JP Morgan (JPM) Misses Bottom Line, EPS of $4.63 Well Below Estimates, -8.7% from 3rd Quarter, -3.7% Y-O-Y; Trump Targeting Iran Again

The first big fourth quarter earnings release was forwarded Tuesday morning by the largest bank in the U.S. by assets, JP Morgan Chase (JPM).

The company reported diluted earnings per share of $4.63, compared to $5.07 in the third quarter and $4.81 in the same period a year ago. From a bottom line perspective, it's clear that business is going in reverse at the venerable ship of state with the "fortress balance sheet." EPS estimates were largely in a range of $4.90-5.00. This constitutes a very big miss and a sets a poor tone for earnings season, just now beginning.

Further on, as one delves deeper into the company’s numbers, the declines in gross and net income indicate a severe decline that cannot be attributed to the 43-day government shutdown from October 1 into November, but to underlying factors stemming primarily from consumer spending trends.

The company breaks down their results into sections, though it is within Consumer & Community Banking (CCB) that most of the financial damage can be seen. Net income was $3.6 billion, down 9% from the fourth quarter of 2024, and down 27% from the prior quarter.

Company-wide, provision for credit losses was $4.7 billion. Net charge-offs were $2.5 billion, up $150 million, predominantly driven by Wholesale. The net reserve build was $2.1 billion, reflecting a $2.2 billion reserve established for the forward purchase commitment of the Apple credit card portfolio. In the prior year, the provision was $2.6 billion, net charge-offs were $2.4 billion and the net reserve build was $267 million.

Net revenue of $46,767 billion, was down from $47,120 billion in the third quarter, but up 7% from $43,738 billion in the 2024 fourth quarter, rouhgly in-line with inflation, which means the company was mostly treading water for all of 2025. They are losing share and money is fleeing from their credit card business, just as they take on the Apple Card portfolio, taken over from management by Goldman Sachs. The $2.2 billion reserve established just for that portfolio is stunning, given that Apple customers are widely regarded to be fiscally prudent. The fact that Goldman sought to unload the unit is indicating the opposite. Expect more write-downs when JPM issues first quarter results in April.

JP Morgan's results reflect similarities in other U.S. large-cap companies, which, while they routinely beat estimates, they fall short on either y-o-y or prior quarter earnings, the straightaway implication that the business is, not growing, but rather, contracting. Nonetheless, stocks continue to rise. The Shiller PE ratio (CAPE) finished Monday at 41.01, a new interim high, second only to the record 44.19 of December 1999, just prior to the dotcom bust.

On Monday, stocks took the usual path of least resistance, starting lower and ending higher. The Dow Jones Industrials erased an opening loss of more than 400 points to close 89 higher. The S&P and NASDAQ followed similar paths, though overall, trading was muted.

One might reasonably expect a wave of tax-related selling in profitable names, given that any gains taken now won't need to be reported until April 2027, generating a very solid free cash flow. If markets sense weakness, tax-related selling will likely exacerbate losses. JPM's benchmark report is not setting a very bullish precedent.

Gold and silver started off the week with a bang, both at record highs. Gold closed out Monday at $4585.89; silver finished at $83.94 an ounce. Both are ripping higher in the aftermath of the CPI release. Gold, $4609.00; Silver, $87.57.

The BLS released a statement at 8:30 am ET:

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent on a seasonally adjusted basis in December, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 2.7 percent before seasonal adjustment.

On that release, stock futures initially spiked higher off earlier lows, but are quickly retreating as the opening bell approaches.

Things might get a bit dicey today and for the rest of the week and earnings season, especially, in addition to somewhat dour economic tones, President Trump is amping up aggression aimed at Iran. His continued semi-psychotic actions adding to the uncertainty and unease.

At the Close, Monday, January 12, 2026:
Dow: 49,590.20, +86.10 (+0.17%)
NASDAQ: 23,733.90, +62.60 (+0.26%)
S&P 500: 6,977.27, +10.99 (+0.16%)
NYSE Composite: 22,695.93, +104.23 (+0.46%)