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JPMorgan’s Whale Autopsy: Do You Really Need to See the Gory Details?


In almost every murder case, the prosecutor waits to see the autopsy results before deciding if — or how — to pursue the case. While coroners are accustomed to dealing with such things, for the general public the gory details are typically shocking. But that doesn't mean juries don't need to see them.

In much the same way, the board of JPMorgan Chase (JPM) is weighing whether or not to release the details of its own forensic analysis. They performed a six-month dissection of the London Whale, a spate of outsized risk-taking and derivative trading that cost the nation's biggest bank an estimated $8 billion to extract itself, as well as many multiples more in lost market value of the stock.

"Obviously people have talked about some pretty big numbers out there," says Anton Schutz, president and CIO of Mendon Capital. "We all want to know how big [the trades] were, when did they know about it and how soon did they report it to us."

Related: London Whale Tail Takes Aim at Dimon's Bonus

Like many observers, Schutz expects the matter to impact JPMorgan CEO Jamie Dimon's compensation but not his job. However, he is unsure whether ''privacy issues'' will ultimately block the report's release. "Some disclosure there might be interesting and might point to issues, even potential fraud, from an accounting perspective," he says.

In the meantime, the bank will release its fourth quarter results Wednesday morning, which Schutz expects "will be very noisy." Officially, Wall Street is expecting to see $1.22 per share in earnings, up from $0.90 a year ago. But Schutz says JPMorgan's peerless balance sheet and array of businesses should still be clearly noticeable through the fog. "When you cut through all of it, this bank is going to show they're just putting away a ton of capital every quarter in terms of earnings," he says.

Related: Big Bank Earnings: A Make-or-Break Week Ahead

At the same time, Wednesday will also bring us the latest from Goldman Sachs (GS), a stock that just hit a new 52-week high after gaining about 50% in the past six months. Officially, analysts are expecting an 85% increase in earnings per share this quarter, to $3.40 from $1.84 a year ago.

Schutz is more interested in what the country's leading investment bank has to say about the year to come. "To me the brokerage firms are more about the pipeline and what happens in the future than looking in the rear-view mirror," he says, highlighting their leverage to political and economic certainty and strength. "Really, there's nothing more sensitive than a pure broker dealer or a bank."

He adds that as long as "Washington doesn't mess this up," 2013 should be another good year for banks, underwriting and IPO's.