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And Cue Pain
The one print everyone is looking for this morning:
- IG9 10Y 135/137.5... +9.5bps
Assuming ~$200MM DV01 and.... oh boy.
It would appear the hedge fund community has found a weakness...
Source: CMA
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Taste the pain, bitchez!
Hmmm....it's got kind of a copper taste to it.
It's so good, once it hits the lips...
That's Fight Club......you get to crave the taste.
Frank the Tank
http://www.youtube.com/watch?v=k7SuY3T_U6c
I love the smell of napalm in the morning...
There was a typo in the title ... Was supposed to say " Cue the Gain"
"when i say surf ..we surf...charlie dont surf"
oh yea ;^)
Your shipment of FAIL has arrived!
"You can swallow a pint of blood before you get sick."
The sharks just bit off another leg of JPM. Soon both arms will be gone. Can you say 2008?
"Sometimes that banker he looks right into ya. Right into your eyes. And, you know, the thing about a banker... he's got lifeless eyes. Black eyes. Like a doll's eyes. When he comes at ya, doesn't seem to be living... until he bites ya, and those black eyes roll over white and then... ah then you hear that terrible high-pitched screamin'. The market turns red, and despite all the poundin' and the hollerin', they all come in and they... rip you to pieces."
Our desk is going to buy $5b of IG9 just to add to the pain some more.
Leveraged pummeling. Nice.
Your DESK is going to buy $5 bn?
So even the furniture is attacking Jamie Demon now?
Can Buckaroo Banzai draw us a picture of that?
; )
Taste the pain? Tastes like chicken to me...
Can somebody please do the sums for me!
It means Jamie's loss is getting bigger - right?
; )
"It means Jamie's loss is getting bigger - right?"
Nope. I bet his pay and bonus will remain the same. No apparent loss on his part.
Not sure. DV01 (from memory) is Delta Value for one basis point. 9.5 basis points @ 200mio is a 1.9 billion dollar (unrealised) loss, so still in the 2 billion range. The positions can't be unwound without further pain, so they will probably ride them to maturity. We will see what the price is then.
Unless they are already 2B in the hole, and this is another 9.5 bips of pain on top of that.
He was 2bbn in the hole BEFORE the unwind. This is on top of that.
Anyone run a Correl vs the market. Looks like a perfect inverse of the SOX. Dies that mean if we break 1,340 (3 month H&S neckline( and headtoward 1,275 (200 DMA) he looses a couple billion more?
Btw do you Hedgies still want to hand him his ass for bitching about short sellers?
so they will probably ride them to maturity
I don't think so. If the risk manager says "unwind", Iksil won't get the time to ride the position out until maturity. Risk managers typically don't understand how to unwind a position in a controlled way. It's a "just do it now" attitude.
That would be so awesome if true. It means that every hedgefund and their dog can front run the unwind, maximising the losses for JPM.
Boom goes the dynamite...and everything attached to it.
There is joy in Mudville today.
Can someone explain this to lay people?
Ok, so have you ever watched the national geographic specials where the pack of jackals is circling the wounded gazelle? That's basically what's going on here.
http://www.youtube.com/watch?v=Cjzp7-gYmlY
excellent metaphor!
Sure, but let's let the Tylers do a more thorough job...
http://www.zerohedge.com/news/behind-iksil-trade-ig9-tranches-explained
Excellent find, thanks. While the tranche itself seems very complicted; the potential loss seems staggering. This may truly be a Bear, Lehman, AIG, black swan moment. I can't help but wonder what shenanigan's TPTB will pull over the weekend. Monday could be interesting.
Today could be interesting.
No EBT
It means all pensions are empty, no bond is worth shit and money is worthless.
If you've noticed all the permabulls are now HOPING gold is going to be worth something. That's how bad the situation is now. The typical conservative party line member that marches to the financial beat offered is now very scared.
If you aren't, then I've got some news for you...when not in doubt, get in doubt fast.
As a yield hungry wanna be I would like to agree with you...
If you've noticed all the permabulls are now HOPING gold is going to be worth something.
An ounce of gold is worth an ounce of gold....pay me now or pay me later. No one knows what that piece of freakin paper is worth anymore.
Bingo.
You've got the right idea. Gold is the currency. Silver is the currency.
