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There's trouble before the honeymoon even starts. Merger partners

Chase Manhattan Bank



J.P. Morgan

(JPM) - Get JPMorgan Chase & Co. Report

this morning warned that they would miss fourth quarter earnings estimates. No, they didn't blame ailing companies unable to pay back loans -- problems that have lately plagued other banks. In fact, the companies said non-performing assets are not expected to increase materially this quarter.

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For Chase and Morgan, the problems stem from troubles in their capital markets area. They said earnings would be "substantially lower" because trading revenues for both companies are expected to be lower than last year's fourth quarter and lower than the third quarter of this year.

This will be an issue to watch for among companies all over the map this quarter. Before the bottom fell out of the

Nasdaq earlier this year, many companies had begun to depend on their capital markets areas as an

important source of income. But now many of those investments have shrunk severely or gone bust.

Chase and Morgan said their combined investment banking revenues are expected to be modestly higher compared to the third quarter.

Still, financial companies have been beat up this year, and with most of the market expecting an interest-rate cut early next year, some market watchers think it's time to buy into this group. Financial companies benefit from lower rates because consumers and corporations are encouraged to take out more loans.

The companies this morning said they increased to $3.2 billion from $2.8 billion their estimate of one-time costs they'll incur because of the merger. The banks are eliminating 5,000 jobs because of the merger. Chase and Morgan will issue a joint fourth-quarter earnings release on Jan. 17.

After rallying steeply since last Thursday, both Chase and J.P. Morgan are setting up to give up some of those gains today.