Abdul Kalam

JPMorgan Chase: Poisoned by Bear's 5,000 Counterparties

JPM only acquired the banking operation of WaMu, i.e., mostly its deposits and not the toxic mortgages (lesson learnt from Bear's acquisation). The bargain with Bear would compensate for the toxic assets acquired. In a nutshell, I expect JPM to be more stronger in the coming years. People talk about trillons when it comes to derivatives. But the net counter party trades is only few billions. Take for instance the settlement of Lehman's derivatives. The actual CDOs of 400+ billion led to net inter party exchange of only 4-5 billion. After Lehman's failure, fed and treasury has made it clear that it won't allow any other financial institution to fail.

The only thing I am concerned about is the rising unemployment which would cause credit card and mortgage defaults. This could lead to losses.

From technical analysis perspective, I see shares of JPM reaching $40 in december.