The paper changes as history changes. Bonds today. Notarized Bill tomorrow. Dollars today. Monopoly bucks tomorrow. But every time money systems reset and collapse the civilization, every human has done the exact same thing. The Ancient Chinese and Indian societies then to Mesopotamian then to Egyptian...etc.
All humans return to baseline, the fact there are all these imaginary numbers backing paper agreements for things like legal settlements (pensions, paychecks, etc) doesn't matter. All bets are off now.
Gold and silver will always be gold and silver regardless of the government, time period, association or language. You and I can agree an ounce is an ounce, anyone can agree on what gold is and that it's rare enough we can use it as a medium of trade.
Traditionally yield should only be used for a physical asset.
- "The fields yield 40 tonnes of grain annually"
- "The oil field will yield 60 million barrels of Oil."
Versus the paper IOU's people are always talking about.
- "My bond earned 3.5% against the lower production yield of the Oil industry."
Think of it this way. If World Conquering Aliens (WCA's) came here tommorrow which would be more appealing?
- The physical assets which yield a defined physical output? (Water, Food, Oil, Minerals, Women...because Mars needs them for some reason)
or
- A piece of paper that is an IOU backed with nothing but faith and an promise from the richest people on the planet that are known liars, cheats, theives and even murders? (Faith, IOU, paper...as fungible and disposable as Xmas paper, we can always print more)
If you were the commander of the WCA's invading earth, what would you be more interested in?
1.4 BILLION IN LOSSES AS A MINIMUM.........
well, I assume its 1.4 billion on top of what was already announced.
but 1.4 billion is kind of small for JPM, n'est ce pas? (160 billion market cap)
Yeah, but the losses are just starting.
Market Cap $160 billion what? Paper Dollars?
Ah Yes Market capitilisaton - Price discovery has a habit of blowing that Hopium right up.
It's whats under the hood that counts
I am not entirely familiar with how this position trades (indexed CDS tranches?), but is it possible that it will trip trading circuit breakers and stop (OK, slow) the carnage?
market cap is not a constant.
If JPM's credit rating falls, it has to post more collateral
The other sharks are now smelling blood and looking to tear off some meat, by making JPM's position worse.
Sharks LOVE the taste of shark meat
Thank you Ted!
Err - is that $1.4 billion + the initial $2 billion + the amended Tyler figure of $3 billion - or am I double-counting - err, sorry, 're-hypothecating'?
Oops - double-post.
Even the damned comments are re-hypothecating now!
Good thing the Fed allowed JP Morgan to move all of its' derivitives exposure to the retail portion of their balance sheet or this might have been a tough loss for them...instead, it's another tough loss for the US taxpayer. Ms. Bair of the FDIC tried to prevent the balance sheet move, but to no avail. If these trades are done out of London to avoid US regulatory control, why are the US taxpayers on the hook? This is all such bullshit!!!
Can someone explain this to lay people?
Yes, lot of people will get laid explaining this.
Money on the dresser, no kissing.
Try this on what DV01 is:
"A bond valuation calculation showing the dollar value of a one basis point decrease in interest rates. It shows the change in a bond's price compared to a decrease in the bond's yield."
Read more: http://www.investorwords.com/6498/DV01.html#ixzz1uZ05SOM4So, as ZH is surmising (knows?), every basis point change in this position changes the value by 200mm. And currently, not in a good way for JPM.
Ok so this has to do with duration. Do you have a link for this particular index so I can read about it?
I guess the layman's explanation would be that JPM has bet that this was going down and instead its going up a lot meaning they will be losing tons of money. They also have so much money invested in their short position that its too big to unwind especially since now everyone knows what that position is.
Explain to lay people?...sure.
"andddd it's gone!"
never gets old.
http://lcdx.wikidot.com/ig9-summary
Head over to http://ftalphaville.ft.com/ and scroll down a few articles to one called "JPM Whale WatchingTour. Too Big to Hedge" by FT's resident credit market genius Lisa Pollack. Great explanation for non-MBAs.
Popcorn and beverages ready!
Canceled all morning meetings today.
It's 5 o'clock somewhere!
Whats the average leverage on that you think?
That TCE may not be so tangible by the time this is through.
Merry X-mas!!!!
Was out last night when a banker came in and started buying everyone drinks, complaining that the reason for all our financial woes was due to traders screwing up the market pricing. I looked him in the eye and simply said "How does one price anything when you guys are getting free money and using mark to fantasy accounting". He asked me if he could pay my party's entire tab. fucking assholes, they know the truth and the enjoy making sure we all know that there is nothing we can do about it.
