JPM posted some good numbers in Q2. Buoyed by trading and underwriting profits, they earned 27 cents per share, easily surpassing expectations. They even ponied up $27 billion of TARP money. That's the good news. The bad news was in commercial real estate and credit cards. CEO Jamie Dimon doesn't see the recession ending just yet, so they're upping their loan loss reserves.
So how do you play this? I'm looking hard at shorting the KBW Regional Banking ETF (KRE). Compare it the Financial Select Sector SPDR ETF (XLF). The former is off about 36%, while the later is only down 3%. KRE is also trading at a higher P/E than XLF. I would think that's going to change soon. The regional banks don't have the same wherewithal as the big banks to handle the commercial real estate and credit card meltdown that's underway.
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