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Deutsche, Interactive Brokers, Barclays Lost Hundreds Of Millions Due To Swiss Franc Volatility
Yesterday, in the aftermath of the Swiss shocker, we tweeted what was quite obvious to anyone who realized that speculators were most short the CHF since the summer of 2013:
The SNB just blew up countless macro hedge funds
— zerohedge (@zerohedge) January 15, 2015
We have yet to find out just which hedge funds were blown up yesterday, but we already do know that numerous retail FX brokers did get blown up and as reported earlier, the largest retail broker FXCM is trading down 90% in the pre-market.
And now, thanks to Dow Jones, we start to learn just how much pain the bank themselves suffered:
- DEUTSCHE BANK LOST ABOUT $150M THURS DUE TO SWISS FRANC VOLATILITY: SOURCE
- BARCLAYS LOST TENS OF MILLIONS OF DOLLARS THURS: SOURCE
- INTERACTIVE BROKERS GROUP SAYS "SEVERAL" CUSTOMERS SUFFERED LOSSES IN EXCESS OF THEIR DEPOSIT AMOUNTING TO APPROXIMATELY $120 MILLION, LESS THAN 2.5% OF CO'S NET WORTH
This is just the beginning. Expect to hear horror stories when macro hedge funds finally clear up their P&L as a result of yesterday's mauling.
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<<< Tears of joy
<<< Tears of sympathy
This move by the Swiss National Bank is just the beginning. Expect more desperate moves on the global economic chessboard in the days ahead. But in the end, none of those moves is going to prevent what is coming.
And one of these days, another extremely important currency peg is going to end. Right now, the Chinese have tied their currency very tightly to the U.S. dollar. This has helped to artificially inflate the value of the dollar. Unfortunately, as Robert Wenzel has noted, someday the Chinese could suddenly pull the rug out from under our currency, and that would be really bad news for us…
FYI : PUT PEOPLE TO SLEEP WITH "CHARLES Hebdo" FEAR
Ivory Club here in Frankfurt was filled with grim faces and profanity yesterday at lunch.
Made me lol.
Wait till China re-value their currency like the Swiss did here, the USA will be bankrupt overnight.
Mildly interesting who lost. But who won in this move?
The Swiss people won.
Go on... Tell me how much did SOROS make from all this??
Who was on the winning side of all these trades?
Tell that to Swiss people that I am today considering sending layoff notices to preemptively, and that I wasn't even thinking about at the beginning of the week.
Why lay em off, why not a paycut? Or why not just keep their pay where it is, chances are if you can afford a few European workers, them getting a raise for the short term ain't gonna break ya. This is what FX hedging is for.
Given the contractual lead times in Switzerland for actually laying them off-- steps need to be taken now if the goal is to go into Q4 lighter...
btw- It's not a pay raise for them, groceries and rent are the same price they were last week, but the next contract we are about to deliver on provides USD 3M in revenue, which now buys a lot less CHF or employee paychecks.
F/X hedging is unnecessary and would be an ongoing expense (on top of the 1% in f/x fees that is already paid to bankers on incoming funds)- our revenues are USD and EUR. Floating vs Pegging is a structural (long term) issue of monetary policy, how many YEARS out should I have hedged revenues exposure that I haven't even quantified (budgeted), and coughed up those expenses in the previous accounting periods?
Since my salary is CHF 0 - so a pay cut isn't an option, and since my income is structured as dividends and revenue sharing on specific contracts - the flow of funds going into my safe just took significant haircut regardless of what is decided regarding the size of a workforce whose cost just exploded, but whose productivity hasn't increased.
Thanks for that report Haus.
$150 million loss... pftttt Jamie Dimon spends that much before breakfast on DOJ settlements.
Profanity? You don't say, in such a fine and civilized establishment, how unseemly.
https://www.youtube.com/watch?v=kkPlk1T1Rjg
holy crossfire
What Putin never could have accomplished the SNB does almost effortlessly as if playing with matches. I am not sure whether they anticipated their decision to send shockwaves through the system but sure they know NOW they have possibly knocked over the first domino.
No risk, no reward. Just leave the taxpayer the fuck alone.
LOL, ha ha ha ha man, that's a good one. You will be expected to bail out your profligate government. Otherwise the government would collapse. Then what would you do? Hmmm...
