Jamie Dimon is Shaking in His Gucci’s

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Fourth quarter earnings season kicked-off in earnest last week, and soon one of the most tumultuous years in financial markets history will be in the books.

Some of America’s largest banks set the tone on Friday with results befitting for 2020: equal parts optimism and existential worry.

The Early Reports

Buoyed by a reversal of loan loss reserves, Wells Fargo and Citigroup each beat earnings expectations.

Then there was JP Morgan. The bank revealed it turned a record $12.1 billion profit in Q4. While some of results were driven by a reversal of loan loss reserves, many analysts were swooning over the numbers.

Color analyst Jim Cramer called it “one of the greatest quarters I have ever seen.”

  • Prime Strength: The majority of JPMorgan’s customers are “prime” borrowers who have “a lot more income,” noting consumers continue to pay down their credit card balances at an “extraordinary” pace.
  • JPMorgan reported a 20% increase in trading revenues, meaning it successfully captured the volatility you may have seen in your brokerage account.

Still, investors were turned-off by tepid loan growth and low net-interest rate margins which have long crimped bank profitability.

Fin Tech

Responding to a question from an analyst, Jamie Dimon expressed concern about the fin-tech players which are

Making note of Visa, PayPal, Ant Financial, Tencent, Facebook, Google, Apple, and Amazon, Dimon acknowledge there is a long list of talented companies he is “scared ” of. Exact quote.

The Takeaway

They have sky-high valuations (Square’s market cap is bigger than Goldman Sachs’) and have cut into traditional banks’ revenues with user-friendly, no-fee platforms.