It appears that the loss in the CIO division of JP Morgan (JPM) is now effecting their willingness to buy back stock, even though stock buybacks at current prices below tangible book value would significantly boost intrinsic value. I don’t think JP Morgan is making the right decision to do that as it reduces confidence in their capital allocation and leads to conspiracy theories on to the possible size of the trading losses. JP Morgan’s market cap has shrunk by $30 billion which seems to be an absurdly large amount given that the company is still likely to report a profit of $4 billion or more in the quarter even after the trading loss.
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