JPM Doubles Exposure To European Periphery In One Quarter

Tyler Durden's picture

The last time a Primary Dealer decided to go all in on the Italian "recovery", MF Global went bankrupt. This time around the bank that apparently can't get enough of Italy (and to a smaller extent Spain) and its glorious taxpayer funded, bailed out future is none other than JPM, which according to its earnings presentation has seen its net exposure to Europe double from $6,3 billion to $11.7 billion, following a surge in Italian trading exposure. Surely this will end very well for the bank that only 5 months ago had to reshuffle every executive in its internal $300 billion hedge fund for massive IG9 CDX losses.

Q3 Net European Exposure driven by a surge in Trading securities in Italy and Spain to a total of $14.4 billion: (source)

Q2 Net European Exposure - Italy and Spain trading exposure was just $10.2 billion: (source)

Keep in mind, the Spanish and Italian sovereign bond market is extremely illiquid and a buyer of $5 billion in bonds in these two countries could alone be responsible for a major portion of the P&L move. Which is preicsely what JPM enjoys doing: finding an illiquid product which it can monopolize (ahem IG9) and then becoming the market.

Keep a close eye on this product because when the latest European bailout fizzles, JPM will be the one way train leaving Europe and crushing all the piggy backing hedge funds in its wake.

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Aegelis's picture

No "Indecent Exposure" laws outside the US then?

GetZeeGold's picture



Exposure to Euroland? That's freakin insane. They should have consulted Jon Corzine and his band of dirt farmers.

LongSoupLine's picture



It's not "insane" when you have the insider trading line on what's going to happen.  I'm sure Jamie has his team of financial spooks doing their best "blue horseshoe" work everyday.


GetZeeGold's picture



It's not "insane" when you have the insider trading line on what's going to happen.


There's insiders...and then there's the real insiders....didn't see them coming - Jon Corzine

jekyll island's picture

Corrine actually made the right bet, but ala LTCM he overleveraged and was torpedoed by margin call induced by market fluctuation. Got too greedy.

CPL's picture

Are they out of their goddamn minds?


There is no "win" in that situation.  No profit, all pain.

GetZeeGold's picture



Are they out of their goddamn minds?


Well.......kinda looks like it.


GetZeeGold's picture




Double post.....don't you just hate that crap?

DCon's picture

They know what Draghi is going to do before he does.


Might be a sign


CPL's picture

Who doesn't.


But as a Trade house goes, I would be worried.  It only has two positions.  Bull or Bear.  No, I think I'll sit out on this one.  The traders third position of "wait".


The volatility alone would stamp out the hopes of a Bull run.  The bear aspect of it carries leveraged decay because it's all borrowed money which should be considered margin x2000 to the degree it's being used.  The math alone, which isn't that complex in this situation, should be screaming "stay out of it".


But they aren't.  Unless they are trying to destroy their company...that's the only outcome.  Game theory is nice when you have resources, they don't.  They are stuck in a terrible silver position short which they pay for daily.  They hold endless amount of real estate that they couldn't give away because after 4 years of unmaintained property, might as well burn them down.  Plus the Federal auctions...this now.


Stacking shit sandwiches...

disabledvet's picture

you can become more than merely complacent when you are of the opinion that the Government is backstopping your entire business enterprise...with no oversight i might add. Having said that this is too big an opportunity to pass up. You might as well be throwing a box of steaks in front of wolves given the total collapse of the "outside of London European Banks." And obviously those same London banks are doing the same thing (HSBC going all in into Belgium for example). Ultimately this is their job: "buy low, sell high." Clearly this is a low and JPM wasn't around for a by "ante-ing up" they're seeing who's in the game, for how much, and what their angle is. It's a risky strategy...but one i think that over time could pay off BIG TIME now that we know Mario Draghi sold his soul...and his the Great Satan known as the Goldman Sachs. Indeed at a certain level this move could be construed as an "instrument of State Policy" who's implications...should it be proven to be successful...could be vast and consequential in more than just a financial sense. NEW MARKETS BITCHEZ.

MeelionDollerBogus's picture

JPM is a mafia outlet.

Option 3 is "rape" and it's all bullish because there's no criminal prosecution when Dimon or Corzine do it.

SoundMoney45's picture

TPTB need Europe to appear normal through November 6th.  A few trillion for a bank bailout after that date is a small price to pay

malikai's picture

What's the over/under on these banks just doing what is politically required?

