America’s biggest bank, JP Morgan (JPM), kicked off the US earnings season on Friday along with several other big names. The bank saw earnings and revenues both topping forecasts in Q4 with EPS of $3.57 vs $3.05 expected on revenues of $34.54 billion vs $34.35 billion expected. While the headline figures were positive, sending the bank’s stock soaring by almost 6% on Fridays, there were some other details that have raised some uncertainty for the broader US economy.
 

Hidden Warning Signs

JP Morgan’s projections for net interest income (money the bank receives on deposits) were below market forecasts at $74 billion. The group’s CEO Jamie Dimon added some color to this explaining that higher rates were driving greater competition among savers. In light of this, the bank warned that it will need to change its rates to become more attractive to prospective savers.

Additionally, Dimon warned that while conditions were generally favorable, there are plenty of downside risks for the US economy. Dimon cited uncertainty linked to ongoing Russia – Ukraine conflict alongside energy and food supply issues and persistent inflation as the key threats to monitor.
 

Near-Term Outlook

In all, the guidance on net interest income, along with concerns over downside risks, was broadly in line with current forecasts for a US recession this year. However, given strong headline performance, should one or more of these risk factors suddenly improve in the coming quarter, this would represent clear upside risks for the bank’s stock.
 

Technical Views

JP Morgan

(Click on image to enlarge)

The rally in JPM stock off the 2022 lows has seen the market moving higher within a bull channel. Price is currently testing the 142.12 resistance level and, with momentum studies firmly bullish, the focus is on a continuation higher and a test of the 152.15 level next. To the downside, should the price slip back below the bull channel, 128.58 is the next support to note.

More By This Author: