some intraday trade with the direction it breaks.
NYSE:JPM
by Trader_Joe_Lee
1
THE WEEK AHEAD: WFC, C, JPM, BAC EARNINGS; XLF, IWM, XLU; /CLEARNINGS: And ... we're back into earnings season, which ordinarily kicks off with a bunch of financials. Generally, I don't play these for volatility contraction, since they don't get all that frisky generally, but this environment is a tad different from quarters past, with the 30-day in WFC (45/76), C (44/91), JPM (41/63), and BAC (40/70) all greater than 50% and with the sector exchange-traded fund up there as well (XLF (47/58)). Rather than play one of the single names, I've pondered what could be done in the sector exchange-traded fund, XLF, instead. Pictured here is a long-dated XLF call diagonal with the back month at the 90 delta in June of next year, the 30 delta-ish front month in June of this one. Ordinarily, I don't go that far out in time with the back month, but June '21 happens to one of the expiries with the lowest implied, so it will be one in which the 90 delta has a lower extrinsic value baked into it compared to expiries of shorter duration. Costing 8.36 at the mid price, it has a break even of 23.36 versus 23.38 spot, a debit paid/spread width ratio of .76, and delta/theta metrics of 58.64/.77, so it's neutral to bullish assumption with plenty of time to reduce cost basis via short call roll. You'd be paying 8.36 for an 11-wide, so have a max profit potential equal to the width of the spread (11.00) and what you paid (8.36) or 2.64 ($264) -- about 31.6% return on capital, assuming max profit. Naturally, it would have been more awesome were one to have gotten in at the 3/22 17.50 lows. EXCHANGE-TRADED FUNDS WITH 30-DAY IMPLIED GREATER THAN 50%: XLU (52/52) XLE (47/75) SMH (43/57) GDXJ (41/81) EWZ (40/74) EWW (39/58) SLV (34/50) XOP (33/100) USO (32/128) GDX (28/62) BROAD MARKET: IWM (53/54) TQQQ (47/122) QQQ (40/42) SPY (40/41) EEM (35/40) EFA (31/35) FUTURES: /NG (78/73) /ZW (69/36) /GC (41/31) /ES (40/42) /SI (34/48) /CL (32/1555) /ZC (29/32) /ZS (21/20) I reference /CL in the header, primarily due to the background implied, but also due to price action. Some of the volatility may piss out at futures open given a supposed agreement by OPEC+ to cut production by 10 million bpd or so, with the last holdout -- Mexico -- coming on board. If we revist $20/bbl., I will consider adding /CL out-of-the-money short puts. VIX/VIX DERIVATIVES: What's new ... . We're in a high volatility environment and in backwardation with VIX finishing the week at 41.67. MUSINGS: In The IRA: Things aren't looking all that great for me from an acquisition standpoint with the short put ladders I stuck out there for things on my shopping list -- at least for the April "rung" of them. That's okay, since if they expire worthless, I'll keep the premium associated with that rung. Naturally, if I don't pick up jack via assignment, I'll look at re-upping with a rung to replace the expiring worthless if that happens or just let the remaining rungs ride and look for opportunities going forward. A lot can happen in a week ... .
AMEX:XLF
by NaughtyPines
JMP technicaly based forecast 📌Short intro: I am full time trader - analyst * High accuracy of ideas * Technicaly and Fudnamentaly side in analysis * Comment if have any questions or want to send support * Price action - FIBO - Candl pattern * FX - STOCK - CRYPTO * Simple ideas 💡 JPM technicaly based idea, technicaly indicators showing we can expect higher recovery phase, global economy is in slow phase of recovery, we can see price is near to break FIBO 0.382 in this case FIBO 0.382 is and support zone, expecting to see break ad higher push in price till FIBO 0.6 or till trend line. 📌Have on mind, trading involves risk, check idea on your own tactic, if have questions pls comment! Thanks on supporting! All best, good luck!
NYSE:JPM
by UnknownUnicorn3983388
4
JPMorgan / testing Monthly EMA50.If you are a long-term investor, I would wait JPMorgan Chase & Co.testing Monthly EMA50. 38.2% correction since 2009 low. RSI monthly 44- RSI weekly oversold 25, but no divergence. Too risky to short, to early for long-term buying. Long-term stock investors still shouldn’t buy the dip, but it’s an opportunity-filled environment for pro traders. If you are a long-term investor, I would wait........ Disclaimer: We are not registered or licensed in any jurisdiction whatsoever to provide investing advice or anything of an advisory or consultancy nature, and are therefore are unqualified to give investment recommendations. Always do your own research and consult with a licensed investment professional before investing. This communication is never to be used as the basis of making investment decisions, and it is for entertainment purposes only.
NYSE:JPM
by CryptoTrend-Alerts