Finance

Michael P. Regan is a Bloomberg Gadfly columnist covering equities and financial services. He has covered stocks for Bloomberg News as a columnist and editor since 2007. He previously worked for the Associated Press.

This is not exactly what a company hopes to see happen when it holds an investors' day.

First, if you're JPMorgan Chase, the last thing you want your investors thinking about is the so-called London Whale trades that set the bank back $6.2 billion and change a few years ago. But sure enough, there was Bruno Iksil grabbing the headlines before the first slide deck was even posted, say that he was just following orders when making those infamous credit-default swap trades.

Daily Trouble
Shares of JPMorgan Chase continued to slide during its investors' day.
Source: Bloomberg
Intraday times are displayed in ET.

Things didn't get much better from there. JPMorgan executives spent almost the entire day discussing their business, and the shares just kept falling and falling, reaching their lowest level of the session as Chief Executive Officer Jamie Dimon came back on the mic to answer some final questions from analysts.  

It's hard to say exactly how much the executives' comments affected the company's stock, and the shares of other banks, because it was a weak day in the overall market, driven by the same forces that have hung over sentiment all year like a cloud that refuses to keep moving. Crude oil was plunging again, China's currency was weakening again, yield curves were flattening again. As a result, the S&P 500 tumbled again a day after capping a 6.4 percent rebound since Feb. 11, its best six-day rally since 2011.   

And here were bank stocks helping to lead the way down once again, with lenders in the S&P 500 dropping 3 percent as a group for the biggest decline after energy companies among 24 industries. There wasn't a large-cap bank in sight that lost less than 1 percent. That perhaps calls into question the nascent rebound in bank shares from multiyear lows earlier this month, though it's possible it's also just a breather. After all, the group did jump more than 10 percent collectively in the previous six sessions, its biggest gain over that many days since 2012.

That whole turnaround began, it should be noted, right after it was reported that Dimon spent almost $27 million -- a whole year's pay -- buying shares of his own bank after they fell below book value. That has a lot of people calling the two-year low in benchmark indexes on Feb. 11 "the Dimon low."    

On Tuesday, however, it was JPMorgan's turn to play spoiler as it presented plenty of reminders of the concerns that have made banks the biggest drag on the market this year. Its shares sank 4.2 percent after a 10 percent surge in the previous six sessions. 

Dimon tried his best to talk up the positives, saying that the gloom in the markets is wrong and the economy should continue to "chug along" with indicators on the health of consumers continuing to show strength.   

But markets were focused on other things. The biggest U.S. lender said that if oil were to hold near $25 a barrel for 18 months, it would need to boost reserves for impaired energy loans by $1.5 billion. Investment bank customers are still shellshocked amid the market volatility, with trading revenue down 20 percent from the previous year and investment banking down 25 percent. Furthermore, there's not likely to be much of a bonanza in net-interest income because the bank doesn't expect rates to move much this year or next.

But Dimon is still bullish about JPMorgan's business and unapologetic about its size and mission.

In response to a question from analyst Mike Mayo of CLSA, who asked Dimon how he would explain the benefits of being a too-big-to-fail bank to the analyst's mother-in-law, Dimon responded that it was like trying to explain how lithium-ion batteries or Boeing jets work.

"It's just hard to explain to your mother-in-law what you do and why," he said, drawing some sympathetic chuckles from the crowd.

You know it's a tough day when you have to play the mother-in-law card.   

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Michael P. Regan in New York at mregan12@bloomberg.net

To contact the editor responsible for this story:
Daniel Niemi at dniemi1@bloomberg.net