JPMorgan Will Be A Survivor, But Chaos Will Reign For A Little While

I imagine a lot of investors looked at JPMorgan’s (JPM) first quarter earnings and guidance, and the start of this reporting cycle, at least a little like that oft-memed scene of Theoden before the Battle of Helms Deep in Lord of the Rings: The Tower Towers – “and so it begins”. Estimates were all over the place for JPMorgan with respect to provisioning, and while the core earnings reported by the bank were better than expected (an arguable point to be sure), investors were not impressed by the high ongoing levels of uncertainty and the risk of further increases to reserves in the coming quarters.

I do see some risk in JPMorgan management’s assumption of a meaningful second half recovery in 2020. Beyond the impact on earnings in 2020 and 2021, though, I don’t think that has much bearing on the value of the business. I continue to believe that JPMorgan is the best-run of the major banks, and I likewise believe that, as has been the case in the past, JPMorgan will emerge from this stronger than most of its rivals. With the valuation now meaningfully discounting the long-term value of the business, these shares are once again attractive.

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JPMorgan Will Be A Survivor, But Chaos Will Reign For A Little While