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JPMorgan Joins "Perfect 10" Club With Flawless Trading Quarter, Morgan Stanley Loses Money On Just 4 Days

Tyler Durden's picture




 

Yesterday we discussed the statistically impossible trading desk results of Goldman Sachs, which reported in its 10Q that it lost money on exactly 0 days last quarter, and was profitable on 63 out of 63 days. Today we find that the rape and pillage of the middle class was not isolated to Goldman, and that JP Morgan also had a flawless quarter. And if the odds of Goldman making 63 out of 63 are virtually impossible in any universe in which risk goes hand in hand with return (but in those in which monopolies are encouraged and bailed out), the coincidence of the two main firms that control the world having a perfect track record is impossible2. And since things in reality tend to be zero sum, when everyone makes money, someone may be tempted to ask the question, just who is losing money? And the answer, dear taxpayers, and [Goldman|JPMorgan] clients, is you.

On this background, the performance by Morgan Stanley in which the firm disclosed a massive 4 loss days (granted in the smallest possible bucket), is downright pathetic. If MS, unlike GS and JPM, is unable to rape and pillage the middle class and its clients with impunity, it surely deserves to not be bailed out the next time the market implodes.

And going down the investment bank foodchain we end up with Jefferies, whose trading performance this quarter was deplorable not only compared to the abovementioned fine examples of perfection, but its own performance in Q1 2009.

And for those who want to laugh long and hard, here is the simply hilarious defense that Goldman's Gary Cohn came up with to defend his firm's prop trading monopolistic bonanza. Via Bloomberg:

Goldman Sachs Group Inc.’s infrequent sales and trading losses are evidence that the division doesn’t depend on proprietary trading to generate revenue, President and Chief Operating Officer Gary Cohn said.

“There is often speculation that proprietary trading revenues drive our outperformance in these businesses,” Cohn said today at a financial services conference hosted by UBS AG in New York. “Over the last 12 months we have only recorded 11 loss days. It is implausible that a proprietary-driven business model could be right 96 percent of the time.”

Goldman Sachs, which makes more money from sales and trading than any Wall Street firm, reported yesterday that it made at least $25 million trading every single day of the first quarter, the first perfect quarter in the company’s history. The company’s fixed-income, currencies and commodities business, known as FICC, and equities unit generate those returns by making markets for clients rather than betting the firm’s own money, Cohn said.

“The simple answer is that our FICC and equities businesses are largely global market-making businesses where we intermediate flows and commit capital and liquidity and in the process generate revenue including bid-offer spreads,” Cohn said. “These franchises create numerous opportunities for the firm.”

 

 

 

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Tue, 05/11/2010 - 14:05 | 343940 sweet ebony diamond
sweet ebony diamond's picture

how do i join this club?

and where is the hamptons?

Tue, 05/11/2010 - 14:11 | 344032 AnAnonymous
AnAnonymous's picture

Same way as usual: write the question test yourself.

Take example, never hand down a perfect test. A 100 pc record draws suspicion.  Always stage a few mistakes here and there as an evidence you dont cheat. Because a cheater would have it fully right, right? Especially if he is a greedy cheater.

Tue, 05/11/2010 - 13:46 | 343941 Jesse
Jesse's picture

 

It's good to be the King.  Or to at least buy the King.

Tue, 05/11/2010 - 13:49 | 343958 MyFriendMises
MyFriendMises's picture

"In life, we are Kings or Pawns."  I guess we know who is which. 

Tue, 05/11/2010 - 13:47 | 343948 Toiletducky
Toiletducky's picture

The World is Saved - No loss Everyday - Collusion of the Oligarchy Continues

Tue, 05/11/2010 - 13:57 | 343980 Divided States ...
Divided States of America's picture

I would like to know just who the FUCK is losing...besides me, that is.