CPL's picture

Their spread, negative in both directions.  Damned if they do, damned if they do.  Because JPM doesn't have wisdom enough to understand fools rush in.

blindman's picture

There is an old joke about a central bank official picking up a pizza. (Perhaps it’s Chairman Bernanke, on his way home after a long day of quantitative easing.) The clerk asks, “Do you want it cut in six slices, or eight?” The central banker responds: “I’m feeling extra hungry today; better make it eight.”
Max Keiser destroys 2012 Nobel Peace Prize

Posted on October 12, 2012 by maxkeiser
" give it to monsanto ". frankenstein and the machine
update !
"Earthship Biotecture": Renegade New Mexico Architect’s Radical Approach
to Sustainable Living

youngman's picture

OK this is what I wanted...I wnated to know who was buying all that I know....but I bet they think they have the inside information loop and will be kept whole on these buys buy the Government Reps....if all things stayed the same from today on....JPM will lose50-70% of that investment...Spain and Italy will not pay them back....they can´t...but if you have the Governments telling you they will cover all expenses...then you are making a 5-7% return in an inflationary market....I still would have bought gold rather than a Spanish bond...but JPM has to help their political friends...and that is exactly what they are would also be nice to know how they are hedging derivatives????

Raymond Reason's picture

The smartest people in New York are not so smart after all, just well connected. 

disabledvet's picture

well...if you're smart and well connected then you're smart and well connected too. Plus if this works "they even more smart and more well connected" actually. In fact "they're the connection" ultimately. I like the play...i agree they're probably some hedging weirdness...but probably not as much as you think Youngman given what happened in London. view is that this is simple "buy low, sell high play" and with the EZ's back against the wall given their Greek Debacle...and what is a HORRIFIC condition in France...there seems to be an imbalance in the cup and saucer which if maintained will cause the cup to fall and the all the contents to spill out.

LawsofPhysics's picture

No worries, all of it will be FDIC insured.  "Winning"

Cursive's picture


Well, not FDIC, but it will be backed by the Fed.  Jamie can make these moves (and that assumes that he even knew about it in advance which is unlikely) because BernanQE will always be there to bail him out.  JPM is THE TBTF bank.  Hubris.

LawsofPhysics's picture

Yes, either way, that is the taxpayer.  These fuckers really believe they are doing God's work.  JPM is the Fed and the taxpayer is on the hook for everything this den of theives and their associates do.  Amazing how clear the political theater has become with respect to both parties being backed by the same masters too.  So many obvious questions not being asked.  Anyway, try to be productive.

Dr. Engali's picture

One can only hope this blows up in their face too,and the sooner the better.

Schmuck Raker's picture

Be careful what you wish for Doc. Taxpayers are sure to pick up the tab if they blow up.

Dr. Engali's picture

I want something big to blow up in there face for a whole systematic take down. We are paying for it as it is. The way it stands now  a few generations removed are paying for it.

timbo_em's picture

So when JPM sells its Spanish bonds and sends the whole market south, I buy the roadkill with a maturity of less than three years at a discount and wait for Rajoy to ask for a bailout and the ECB to intervene?

AlphaHunter001's picture



they won't sell into the market, that trade you're talking about is what they're doing - they know the ECB will buy them up - it's almost a risk free trade, just like Pimco buying ahead of the Fed... that's why they're extremely profitable, smart trading

Urban Redneck's picture

They don't even need the ECB to buy them back, they can just swap them at Ben's drive-through/taxpayer drive-by for fresh FRNs...

Yen Cross's picture

JPM must be buying Spanish bonds this morning./sarc

Spain 10-Year 5.671 5.814 5.758 5.670 -0.143 -2.46%
Hondo's picture

A complete scam with the taxpayer as a backstop......let alone the fact that this most likely occured with insider (illegal) knowledge of what the Troika was up to.

AlphaHunter001's picture


You don't think it's a coincidence that they increased exposure as soon as the ECB stated they will support the market? It's called being a profitable trader! Gross and Pimco have made a fortune buying treasuries and now MBS ahead of the Fed, why is it bad to buy ahead of the ECB?


"finding an illiquid product which it can monopolize (ahem IG9) and then becoming the market"


You say that as if it's a bad thing - sure people might not like that they're extremely profitable, but making $5 billion net profit a quarter is a damn good company!


