Goldman Breaks Down How JP Morgan's Trading Loss Could Hurt S&P 500 Earnings

Photo: kohane

Earnings season is underway.  aluminium giant Alcoa unofficially kicked things off yesterday by announcing better-than-expected Q2 results.The next major company to announce is JP Morgan, which will release its Q2 earnings on Friday.

All eyes will be on any new details regarding its disastrous CIO trading losses, which are estimated to be somewhere between $2 billion and $9 billion.

These numbers will be watched by more than just the bank’s investors.

“When JP Morgan reports earnings on July 13th, the magnitude of its hedging losses will impact S&P 500 index-level EPS,” wrote Goldman Sachs’ analyst Amanda Sneider. “Every $1 billion in JP Morgan earnings represents $0.11 of S&P 500 EPS.

Wall Street expects the S&P 500 to collectively deliver $25.01 of EPS, so the size of JP Morgan’s trading loss will certainly be material.

Here are Goldman’s scenarios based on estimates from their Financials team.

jp morgan cio

Photo: Goldman Sachs

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