Tue, 05/11/2010 - 14:08 | 344021 Cognitive Dissonance
Cognitive Dissonance's picture

And that's the point. Very few are "losing" including all those who have money in 401(k)s, IRAs, variable annuities etc. Consider this. When playing Monopoly, did you ever refuse the "Bank error in your favor" card? As long as the "middle class" is dealt into the Ponzi and the quarterly statements go higher, no one is going to make much of a fuss about this.

Fact of life Jack. The people are corrupt so why are we expecting the leaders to be different?

Tue, 05/11/2010 - 14:39 | 344131 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Ah yes, Catherine Austin-Fitts' "Red Button" scenario.

Tue, 05/11/2010 - 15:04 | 344204 DaveyJones
DaveyJones's picture

because people are stupid?

Tue, 05/11/2010 - 15:15 | 344241 drwells
drwells's picture

Yep. Rule #1 is to make the mark think he's conning you.

Tue, 05/11/2010 - 14:39 | 344128 moneymutt
moneymutt's picture

me

Tue, 05/11/2010 - 13:48 | 343950 silvertrain
silvertrain's picture

Wow, alot of home runs being hit here..Kinda reminds me back when I was watching the famous home run chases..With the likes of Bonds and Sosa and Maquire,wait a minute, Maquires keep showing up..You dont think they may be on the roids do ya? Or is all these numbers legit..

Tue, 05/11/2010 - 13:49 | 343955 prkr01
prkr01's picture

I have pretty much given up any hope of ever seeing change.Today I wrote my Senator Mark Udall pertaining to his Neah vote on the Vitter bill which Im sure was a waste of my time.Everything is corrupt in this country and suppose its time to just accept it.Lie cheat and steal is obviously the American Way.

Fri, 01/14/2011 - 02:19 | 875444 Bringin It
Bringin It's picture

Yes, it was a waste of time.  Yes, everything looks corrupt and likely is.  But you don't need to lie, cheat and steal.  You only damage yourself by doing so, IMO.

Tue, 05/11/2010 - 13:49 | 343957 buzzsaw99
buzzsaw99's picture

A lucrative and risk free business model. Congrats to the squid and JPMorgueman!

Tue, 05/11/2010 - 14:01 | 343998 mikla
mikla's picture

Yeah, and the only take-away is that Morgan Stanley is incompetent.  FOUR losing trading days?  Morons.

Tue, 05/11/2010 - 14:29 | 344094 sheeple
sheeple's picture

These guys are geniuses! When I grow up, I'll be a TBTF banker just like them!

Tue, 05/11/2010 - 13:51 | 343960 JW n FL
JW n FL's picture

What are you saying?

 

Algo's plus 0% Fed Window equal no losses? how?

 

I can't see it?

 

Investor confidience builds in a segment, luquidity... and BAM! POW!! SLAM!!! that segment is drained, BITCHES!!!!

 

I still cant see it???

 

0% Fed Window equals Purchaser of last resort, T-Bills? What the fuck kind of arbatraige is that? FED ON FED? porn?

 

I still am a little fuzzy...

Tue, 05/11/2010 - 13:56 | 343974 JW n FL
JW n FL's picture

Nice. Thanks!

Tue, 05/11/2010 - 14:00 | 343993 dan10400
dan10400's picture

 

++ as well.    

Tue, 05/11/2010 - 13:54 | 343965 Rick64
Rick64's picture

And what do these companies attribute their perfect and near perfect trading records to? Its not that incredible when you have a monopoly and access to interest free money.

Tue, 05/11/2010 - 13:55 | 343970 RobotTrader
RobotTrader's picture

I'm predicting a fresh, new, world record highs in cost of Hamptons rentals this summer.

LOL...

Tue, 05/11/2010 - 14:56 | 344174 Hulk
Hulk's picture

I'll take the one third from the left...

Tue, 05/11/2010 - 15:25 | 344272 living on the edge
living on the edge's picture

I agree....

