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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sweet ebony diamond's picture

how do i join this club?

and where is the hamptons?

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.

Jesse's picture


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

MyFriendMises's picture

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

Toiletducky's picture

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

Divided States of America's picture

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

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?

Mr Lennon Hendrix's picture

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

drwells's picture

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

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..

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.

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.

buzzsaw99's picture

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

mikla's picture

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

sheeple's picture

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

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...

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.

RobotTrader's picture

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


Hulk's picture

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

Dehrow's picture

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

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.)

moneymishap's picture

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

nedwardkelly's picture

All the banks are above average!


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

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. 

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

DaveyJones's picture

putting the douche in fiduciary (nice)

leave it to the french to fix our ethics

Miyagi_san's picture

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

Ragnarok's picture

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

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.


Cognitive Dissonance's picture

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

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.

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.

fuu's picture

Is it ok to call bullshit?

gridlock's picture

And it's not ending anytime soon - great report on Huffpost on the lobbying armies that made it perpetual -

The Rogue Trader's picture

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

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

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...


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?


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: )

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.

Tesla's picture

I'll take a look--thanks.

jory's picture

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



Tesla's picture

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

Mr Lennon Hendrix's picture

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