Whales and Market Cornering Attempts

ilene's picture

Whales and Market Cornering Attempts

Courtesy of Russ Winter of Winter Watch at Wall Street Examiner

“You have to dance while the music is playing”- Chuck Prince, Citigroup mucky muck, shortly before 2008 crisis

Of late Zero Hedge has been mentioning the presence of one large JP Morgan trader nicknamed the whale (Bruno Iksil). Tuesday ZH broached a question I myself have been wondering, is there a large whale trader (or traders) price fixing the markets, or at least key inter-related markets. There certainly is precedent (LTCM for example) for large traders or speculators to get greatly overexposed, but now I am taking about LTCM multiplied 100-fold. That would have the effect of temporarily price fixing in a thin market.

It is not so far fetched or loony fringe as you might think, when you look a the extremely low volume and narrow market participation.  And money managers, at least the big ones, are frequently stooges of the sistema and TBTFs, or feel they can’t stray far from the conventional wisdom, no matter how absurd. Nor is it so far fetched when one sees that five too-big-to-fail banks: JPM, WFC, BAC, C, and GS now have assets (mostly fictitious) equal to 56% of GDP, up from 44% during the financial crisis.  Add the City of London banksters and Deutsche Bank and you have your usual suspects.

Harkening back to the last crisis where one set of banksters fed on Lehman and Bear Stearns, don’t think for a minute they are in it all together either. Given the lopsided presence that these entities have in financial markets, what would be illogical about assuming that they may also be horribly offside on some enormous crazy ass trades. One could call it manipulation, or just a extremely risky behavior. Or as plausible is that they are trapped into these bloated positions, and are trying to keep a sinking ship afloat via manipulation. I think they are swimming against the tide.

Market history is full of similar examples on a smaller scale, and is also full of examples of poor risk management controls.  Or certain assets (such as US Treasuries or German Bunds), may be classified low risk, when the reality is very different. The story about derivatives has been around for awhile, and most have fallen asleep of late on that risk as well, but the truth is that the TBTFs are further gorged, well described here.

For additional analysis on many topics, including trading ideas, subscribe to Russ Winter’s Actionable – risk free for 30 days. Click here for more information.  

Copyright © 2012 The Wall Street Examiner. All Rights Reserved. The above may be reposted with attribution and a prominent link to the The Wall Street Examiner.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
EFNuttin's picture

Just read Ilene's article on May 12 in the wake of the May 10 revelation that JPMorgan lost $2 billion (so far) courtesy of this whale.  This was really prophetic regarding the danger.  Wondering what the damage will look like for JPMorgan and the other dominos as of next Saturday, May 19.

Centurion9.41's picture

Argentinian Black Swan?

The BRICK concept is an old one, per-dating the ramp up of Shadow Banking CDS's.

I wonder, is there a BRIC version(s) of Greece out there? Ones where whales have made too large of bets, that can be turned to zero with a political socialization of assets?

The whales and cabal are so focused on the Kabuki of the Troika, could there be a Black Swan comprised of a politician & and unwitting whale coming together to create a Tempesta di Merda?

We know this much, wherever it comes from will be from a relatively unknown direction, and denied as an issue. Until it can not be denied any longer.

brettd's picture

What is a "worker"?

Is a bank teller a "worker?" How about a bank president? is this about toil or value added?

What about a politician or a union boss? If so, what do they produce?

Is a grandfather "working" when he spends his morning researching retirements?

How about a lifeguard at the local "Y" sitting and watching a pool all day?

Perhaps its time to start defining our terms.

JohnKozac's picture

Groupon's stock has been absolutely crushed since the middle of February. The stock dropped another 5% today.

The bad news for shareholders is that it's still arguably overpriced. With a $7 billion market cap, it's trading at 3X revenue. It still has some room to fall.



Read more: http://www.businessinsider.com/chart-of-the-day-groupon-stock-2012-4?nr_...

grapeape's picture

it's me, i'm the whale. i cornered the market on frozen apple juice concentrate.

betting on the early bloom and 3 weeks of killing frost to make me rich. lol.

TooBearish's picture

Sorry - its the FED setting the prices the whales in HF land are simply along for the ride....

GMadScientist's picture

Gundlach is a wee tad early on the Natty call, but the premise of getting in at the basement is sound.


covert's picture

yes, the market is rigged by:

1. central bankers

2. other bankers

3. insiders

4. covert influence

5. covert ops

6. a wealthy few.



Dead Canary's picture

The money and powerful always makes the rules. It's been true for 5000 years of civilization. In every form of government,  be it Democracy, monarchy, theocracy, totalitarianism, socialism or communism. Changing the "ism" is never a cure.

The powerful take because the weak stand by and let them little by little until its too late. Wake up America. We used to have a good system, we can have one again.

brettd's picture


How do you take it back?

slobbermut's picture

The 'weak', the uninformed, the apathetic do not have the means nor the unity of leadership to right this ship.  The degree of slumber is inconsequential - there is no way that 'America' can have a 'good system' again.....won't even argue whether the system was ever anything but rigged from near day one.   If you read Scripture, you already know how the story ends...if you don't - well, just don't say you weren't warned.

LowProfile's picture

Sorry, but I cannot logically trust the re-re-re-re-re-hypothecation of the stories (to fit whoever happened to be in power in that era) in scripture.

dolly madison's picture

The system was always destined to come to badness.  It has a missing check and balance.  The people need veto power.

brettd's picture

Why is it that it (public works/policy)

works reasonably well at the local & state level.....

and in Washington gets "stuck on stupid."

LowProfile's picture

Because "central planning" is an oxymoron.


Peter Pan's picture

Maybe one day in the future, that new NSA spy centre in Utah will release phone and email records of the big boys which will reveal exactly what manipulations, deals and bets were being conducted by the people doing God's work. It will of course be too late for those of us who seek the truth in this life but it will be interesting nontheless.

Archimedes once said (in relation to the power of a lever) "give me a place to stand and I shall move the world."

The financial Archimedes' of today say it a little differently, "give us leverage and we shall destroy the system".


LowProfile's picture


It will of course be too late for those of us who seek the truth in this life


Maybe not.

e-recep's picture

theory says, whoever has the most money can buy politicians and custom-tailor laws that are to his advantage.

the graph that depicts the dwindling share of the corporate tax shows that the theory is correct.

in a capitalist enviroment the middle class cannot stop politicians to side with the big corporations.

it is all intrinsic to the system we call capitalism. it is within its genes. blaming this or that individual is futile. it is the system. look at the time span, almost 75 years. most "bad" guys who are making headlines today were not even born when things started to go south for the middle class.


Stuck on Zero's picture

Beg to differ.  It's not capitalism it's fascism.

Peter Pan's picture

That's the nature of the parasite. It has eaten up the worker and now is turning on the middle class as the next host. It's a pity because all three levels have something to offer to the system when there is a balance.

lincolnsteffens's picture

I don't know how you figure the middle class is not the worker class.

In addition, capitalism like all isms are subject to corruption. It is human nature that bribery in any form has the ability to corrupt. The real breakdown occurs when corruption and isms run so rampant that just laws do not get enforced and unjust laws result in out sized profit. It is the citizen in a country of just laws who has the ultimate responsibility to see just law wins the day. When citizens wrongly assume they can have no effect on just laws being subverted, the citizen has then become subverted and lawlessness rules. We are on the edge of becoming a lawless society because the subversion is not yet painful enough to cause revolt.