Tue, 05/11/2010 - 22:44 | 345255 Dehrow
Dehrow's picture

Cool, you guys share that one, I'll take the rest.

Tue, 05/11/2010 - 13:55 | 343971 Mad Max
Mad Max's picture

All the banks are above average!

This time is different!

You're just jealous of their skill!

:)

Query: would it be statistically possible for a large casino to have a quarter with no days of losses?  (Incidentally this question was intended to be rhetorical, but I actually don't know the answer.)

Tue, 05/11/2010 - 14:11 | 344033 moneymishap
moneymishap's picture

I would like to see the statistical likelihood of two major banks having simultaneous flawless quarters.

Tue, 05/11/2010 - 14:43 | 344142 nedwardkelly
nedwardkelly's picture

All the banks are above average!

 

We may need to change the name from Wall Street to Lake Wobegone St.

Tue, 05/11/2010 - 14:10 | 343973 Howard_Beale
Howard_Beale's picture

Goldman Sachs

Putting the douche in fiduciary

Check it out at the ZH approved fundraiser store. Shirts available in a variety of colors.

www.zazzle.com/Howard_Beale 

If you want it on black--here it is!

http://www.zazzle.com/goldman_sachs_tshirt-235533267729549487

Tue, 05/11/2010 - 15:22 | 344263 DaveyJones
DaveyJones's picture

putting the douche in fiduciary (nice)

leave it to the french to fix our ethics

Tue, 05/11/2010 - 22:40 | 345249 Miyagi_san
Miyagi_san's picture

I laughed so hard the dog got spooked....is that stuff legit. I want the Audit The Fed, bumper sticker x 10 

Tue, 05/11/2010 - 13:57 | 343982 Ragnarok
Ragnarok's picture

Perfect 10 Club? Hardly.  Everybody knows the last 4 days is what separates the Gods from the demigods.

Tue, 05/11/2010 - 13:57 | 343983 ArkansasAngie
ArkansasAngie's picture

The reform votes are correlated with whether the Senator is up for election come November.

Vote -- it's the preferred method of throwing the bums out. 

You've been double and triple dog dared by the Senators who are counting on you not voting.

 

Tue, 05/11/2010 - 13:59 | 343990 williambanzai7
Tue, 05/11/2010 - 14:51 | 344159 Cognitive Dissonance
Cognitive Dissonance's picture

I just knew you were holding out on me. :>)

Tue, 05/11/2010 - 13:59 | 343991 JW n FL
Tue, 05/11/2010 - 14:00 | 343997 AccreditedEYE
AccreditedEYE's picture

“These franchises create numerous opportunities for the firm.”

Indeed... opportunities to front run, manipulate, defraud, lie, cheat, steal and become a monopolistic blood sucking Squid.  Getting so tired of the tolerance for this sh*t.

Tue, 05/11/2010 - 14:03 | 344007 no cnbc cretin
no cnbc cretin's picture

The rape and pillage of the middle class - history is repeating.

And the unemployed and under employed are losing money

in this permanent contraction.

Tue, 05/11/2010 - 14:06 | 344018 fuu
fuu's picture

Is it ok to call bullshit?

Tue, 05/11/2010 - 14:09 | 344028 gridlock
gridlock's picture

And it's not ending anytime soon - great report on Huffpost on the lobbying armies that made it perpetual - http://www.huffingtonpost.com/2010/05/11/big-bank-takeover-report_n_570847.html

Tue, 05/11/2010 - 14:11 | 344034 The Rogue Trader
The Rogue Trader's picture

Only way to compete with criminals in this market is to think like a criminal yourself....

