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JP Morgan (NYSE:JPM) released Q2 results and told everyone that Bear Stearns (NYSE:BSC) does not taste very good. At the same time it is experiencing substantial write offs in most operating areas, as credit quality worsens and spreads compress.

For a financial institution of this size it is not hard to release a blizzard of numbers and declare disclosure has occurred. So you look at the little things and see if you can guess/ intuit/ extrapolate and otherwise back into reasonable conclusions. By the way SEC, if you hear rumors of any kind about JP Morgan, just look at these statements and wonder if you are well informed. Even JP Morgan will admit in an exculpatory caveat that the numbers are on a managed basis.

Several thoughts come to mind. The press release has little to no mention of the words Sub-Prime, Collateralized Debt Obligations, Freddie Mac (FRE) and Fannie Mae (FNM). JP Morgan claims to be experiencing write offs on the consumer side. It makes no mention if this is still from the funny money derivative stuff or are its own direct lending efforts coming up short? Don’t tell me everything was parked in investment banking, we all know that’s not really accurate.

Everyone has been watching Freddie & Fannie, waiting for the other shoe to drop. Somewhere in JPMorgan the risk management guys should know to the penny what its exposures are. The press release did not cover the issue. Perhaps it’s hidden somewhere in the unmanaged portion of the company's financial statements and investors have not found it as of yet.

The gunslinger mentality dies hard. The press release mentions the company's prowess as number one in several investment banking categories. Yet at the same time it is writing off huge amounts within the investment banking area.

Disclosure: None

Source: JP Morgan Puts on a Brave Face