JPMorgan Chase posted a strong profit beat this morning ($5.23 EPS vs. $5.00 est), but the market reaction is chilly (-2.8%).
Why the sell-off? It comes down to a “high bar” set by 2025’s rally, a surprise miss in Investment Banking, and growing anxiety over Washington’s credit card proposals.
📊 THE TALE OF TWO DESKS:
- 🚀 Trading (The Winner): Markets revenue surged 17%, driven by a massive 40% jump in Equities. Volatility in AI stocks and interest rate speculation fueled a windfall for the prime brokerage unit.
- 🛑 Investment Banking (The Lag): Despite advising on mega-deals (Warner Bros/Netflix, Kimberly-Clark/Kenvue), IB fees fell 5%, missing analyst estimates by 8%. The anticipated dealmaking boom hasn’t fully monetized yet.
💳 THE STRATEGIC SHIFTS:
- The Apple Card Bet: JPM took a $2.2 billion provision tied to taking over the Apple credit card partnership from Goldman Sachs. It’s a costly entry ticket, but solidifies their consumer dominance.
- The Rate Cap Threat: Management didn’t mince words about the Trump Administration’s proposed 10% credit card rate cap. CFO Jeremy Barnum warned it would be “very bad for consumers” and force the bank to “significantly” change its business model—likely cutting access to credit.
🏗️ THE MACRO VIEW: Jamie Dimon remains cautiously optimistic, calling the US economy “resilient.”
- NII Guidance: Expecting ~$95 billion for 2026 (ex-markets).
- Consumer Health: Stable, with no substantial rise in delinquencies despite a softening labor market.
💡 ANALYST TAKEAWAY: JPMorgan is a victim of its own success. With the stock up 34% in 2025, it was priced for perfection. While the Equity Trading blowout proves the franchise’s versatility, the “Wait-and-See” approach on Investment Banking recovery—combined with the looming regulatory headache of a rate cap—is giving investors a reason to take profits.
👇 Bankers: Is the dip in IB fees a blip before a 2026 M&A super-cycle, or are deal timelines stretching out longer than expected?