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Halftime Pt. 1: JPMorgan Reveals Key Insights For Other Banks

On the surface they seem better than expected but stocks turned negative on Thursday, as the Street feared what lies beneath recent earnings from JPMorgan.

Don't panic, it’s not all bad - there’s both positive and negative in the numbers.

Key Insights for Other Banks

First the negative - according to David Geroge of RW Baird one of the biggest negatives is that loans continued to shrink. And in some areas, including prime mortgages, more loans stopped performing all together.

Also rates are still very low and that’s weighing on spread revenue.

All told, those factors “will likely have an impact on all (money center) banks as we go through earnings,” says George on the Halftime Report. That bodes poorly for Citigroup and Bank of America, which report earnings on Friday.

Now the positive. JPMorgan's trading revenue was weaker than last year but better than expected.

That might be a positive sign for rivals Goldman Sachs and Morgan Stanley, which report next week, according to Reuters.

Key Insights for Broad Market

However, comments made by CEO Jamie Dimon about the economy spooked investors most and triggered weakness in the overall market. "It is too early to say how much improvement we will see from here," he said, a much more sober assessment of the recovery than investors expected.

What should you make of it all?

In the wake of JP Morgan as well as some weak economic data the market looks a little squishy here, says Guy Adami. I’m bearish. The rally over the last few weeks has been on anemic volume and the market couldn’t rally despite blockbuster numbers from Intel. Ultimately I think the market goes lower.

I think we’re in a period of consolidation which is bullish, counters Jon Najarian. The bear market scenario is largely based on double-dip fears pegged to consumers cutting back. But the results out of JPMorgan show delinquencies are down.

It’s true that delinquencies are down at JP Morgan and also Target but I’m not sure that means the consumer is back, muses Patty Edwards. I think people are paying off credit cards because they have no choice. But I wouldn’t take the data to mean all is well in consumer land.

Looking at JPMorgan, I have an ‘Outperform’ rating on the stock, says David George of RW Baird. It’s likely the bank will show continued capital build and credit improvement over time. I expect to see upside in shares, he says.

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EXPLOSIVE MOVE HIGHER IN EURO

Meanwhile, bleak economic data here in the US sent investors piling into the euro , which traded sharply higher on Thursday.

What should you make of it?

The Fed minutes released Wednesday suggested to investors that rates here in the US weren’t going to climb anytime soon, muses Brian Kelly. I think that's partly what triggered the renewed interest in Europe's currency.

I expect the euro to climb as high as 129 or 130, says Guy Adami, but then I’d get short. Ultimately I expect the euro to trade to parity with the dollar.

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TAKE YOUR POSITION: APPLE

Once again the traders are keeping a close eye on Apple after the company said it will hold a press conference tomorrow to discuss growing concerns about receptions problems with the new iPhone 4.

What’s the trade?

Apple is smart, says Patty Edwards. I expect they have a solution to the problem or they wouldn’t have the press conference. I think after the event the stock goes higher.

I’m seeing a lot of institutional investors buying 10% out of the money puts in Apple, says Jon Najarian. That’s negative and it suggests to me that big money is nervous.

If you’re been waiting for a pull back, I’d close my eyes and buy the stock around $230 and hope for better days, says Guy Adami.

What do you think? We want to know!










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TOPPING THE TAPE: BP HIGHER AS LEAK SHOWING PROGRESS

Shares of BP traded higher on Thursday after the company said it has fixed a leak in its highly anticipated cap and is now ready to see if the 75-ton stopper can contain the massive oil spill

What’s the trade?

The only thing that capping the well does is provides some clarity on what the company’s liability may be, says Brian Kelly. But I think there are much better ways to play the space than with BP.

I’m seeing a lot of upside calls trading in Anadarko, adds Jon Najarian.

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Trader disclosure: On July 14, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Najarian Owns (APC), Is Short ( APC ) Calls; Najarian Owns (VVUS), Is Short (VVUS) Calls; Najarian Owns (ARNA), Is Short (ARNA) Calls; Kelly Owns (BP) Puts; Kelly Is Short (GS); Adami owns (AGU), (BTU), (NUE), (C), (GS), (INTC), (MSFT); Adami’s wife works at Merck;

For Patty Edwards
Edwards Owns (JPM) For Clients
Edwards Owns (MS) For Clients
Edwards Owns (BAC) For Clients
Edwards Owns (C) For Clients
Edwards Owns (WFC) For Clients
Edwards Owns (RIG) For Clients
Edwards Owns (XOM) For Clients
Edwards Owns (AAPL) For Clients
Edwards Owns (GOOG) For Clients
Edwards Owns (YHOO) For Clients
Edwards Owns (MSFT) For Clients
Edwards Owns S&P 500 For Clients
Edwards Owns Nasdaq 100 For Clients
Edwards Owns Gold For Clients
Edwards Owns Silver For Clients
Edwards Owns (VXX) For Clients

For Brian Kelly
Accounts Managed By Kanundrum Capital Own (GLD)
Accounts Managed By Kanundrum Capital Own (TLT)
Accounts Managed By Kanundrum Capital Own (AUY)
Accounts Managed By Kanundrum Capital Own (GFI)
Accounts Managed By Kanundrum Capital Own (C)
Accounts Managed By Kanundrum Capital Own (GME)
Accounts Managed By Kanundrum Capital Own (BIG)
Accounts Managed By Kanundrum Capital Own (NWL)
Accounts Managed By Kanundrum Capital Are Long Japanese Yen
Accounts Managed By Kanundrum Capital Are Short (USO)
Accounts Managed By Kanundrum Capital Are Short Australian Dollar
Accounts Managed By Kanundrum Capital Are Short (AMZN)
Accounts Managed By Kanundrum Capital Are Short (KMX)
Accounts Managed By Kanundrum Capital Are Short (FXI)
Accounts Managed By Kanundrum Capital Are Short (EWO)
Accounts Managed By Kanundrum Capital Are Short (EWI)
Accounts Managed By Kanundrum Capital Are Short (JOE)
Accounts Managed By Kanundrum Capital Are Short (RSX)
Accounts Managed By Kanundrum Capital Are Short (SLX)
Accounts Managed By Kanundrum Capital Are Short (CSX)
Accounts Managed By Kanundrum Capital Are Short (FCX)

For David George
Robert W. Baird & Co. And/Or Affiliates Expect To Receive/Seek Investment Banking Compensation From (JPM) In Next 3 Months

CNBC.com with wires

Symbol
Price
 
Change
%Change
S&P 500
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APC
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BAC
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BP.
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C
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GS
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MS
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TGT
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JPM MLP ETN
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AAPL
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