Transcription
JP Morgan Chase just made $16.9 billion in just three months. And the most honest sentence in the entire earnings call didn't come from a press release. Came from Jamie Diamond himself.
By the end of this video, you're going to understand exactly how the same chaos that's crushing your mortgage and your portfolio right now is getting harvested for profit on a trading floor a few miles away. And why that is not an accident. Not at all.
Okay, here's the headline that every outlet ran this past week. JP Morgan's core net income hit $16.9 billion for the second quarter, crushing the $5.80 per share analyst estimate on a headline basis, including a one-time $4.6 billion gain from its Visa shares, plus another billion in equity investment gains. Reported net income was even higher at $21.2 billion. Strip out both of those one-time items. The $16.9 billion figure everyone's quoting and underlying profit still grew 13% year-over-year, which is really good. This was not an accounting trick at all. This was the core business.
On top of that, JP Morgan posted a 23% uh return on tangible common equity for the quarter. That's well above its own long-term target. and it raised fullear net interest income guidance to 100.5 billion up from 103 billion. That is a not a one-time number either. That is the bank telling investors it expects this pace to continue for the rest of the year.
And JP Morgan was not alone. Goldman Sachs's profits soared 78% on its own trading rally the same week. Across the board, all five major US banks beat Wall Street's estimates this earning season. Every financial headline is framing this as a banking success story. Strong consumer, strong deal making, strong balance sheets. That's the story that the mainstream media on television is telling you right now.
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Okay, here's the crack in that story. You knew I was going to tell you about it, didn't you? The engine behind this quarter was not lending at all. It was trading. JP Morgan's market division pulled in a record 122.1 billion. That's up 35% year-over-year. Fixed income trading rose a modest 6% to 6.1 billion. But equities trading revenue surged 86% to 6 billion. One of the largest quarterly jumps in the division's entire history. That one number, equities up 86%, is what actually carried this entire quarter for the bank.
Now, here's the shadow data that matters more than the headline. You know, I love it. JP Morgan's own chief financial officer, Jeremy Barnum, told analysts exactly what drove that equity surge. His words were major IPOs, major index rebalancing, and what he called complicated dynamics in the Korean equity market on top of the elevated client activity across Asia. He called the environment dynamic and interesting. Interesting indeed. And he added something most headlines completely left out. He warned this level of equities revenue might not repeat.
Think about what Barnum just described. South Korea's market has triggered trading halts three dozen times so far this year alone. I put out a video on that. That is the same volatility regime that just knocked Taiwan's stock market into its worst single day in history and dragged Bitcoin below 64K this week.
Now, JP Morgan didn't need Friday's chip selloff to post this quarter's numbers. Its quarter closed before that selloff even happened. What JP Morgan needed was the underlying condition that produces sell-offs just like that one. And that condition hasn't gone anywhere. It just flared up again this past week in real time right after the books closed on the quarter that already benefited from it.
Here's the mechanism underneath all of this. A trading desk does not care which direction a market moves in. It gets paid on volume and on spread between it what a buyer will pay and what a seller will accept. When markets are calm, that spread is thin and volume is light. When markets are panicking, spreads widen and volume explodes because everyone needs to reposition at once. Your 401k only makes money when the market goes up. A tier one trading desk makes money when the market moves at all up, down, or sideways in a panic. That asymmetry is the entire business model. And the structural fuel for that volatility is simply not going away.
The same deficit spending that's keeping your mortgage rate stuck above 6 12% is also flooding bond markets with supply that has to get absorbed somewhere. The same geopolitical escalation push pushing oil toward 88 bucks a barrel is also what sends clients scrambling to reposition their books through a bank's trading desk. Main Street experienced that as a cost. Wall Street's markets division experiences that exact same event as a fee.
Diamond himself said the quiet part out loud in the same call. His exact words were, "It is getting close to as good as it gets." End quote. we just don't know how long it's going to last." End quote. And separately, he warned that risk is shifting below the surface like tectonic plates, pointing directly at geopolitical conflict, sticky inflation, and government deficits as the fault lines. That's the man who just posted a record quarter telling you the the record quarter is built on borrowed time. Take note.
Now, here is the part that should actually bother you. On the same earnings call, Diamond disclosed that artificial intelligence has already cut staffing by up to 40% in some divisions at JP Morgan. Should I say that again to you? I think I'm going to I'm going to tell it to you again because it's that important. Diamond disclosed that artificial intelligence has already cut staffing by up to 40% in some divisions at JP Morg. Okay, take note of that as well.
The same institutional harvesting record fee uh recording record fees from markets chaos is simultaneously automating away the human jobs on the other side of its own balance sheet. One side of the bank is booming because the economy is under stress. The other side of the same bank is shrinking its own workforce. While that boom happens, wow guys, here it comes. That is the K-shaped economy showing up inside a single company's own income statement. Once again, that magic letter K.
So, what do you actually watch for from here on? Well, watch whether this week's fresh sell off in chip stocks and Bitcoin and the renewed oil shock out of the straight horm shows up as another trading windfall when the third quarter numbers come out in October. Watch whether Barnum's own warning holds up that this level of equities revenue does not repeat. and watch the other banks that report this season because if a if Bank of America, Cityroup, and Wells Fargo all showed the same pattern, this is not one bank having a lucky quarter. It's the entire systems plumbing, getting paid to process your panic.
This doesn't mean JP Morgan did anything wrong or that the results were fake. The $6.9 billion is real. The 86% equity surge is also real. What is misleading is the framing that treats a record banking quarter as proof that the economy is healthy when the same report shows you was built on the exact disclos uh dislocations that are squeezing everyone who's not sitting on a trading desk right now.
So your truth bomb for today is this. JP Morgan's record $16.9 billion quarter was never proof that the economy is fine. was proof that a tier one trading desk gets paid every time the same deficit and geopolitical shocks that are crushing your mortgage and your portfolio force the world world to trade. Join me every day for Wall Street truth bombs or drop them right here before the market figures them.