Seeking Alpha
Registered investment advisor, macro, ETF investing
Profile| Send Message|
( followers)  

JP Morgan (NYSE:JPM) reported this morning, beating on EPS ($1.30 vs $1.24 est) and slightly missing on revenue ($23.16bn vs $23.19bn est). Historically, the stock has not had very volatile days on earnings (an average 1-day move of -8 bps), but large selloffs have come when the Equities & FICC Markets business has reported a slow quarter. The Markets business is highly volatile and was 17.7% of total revenue this quarter, so big swings in trading revenue for the unit can flow right to the bank's bottom line.

Since the start of 2012 (the last 7 reporting dates), JPM has only been down on the day following earnings when the markets business has reported decreases in revenue year-over-year of more than 5%. In the chart below, the bar graphs represent year-over-year revenue growth (%) for the markets business and the line illustrates 1-day returns for the stock on the day it reports earnings. With today's flat revenue growth in markets, we wouldn't expect a negative reaction to the report.

(click to enlarge)

Source: JPM Markets Business And Following Day Returns