Sure there is, got rope?
....they know the truth and they enjoy making sure we all know that there is nothing we can do about it.
Invest in bankers krytonite......otherwise known as gold.
+1 GetZeeGold
(but do not take the 'p' out of kryptonite; kinda like taking the 'O' out of 'GOLD'...)
"p"
You should have kicked him in the cunt...
can anyone explain this to a lay person? is this the start of the event we have all been waiting for?
Just some unrealized losses for realized morons (JPM prop desk)
http://lcdx.wikidot.com/ig9-summary
It is an index market of credit defaults.
The official name of this index is CDX.NA.IG.9. It includes 125 equally weighted reference entities that are liquid in the Investment Grade CDS market.
Coupon: Varies depending on the trade
The IG CDX index trades based on spread. For example, ig9 recently closed around 120 bps. This means that if you go long the index, you receive the annual coupon, paid quarterly, as well as an upfront to adjust the equivalent spread to the traded level.
When a Credit Event, such as bankruptcy or failure to pay, occurs on one of the names, if you are long the index you are responsible for the loss.
This is the most convoluted back door betting I have ever learned about. Sorry "hedging" I have ever heard about.
"I don't care who's backdoor you have to pull it out of, we need to make the quarter." - JPM "Risk Manager"
I know a great bookie ... he handles bets on football games and horse races ... I'll have to ask him if he handles 'synthetic credit portfolios' as well ...
Bookies aren't that stupid.
If a bookie fails to hedge he sleeps with the fish, if a banker fails to hedge he sleeps with his wife.
lol from a layman, I got this bit
This is $5bbn on a $150bbn mkt cap. So no its jsut one more reason for the mkt to be down 50bps.
Damn those speculators ???
JEF is getting slammed even more the JPM measured from XLF recent highs. (late March)
"Karma's a bitch." the "MF Global clearing house" yes, yes?
They knew this was coming and used the MF Global cash as cover. One way or the other, we the public end up as backstops to extremely risky, yet no risk to the TBTF, behaviour...
How many pancakes will it take to shingle over this roof if a football has no wheels?
Your answer lies within.
3....<crunch>
nice... http://www.youtube.com/watch?v=2IA5Cv_5-g8
"4"
~~~
http://www.youtube.com/watch?v=4ZfpwfQ58Ds
We could also accept 12 http://www.youtube.com/watch?v=JZshZp-cxKg
I guess the layman's explanation would be that JPM has bet that this was going down and instead its going up a lot meaning they will be losing tons of money. They also have so much money invested in their short position that its too big to unwind especially since now everyone knows what that position is.
You're exactly right and the sharks are going to keep hitting their positions hard. There is going to be a lot of pain for the morgue. Let me revise that statement .. There is going to be a lot of pain for the tax payer since we will be on the hook again.
Decree from the King:... "The prince has shat his diapers again, give all the slaves 40 lashes & half rations of grog for 2 weeks!"
JPM will just hedge its losses with Facebook stock. It knows a winner when it sees one.
The only thing to ad to that explanation that unlike a stock short this is uber leveraged, so this 5% move will be leveraged what 3 to 5 times? so its like a 15-25% hit as a minimum....
Traders will pile in knowing at some point JPM has to cover (buy) which will further drive the price up which will result in more covering. This issue is can they get out of it (this and many others) before bankruptcy, due to margin calls etc.....
Now why in the hell is this not happening in silver? Let's really take it to Blythe and Jamie.
A levered position in synthetic products ... but don't you DARE call it a prop desk ...
fucktards.
"A levered position in synthetic products ... but don't you DARE call it a prop desk ..."
Ha ha. You see the man behind the curtain too. Now, wouldn't it be funny if this whole thing was orchestrated to cause a bump up in price and it turns out they were naked short, but actually held some shares long?
They are pretty sneaky when they play at that level.
Gator engineer
This is maybe a dumb question, because I know they seem to be able to get any amount of money at zero % and they can re-hypothecate to infinity in London, and they can make free with client money, but they still do have to put up margin, right? And they can get into problems, especially with downgrades happening at the same time as ballooning losses, BUT, given that are like a massive trader who has made a huge mistake, might they be wanting to de-leverage a little bit today, and on Monday too? So if they have to take their time to unwind the ever-increasing losing HY IG9 thing, might they be looking to unwind some other position, whether or not it is showing a loss, just to free up a bit of margin / collateral?
