JP Morgan upgrades Deutsche Bank from underweight to "neutral"

Discussion in 'Stocks' started by ASusilovic, Jun 10, 2009.

  1. "We just don't believe they suck as bad as they did a few months ago" said Jamie Dimon. :cool:
  2. Performance Deutsche Bank last 6 month :

    +66, 7 %.

    :p :) :D
  3. And here comes the same banks research note :

    JP Morgan sees repeat fixed income performance for investment banks

    All things considered, investment banks managed a stellar first-quarter — with results lifted by performances in their fixed income units.

    The big question hanging over bank-watchers since, has been whether the IBs can repeat that performance in subsequent quarters. Some commentators, like James Kwak over at The Baseline Scenario, were sceptical. In fact, Kwak noted back in April that in order to repeat its Q1 earnings of $2.1bn in net income, a bank like JP Morgan would have to repeat “unprecedented, exceptional, super-duper” fixed income trading revenues quarter after quarter.

    Now, JP Morgan’s own banking analysts have issued a 73-page research note claiming IBs can, and will, post stellar fixed income gains — for the whole of 2009, and even 2010 — though on a lesser scale. Here’s the comment from the analysts

    We expect Investment & Wholesale Banks to post record revenues in Fixed Income, supported by very favorable market conditions (high volatility, wider margins and strong issuance volumes) and a fundamental change in the competitive landscape. We estimate Fixed Income will be the main earnings driver in 2009E, accounting for 14% to 61% of group revenues in 2009E, and more than offsetting the increase in loan loss provisions.

    . . .

    2010E IB revenues down -13% vs. 2009E, bringing revenue levels more in line with 2005. Investment Banking revenues decline in 2010E as we expect Fixed Income prop trading revenues to halve vs. 2009E and Fixed Income flow revenues decline -28% in 2010E/09E with more normal Fixed Income market conditions — lower volatility, lower issuance volumes and margin erosion vs. exceptional 2009E levels. However, Fixed Income still remains the main revenue driver in IB in 2010E, with Fixed Income revenue level between 2005 and 2006 whilst total IB revenues are more in line with 2005 level.


    Which should make IBs’ total 2009 and 2010 revenue performances look something like the below, according to JPM. Click to enlarge.


  4. The downturn in the bond market since the beginning of April, the second quarter, should make that a near impossibility assuming that a bank like JPM has a long-bias in the bond market. :cool:
  5. "Efficient markets theory"...HAHAHAHAHAHAHHAAH

  6. "Record profits in fixed income trading" = banker lingo for CDS payouts from AIG courtesy of US taxpayers :cool:
  7. In the hope that the equity rally will finance a new wave of "consumer spending"...but so far people are aware that they must save money and repay consumer spending driven recovery...outsch !