All of these reasons you gyus complain about are making the case to be bullish JPM... it's not as if anyone says they're losing money, just making too much LOL

Village Smithy's picture

This kind of all-in capricious behaviour is why we are in this mess. You might have a valid point if you were talking about an entity that stood to actually fail if their trade went the wrong way on them. When you have your countrys' printing presses as your back stop and have nothing but contempt for your fellow (muppet) citizens it's impossible to fail at these trades. In reality they all failed and have absolutely no standing.

Currency is Debt's picture

Thanks for setting this Alpha guy straight. He lives in his own small world.

shovelhead's picture


Free Dollars for Indigent Co*ksuckers

LawsofPhysics's picture

yes, paid for by every working stiff.

blindman's picture

America’s Moral Degeneracy
" ..In the West, the Ministry of Propaganda continues to talk about the “Syrian revolt.” There is no revolt. What has happened is that the US and Israel have equipped with weapons and sent into Syria Islamists who wish to overthrow the secular Syrian government. Washington knows that if the Syrian government can be destroyed, the country will dissolve into warring factions like Iraq and Libya." .. pcr

fonzannoon's picture

"hell of a quarter boys. great numbers!"


fonzannoon's picture

man it would be great if spain pulled an iceland. one can only hope.

HD's picture

That's why TPTB remove democratically elected leaders and install Goldman technocrats - to avoid such possibilities.

Lost Wages's picture

Bill Gross is buying European bank debt and JPM is buying European sovereign debt. Obviously Draghi is going to open the floodgates regardless of what is currently "legal." 

Ranger4564's picture

Bill Gross works for the oligarchs same as Buffett or Soros or Rogers or even Krugman. It's a fucking show... good cop bad cop... liar lying about truth, liar lying about lies.

Ranger4564's picture

JPM is scheduled to be "bankrupted" a la MF Global and that other recent failure... this is necessary to tip the collapse, but only after consumer sentiment shows real signs of concern. The only reason we still have an economy is because of the clueless faithful who don't know and don't care about financial on-goings... as long as they can shop, and watch mindless tv, have not acknowledged our dire condition.  In order for the financial oligarchs to actually succeed in foisting the massive debt bomb on human civilization, people actually have to know of its existence and fear it.  The FED deciding to QE recently is basically to ensure the powder is rammed in as tight as possible.  Raising the height of the cliff. The fake news about the falsified improving economic / employment data is intentionally transparent because it was intended to be "uncovered" so it can be broadcast by media so people can start learning about our precarious situation / becoming concerned. Now that more people realize the situation is being misrepresented, they can start spreading the alarm. So, only after enough people have been panicked, and others fooled into believing the banks / gov are trying to save the economy bt failing will the real destruction commence.

Once JPM goes, others will follow soon after, and the cascade / avalanche will start. Everything is setting the stage in pieces so the manipulation is not immediately apparent. Otherwise the takeover would be a bit tougher and more violent.


At least, that's what i told them to do... we'll see how it plays out.

GMadScientist's picture

Wait a minute...aren't we just losing the same MFG client capital again here? ;)

“Rebellion to tyranny is obedience to God.”-ThomasJefferson's picture

Jamie Dimon and his private piggy bank, JPM Chase, have roughly 5 trillion US dollars in customer deposits.  If and when another of Mr. Dimon's reckless bets goes sour, and the shit really hits the fan, Jamie knows where to turn to...

During the Holder, Geithner, Bernanke, Obama, Bush, Hastert, Pelosi, Reid years, precedent has been set.  Bankers may steal whatever the fuck they feel like, with absolutely no fear of retribution, period.

When assholes like Jon Corzine at MFGlobal make massive bets they KNOW they can't back up, and then knowingly raid customer accounts with absofuckinglutely NO FEAR of any criminal prosecution; other scum bags get this contagious desire.

My advice to any poor dumb future victim that has an account or a safe deposit box at Chase, withdraw your funds, and transfer them to your local community bank.  

Jamie D. is like a rapist on the prowl.  Stay alert, and watch your ass!  Jamie and the boys would be more than happy to fuck you.

fuu's picture

"We have staying power, and we're willing to use it." -Jamie "The Diamond" Dimon.

Quinvarius's picture

I remember when he was talking about riding out the whale trade for as long as it took.  LOL.  He may have said that just before the Fed bailed him out.  But he was actually doing it for the year prior.  That is how they think.  Jamie has no experience trading, so he thinks like a noob.