Like a lot of other people here, I am thinking about silver...
Hurt So Good
http://www.youtube.com/watch?v=4dOsbsuhYGQ&ob=av2e
A Whale of a Tail.
RUMOUR HAS IT: ONCE THEY FINISH CLEANING CIO UNIT AND CLEARING CREDIT LOSSES JP SHARE PRICE WILL BE TRADING AT AROUND 28 DOLLARS....OF COURSE OTHER BANKS WILL FOLLOW SUIT TOO.........
with current share price trading at $38 in premarket, your rumor must be completely balanced by an equally valid rumor that the stock will trade at $48...
Looks like Ol' Caps Lock is back.......
What, are you like 12 and haven't figured out the keyboard yet?
Rumour has it: People who leave the caps lock on are morons.
So back to silver:JPM parity?
and to think Max Keiser called to punch JP Morgue via buying physical silver..
Physical silver has been misvalued for the last 140 years. Whatever brings JP Morgan down will allow the proper valuation of silver to be realised.
+1
Yeh you're right there Mantrid.
Max should have told us that what we should have done (as well as buying silver of course) was make that HY IG9 thing go wrong - you know, get on the other side of that prop desk trade.
Luckily the stupid bastards managed to screw that up all by themselves!
Hmmm, it looks that paltry loss was just a bit too small. Add a few hundred million more to the estimated loss, per day.
It's all trivial anyways. JPM losses is the taxpayers' problem. We will inherit the loss, JPM keeps their profit. It's the banking game post 2008.
Hmmm, I wonder if this would make suitable collateral at the Fed's Short-Term Window? That would be one way to make it all disappear. Heck, they might even swap out the CDX Series 9 positions one-for-one in Maiden Lane <insert number here> shares?
I don't know whether you're funny or evil, but keep it up.
Well, TALF was a pretty good hidey-hole for the "toxic waste" that triggered "the event", wasn't it? Now that toxic waste has been allowed to undergo a couple of halflifes and seems to have decayed into a somewhat more stable morass. Time to reload the "digester" with scary crap and let it sit (out of the public's eye) and then the Fed can cover the shorts at their leisure and repackage the waste as Maiden Lane <n>, and convince some other TBTF (that it helped out before) to "purchase" it. I'm sure that favors across the board are fixin' to be called in.
It's still throwing off many Sv, but they mixed it into some concrete used for a pour in New Jersey so it's all good.
http://www.youtube.com/watch?v=gtYjdEwa8GA
"After all...we are not communists." - Don Barzini
Sv makes my head hurt. Could you translate that to millirem? Got 0.1 of 'em last night at work.
I hate those stupid badges.
they might even swap out the CDX Series 9 positions one-for-one in Maiden Lane <insert number here> shares?
You should put TM on that idea so that Ben can print you some royalties for when they do it...
And coming (someday) to a theater near you, the sequel: Whale Tail II: Silver Shorts.
"Thar She Blows!" (Chunks)
Buh-bye Buh-Bruno!
that ain't mojo that's rising
Don't get me wrong, I enjoy seeing JPM in pain. However, my experience is that JPM (Blythe) is quite experienced at working a FUCKING HUGE SHORT POSITION. They will take no prisoners trying to escape this loss. Blythe is giving orders to to burn the churches and salt the fields as we speak....
I think she is going to get a new experiance going doggie style position taking a huge fucking in her shorts
Yep. JPM will be looking for another patsy, like MF Global, and rip its fucking face off.
Jamie Dimon is pissing in his pants.
He's probably pissing in someone else's pants while trying to convince everyone it's raining
Have you seen what he makes in a year? He can easily afford to pay other people to piss in his pants for him.....
Hell, I'd do it just for minimum wage and travel expenses!
For a mere 1% of his .01% of American wealth, I will hire a private jet (getting groped is for tourists) and personally train Mr. Dimon to involuntarily piss his pants every time he hears the opening and closing bell on the NYSE.
If you can provide the plastic sheeting and a trashcan full of lemonade, I will bring all other required "implements".
> He's probably pissing in someone else's pants while trying to convince everyone it's raining
LOL
JPM are in the hole for $1.4b on the day and the day is just getting started.
