London, United Kingdom (PressExposure) January 22, 2010 -- Sources close to analysts at "Zen International" say that the recent quadrupling of profits at JP Morgan need to be taken in context citing the fact that they were generated from the US banking giant's investment banking business rather than from retail banking activities.
This, they suggest, lends further weight to the argument that the US consumer remains constrained by the effects of America's slowly recovering economy.
"Zen International" believes that the bank's decision to increase provisions for future defaults on consumer loans shows that, despite the efforts of the US government to reverse the progress of the country's economic lethargy, the effects have yet to filter through to the consumer.
The firm warned clients that further evidence of a similar nature would eventually spark a reversal of sentiment among investors especially if it comes from retailers.
JP Morgan is the first big US bank to post quarterly results for the 4th quarter of 2009 and "Zen International" sources say that the markets will be eagerly awaiting those from Bank of America and Citigroup. They expect further evidence to emerge that despite America's technical emergence from recession, the loss of 7.5 million jobs since the start of the recession and the dearth of available credit continue to point to a slower and more painful recovery than economists have forecast.