Tue, 05/11/2010 - 14:14 | 344042 mister_x
Tue, 05/11/2010 - 14:19 | 344057 AR
AR's picture

TYLER -- Please, tell us to stop re-posting this.  We can't help ourselves.  Last Thursday's market action will be repeated in the future (no matter what government agencies put in place). Everyone should read Atlas Shrugged. These are grossly manipulated markets on many levels. They will eventually break down. It's a matter of timing. Be patient.  There is no Market...

by AR
on Mon, 02/22/2010 - 16:35
#240616

It's slow today, so I'll add to your comment. I've repeated this story over the last 6 months from time to time, and I'll do so again here. Back in June 2009, a colleague of ours (a $5+ Billion dollar hedge fund) traveled to Europe on a meet-n-greet, money raising campaign. At the time, he returned and said "there is 50% LESS MONEY out there to invest." I presumed his observation was due to lost investments, the meltdown, margin calls, etc..  Then, a month later (keep in mind they are large) he told us, "...there is no market..."  I said, what do you mean there is "no market?" He literally said, there is no market. What he meant was, they could not find market participants to take the other side of their trades -- literally. Bid/Ask spreads were huge, and there was no liquidity anymore for them initiate trades as they’ve done in the past (or, much less).

Since then (the last 4-6 months) all of us, have now discovered, exactly what he was talking about. There is NO MARKET (period). Volume is gone. Government, computers, quants, algos, HFT's -- whatever you want to label them – now are said to dominate 70% of all volume today. Thus, keep in mind too, that they dominate 70% of "today's volume" (which on the above premise, is 50% LESS than the real volume the market traded before the credit crisis).

So, think about all this. One, there is 50% less real volume. 70% of the existing (50%) volume is computer led. Thus leaving, theoretically, only 15% of the actual volume in today's markets being "true or real volume" (when compared to volume prior to the crisis).  Only 15%.  So... now we see the problem with the market's today. This is a huge structural shift (and problem). We don't see it getting better in the short-term.  Interesting dilemma. Good luck everyone...

 

Tue, 05/11/2010 - 14:26 | 344067 Tesla
Tesla's picture

Sorry, I'm a little slow. Can someone please explain to me how this works (The mechanics behind it)?

So Goldman, JPM, Morgan Stanley, etc all get free money, and they use that money for prop trading.

OK, fine--no cost of capital. I get this part, but how do you get zero losing trading days this way? When Goldman's prop desk takes a position, who is on the other side of this? I assume the gov't, since nobody else can keep losing money like this indefinitely (maybe some pension funds and a bunch of hedge funds in the aggregate, but I'm not hearing anything about any of them blowing up. Retail for the most part isn't even in the bond markets, so it's not them), but even then, how does this work? What are the mechanics?

 

Tue, 05/11/2010 - 14:40 | 344135 mikla
mikla's picture

They front-run their clients, and operate bucket shops (trades execute in dark pools off the exchange) so they can skim automatic profits on every trade.

Fraudulent, and illegal, but hey:  It's state-of-the-art.

Google "front running" and "bucket shops" for more (like:  http://en.wikipedia.org/wiki/Bucket_shop_%28stock_market%29 )

Further, they "sell" access to capital markets, market-make the commodities, and otherwise operate a "protection racket" for large funds (e.g., municipalities and pensions).  Really, there are a lot of sources to their guaranteed income, but the initial post is explicitly in reference to their trading/speculation desk (front-running and bucket shops), as well as their insider info fixing the daily market's activities.

Tue, 05/11/2010 - 14:43 | 344138 Tesla
Tesla's picture

I'll take a look--thanks.

Tue, 05/11/2010 - 14:24 | 344074 jory
jory's picture

I made a fortune last quarter.  Whiners and Complainers don't make money.  Play the Game, Losers.

 

 

Tue, 05/11/2010 - 14:26 | 344084 Tesla
Tesla's picture

Did you manage to do it without a single losing trading day?

Tue, 05/11/2010 - 14:43 | 344140 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Jory also hates gold and thinks silver is a small wooden spike in the hand.

Tue, 05/11/2010 - 14:58 | 344181 Hulk
Hulk's picture

You Fab?