I think I might enjoy this day for a very, very, very long time.
But but but...Jamie Dimon said tey might experience another $1B loss off this trade...in the next quarter. He didn't say anything about it being all today...and that $1B really meant $10B.
The retail fish have long left the ocean leaving the sharks to feed off each other - and I think they smell blood in the water from the first one to sustain an injury. Hope these sociopaths burn in hell.
psychopaths?
guess we see just how much gold JP Morgue has
Cue the Chinese.
Jamies secret damage control morning call script to all other banks and hedgies (1st draft) -
"Listen up. You want to see how much juice I have? Why do you think Corzine is walking free and not dead or in jail, cause I OWN the agencies and Congress! Those stupid bastards work for me. Anyone tries to trade against us to take us down is DEAD. If I have to, I will bring the whole fucking world down. Fuck with us and I will personally fuck you up, you fucking fucks.... I think we are clear on that.
Now, my assistant will be coming on line to let you know about planned events for our customer / trading partner appreciation days coming up next month...."
“Just a banker doing God’s work”
Lloyd Blankinstein Goldman Suchs
Is there a way to pile on the pain, by getting long IG9? No matter how risky or lossy it becomes, it would still feel good.
All representatives are currently busy. Your wait time for the next IG9 window broker is 94 minutes. We thank you for your patience...
hilarious! i'll leave this to the professionals to inflict max pain.
How long will it take them to unwind this position? What do they stand to lose in that amount of time? Will this finally put my FAZ position back in the black?
You know after all the bitch slapping Bruno put on the HFM's, they are blood thirsty for revenge. This could get ugly, and I'm sure Uncle Ben will step in to help any minute.
Yeah, all they need is some more paper money to gamble with --------------
http://www.musictory.com/music/Noah+And+The+Whale/Death+By+Numbers
Sharkboy Hits Dock - JPM Takes 'Significant Loss' in Derivatives Book - 'Could Get Worse'
I can't wait til Monday to find out which bank has bought JPM!!! I'm giddy like a school girl.
So the big question is...how could this spread and infect the rest of the financials sector? That's on honest question, I'm not a market professional and I'm struggling to understand all the implications here. Is this 2008 all over again, or just a minor raping for JPM?
"how could this spread and infect the rest of the financials sector?"
It all depends on how much "real money" is in their reserves. When the margin calls come, they may have to liquidate other more profitable positions at a loss to cover their "loans" they took out to develop their short position. If they work one asset class (PM's, CMBS, CDO's, etc) at a time, they may cause a drop in value as they load up the market. On the other hand, other sharks that want to ride the price up as JPM is forced to cover may also unload some of their investments to leverage up on available shares too. It would be a real head-scratcher of a day if they all pound the same investment class into the dirt.
So the question is "How levered are they on this stuff?" If they have lost $2B (for starters) and they are levered 30-1, that should mean liquidating a $60B position. Common sense (hedging my bet as it were) would tell me the loss is $5B at 50-1. So a postiion of $250B needs to move to cover the loss? And a 1% drop from there, doubles the amount you would need to move. Is this semi accurate or do I need more coffee?
Edit: Going with more coffee
Vegas has the under/over by the close at a 13.5 bp move:
Floyd: Takin' bets today, Red?
Red: Smokes or coins, bettor's choice.
Floyd: Smokes. Put me down for two.
Red: All right, who's your horse?
what does DV01 mean?
Dollar value of a 1 basis point move in the index. Think of it as a pain meter - and the basis point move is like the thermometer in the Frosty the Snowman cartoon.
you get to ask 1 styooopid question a year, one-eyed eyore
next time, try looking it up on a search engine, like everyone else, shithead!
Today's banking sector theme song:
http://www.youtube.com/watch?v=nPL7nN99jno
"Now don't worry your handsome wittle head. Uncle Bennie will kiss the booboo and make it all go away. Uncle Hanky sends his regards and little tommy says dry those tears up and put a smile on your face for the cameras." (as heard coming from the bearded visitor behind closed door)
The SEC isn't sure how paltry to make the fine until the squid tells them.
Excuse me if this has been asked before - but - the area of the markets where JPM is having its purported troubles is unregulated yes ? Kind of like the concept of insider trading doesn't exist ? Is there some way that there is an misinterpretted implication where this situation is actually helping JPM - or perhaps some other large entity which JPM is doing a favor for ?