I am sure it is waaaay more that 100's of millions.
We're getting the reports from two groups now, those who are insolvent and those who looked and said "whew, that's all we lost?" It's the middle bunch that are keeping silent that are the real concern. More walking financial zombies to deal with.
Any news on those who made a killing and are now buying small islands?
I am kicking myself right now for not being long CHF. Contracts were cheap and relativly risk free. I mean, lets be honest -- the CHF will be around long after the EUR is going.
Damnit.
You wouldn't get paid anyway. These guys are folding up and walking away.
When rich people lose, they change the rules.
Ve still vant ze money or ve fuck you up!
+1 for Big Lebowski ref.
You can be a winner and still be unable to collect....
Yes I am curious of that as well... probably Swiss government officials who all went long just before pulling the plug
Live by margin. Die by margin.
Any system that has small reserves and yet is so over-levered will eventually fail.
Nassim Taleb, paging Nassim Taleb!
Hmmmm. I wonder when the AIG and Citi explode from all those derivates.
no biggie, cant the IMF guarantee those losses since it only costs the US taxpayer a few hundred million?
Reminds me of this:
We read that the traveller asked the boy if the swamp before him had a hard bottom. The boy replied that it had. But presently the traveller's horse sank in up to the girths, and he observed to the boy, "I thought you said that this bog had a hard bottom." "So it has," answered the latter, "but you have not got half way to it yet."
by Henry David Thoreau
We have not yet hit bottom.
A few hundred million is chump change at this point. They can pick that up loaning cash to the fed for 24 hours.
I'm going to rest of my money out of bank today. 3 day weekend scares me.
... swiss swatch bitches wished to be switched with twat bitches watching swiss swatch switches ... on the other hand, swiss watch witch-bitches wished to be swatch-switched with a swiss twat watch watching switch-twat switches ... or perhaps, the bitch swatch-witches would wish to watch which swiss watch bitches’ swatch switched twat?
... if you understand this you may proceed to analyze the SNB move unpegging its francs from the 'you're peein' euro ...
Yes, but who, besides the Swiss citizens, are the winners? Somebody made a killing.
Aww. Pity party ensues in three...two...one...
This is the end of retail forex. .gov will use this as an excuse to limit what investments you can make with your money, just like the did with Dodd Frank. As usual, the liberties will be stripped from retail, not the big banks.
we all suffered (except if we have positive balance at the end of the day)
Funny how when all is percieved to be going well across the financial world we have a "global economy."
When there are ripples of financial negitivity across the pond then, we the USSA are just fine, no effect on us. That's their problem!
The MSM chatter monkeys are all over the place today...WE BE FINE!
FUBAR!
We have Corzine, they have orderly failures.
FUBAR is right.
Does grandma Yellen understand banking is a ponzi scheme she needs to pump money into all the time, yet? Or is she going to let this thing come apart? I hope the latter. I will leave the lid off of my trash can so Warren and Charlie can eat out of it.
HA HA HA HA HA!.....
no worries the FED will make them whole
Did the fuckers @ Goldman Sacks get muppeted on this one, or were they tipped off?
no one actually connected lost a dime. this wasnt a surprise, except for the sheeple. this shit is managed. duh.
moar bonuses getting burned.
Goody good shoes. Dimon next on the plate.
C'mon lets see a home run.
burnin down the house!
No word on how much SNB made on the "surprise"?
No problem, they are not over leveraged so those losses can be absorbed. /S (as if I needed it)
so its 120m of client money or 2.5% of IB's money??!!! Well i guess they have to foot the bill when the "clients" dont pay!
I tried to explain to some people yesterday that institutional leverage is often extended to clients and that in a bad enough rout this leverage can result in losses that simply cannot be paid back.
This is yet another reason why crowded trades are dangerous.
YOU might not have been on the wrong side of the trade; but, if your brokerage funded enough other people it may affect the brakerage resulting in YOUR funds being unobtainable and the orderly execution of your trades being interupted...
HAHAHAHAHA
suckerz were warned. MANY times.
YAY! We're doomed!
oh well ! i lost a bunch in the NASDAQ mess & the housing bubble scam ..... that's how the cookie crumbles. cry me a river, i know how they feel & believe me, i didn't get any bailouts, i had to suck it up & keep going.