Tue, 05/11/2010 - 18:34 | 344683 fxrxexexdxoxmx
fxrxexexdxoxmx's picture

Refusal to share your gains is a refusal of the POTUS's ideology. Anti-progressive acts are worse than jihadist inspired terrorism. Watch your step. Barry is looking for you.

Tue, 05/11/2010 - 14:27 | 344088 CorrelationTrader
CorrelationTrader's picture

Question Tyler, do their numbers include commission revenue in their trading revenue? or are they Just thieves in the HFT scam please front run my 500k IBM shares when I give you my order.

Your Pipe is bigger than my pipe.... that really is in the interest of a fair and efficient market pricing mechanism. Bring back the floor get rid of ecn's and grey markets!

Tue, 05/11/2010 - 14:38 | 344124 gridlock
gridlock's picture

Financials all slumped - some common sense legislation getting yeahs? How come, lobbyists at lunch?

Tue, 05/11/2010 - 14:40 | 344136 moneymutt
moneymutt's picture

Ins't this the same sort of results what tipped Markopolis off about Madoff? - not that I think its the same type of scheme...but just saying..

Tue, 05/11/2010 - 14:59 | 344184 Cursive
Cursive's picture

Bingo.  But a monkey type the bible before the porn-hungry SEC could connect these dots.

Tue, 05/11/2010 - 14:53 | 344166 The Rock
The Rock's picture

TD, could you please post the historical achievements of these fuckers?  Could you find out what is the record of the TBTF's for, say, 3 years before the Grand Act of 2008?  I would like to see a typical quarterly performance chart to compare before and after 2008.

 

TIA.

Tue, 05/11/2010 - 15:08 | 344216 GlassHammer
GlassHammer's picture

The Bigger the winner the more numerous the losers.

If your a small investor and winning in this market your just the most nimble minnow in the shark tank.

Tue, 05/11/2010 - 16:31 | 344373 Montecarlo
Montecarlo's picture

I shared this bit of news with some colleagues and my wife...everyone had the same reaction - "how is that possible?"     Right - this disclosure is going to do more to harm theGS and JPM more than they realize.  Even the uninformed realize how rigged it is.

Tue, 05/11/2010 - 15:27 | 344278 primefool
primefool's picture

Granma made exactly 0% on her savings account every single day last quarter. Perfect inverse correlation to the TBTF. Thanks Bennie Mae - you have truly done your constituency proud.

Tue, 05/11/2010 - 18:15 | 344629 Mentaliusanything
Mentaliusanything's picture

0% ???? well that shows you what value money holds. It is being rated at Junk

Real money has a cost and its expressed as a %

Tue, 05/11/2010 - 15:29 | 344281 living on the edge
living on the edge's picture

It will be interesting to see if these guys lost on the day of the crash.

Tue, 05/11/2010 - 16:25 | 344358 reading
reading's picture

doubtful...more likely that they closed up shop in terms of liquidity providing and went home hence the bidless market.

 

 

Tue, 05/11/2010 - 18:21 | 344638 monmick
monmick's picture

I, for one, think this is entirely plausible because I personally had 63 losing trading days out of 63 last quarter...

Tue, 05/11/2010 - 18:44 | 344711 benevolous
benevolous's picture

Bank of America was also perfect in Q1.

http://online.wsj.com/article/BT-CO-20100511-718495.html?mod=WSJ_latesth...

 

Of course, it's trading business is run by ex-squid Montag.

Tue, 05/11/2010 - 21:35 | 345094 jbt6561
jbt6561's picture

FBR Capital Markets was also perfect.  Smaller scale, but perfect just the same

http://www.sec.gov/Archives/edgar/data/1371446/000119312510114754/d10q.htm

Wed, 05/12/2010 - 04:48 | 345562 dcsos
dcsos's picture

Hey, that's better than Bernie's record!

You gotta believe the SEC when they say they'll have a case in 10 or so years

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