This page has been archived and commenting is disabled.

Did The Fed Just Give Us A Very Big Clue Just How Big JPM's CIO Loss May Be?

Tyler Durden's picture


Earlier today we mocked Jamie Dimon for announcing the cancellation of his firm's stock buyback program, just two shorts months after March 13, when none other than JP Morgan forced the Fed to scramble and release the full stress test ahead of schedule, after Jamie Dimon decided to frontrun the full FRBNY stress test release (whose sole purpose was to determine under what worst case scenario the Fed was ok with allowing JPM and various other Bank Holding Companies to proceed with dividend raises/stock buybacks) and announce just that - a dividend increase and a stock buyback. Well, in addition to some well justified egg in Dimon's face, today's results actually have some far more troubling implications. Because while we now know that the buyback is over, what we still don't know, because Jamie Dimon refuses to tell us, is just how big the CIO P&L loss as of close today. Yes, there are many speculations but nobody knows for sure. Zero Hedge was the first to suggest based on reverse engineering of what the potential loss drivers may well have been, and subsequently the slower media corroborated, that the total loss would be orders of magnitude greater than the $2 billion announced on May 10. But how many orders? Well, for what may be a critical clue, we go to the Fed's stress test itself. Presenting Exhibit A - page 73 of 82:

This is from the "Comprehensive Capital Analysis and Review 2012" for JP Morgan, conducted by the NY Fed. Specifically, these are, among others, the permissive gating conditions, which if met, would still enable JP Morgan to proceed with the then announced buyback. The highlighted section above speaks for itself:

  • the cumulative "realized losses/gains securities (AFS/HTM) and Trading and Counterparty Losses" amount to $31.5 billion for the pendency of the stress test.
  • In other words $31.5 billion is how much pain JPM is allowed, in the NY Fed's view, to suffer before losses and dividends/buyback would jeopardize the capital structure, and the buyback process should be halted
  • Once again, as a reminder, the buyback process was halted today.

While we do not know the combined loss on these two line items, what we do know as of this morning is that the prohibitive threshold for buybacks was passed just two months after it had been permitted.

Does this imply that the CIO losses, as conferred by JPM to the Fed in private, have a statutory loss potential of over $31.5 billion through Q4 2013? Or is the hit to just this quarter so substantial, that spreading the loss over a period of time has become meaningless, and the Fed has barred JP Morgan from any other future buybacks, i.e., capital outflows, until such time as the trading/realized loss has been offset and the hit to the balance sheet has been undone?

Something tells us that we won't be the only ones asking these questions.


UPDATE: The Independent is noting this morning Europe-time, that the losses at JPMorgan could have grown to $7bn:

Rival traders reckon that the losses could be as high $7bn. "The markets know pretty much what JP Morgan has and in what sizes," said one trader.


The main index on which Mr Iksil's credit default swaps trades were based has calmed down in recent days, which suggests that JP Morgan has decided to trade out of its positions gradually rather than take one massive hit.




According to JP Morgan traders, in [Ina Drew's] absence there were regular shouting matches between her subordinates in New York and London. "The strife distracted everyone because no one could push back," one trader told The New York Times.


[ZH: We suspect the apparent 'calmness' is simply a reflection of the moderation in the skew in HY9 and IG9 - but does not reflect the noise that we are seeing in various other credit indices such as HYG, JNK, IG18, and HY18 all of which have traded a long way from 'fair-value' recently as JPM reached for any and every liquid hedge (and at the same time caused the NYFed to postpone the MLIII auction) and also the fact that it is highly unlikely that JPM was actually able to trade out of the now super-illiquid tranche positions that were the cause of these market technicals - leaving basis risk even larger on this hedge of a hedge]

IG9 10Y skew almost normalized...


as is IG9 5Y


but this has caused 'problems' in the on-the-run indices...


- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 05/22/2012 - 00:03 | 2449740 prains
prains's picture

somebody needs a 911 part deux

Tue, 05/22/2012 - 00:19 | 2449786 phungus_mungus
phungus_mungus's picture

I want Maryam Nemazees legs wrapped around my head!

Tue, 05/22/2012 - 00:29 | 2449804 Bastiat
Bastiat's picture

A nice dinner might be a good first step.

Tue, 05/22/2012 - 00:38 | 2449818 Ahmeexnal
Ahmeexnal's picture

I sense rope and a lamp post in Jamie "fucktard" Dimon's future.

Tue, 05/22/2012 - 02:31 | 2450002 Oh regional Indian
Oh regional Indian's picture

While they make for good rallying cries, I don't think ropes or guillotines are necessary or hopefully likely.

Gandhi was wrong about most things, but he got the eye for an eye thing completely right.

These Bankers, if they had to sit long enough (like say 6 months) in an always lit, fully mirriored room, TOGETHER.... punishment enough, eh? Imagine that, a massive, fully mirrored room, full of Banksters. Mayhem. And th ebest part is they'll do each other in.

But seriously, 2 Billion? 7 Billion? Eleventy Quillion.

NUMBers...charade, game, fooled ya, gotcha... all junk NUMBers.

Between TARP And HAARP and TOIL and TWIST....





Tue, 05/22/2012 - 02:37 | 2450019 fourchan
fourchan's picture

im going to guess 10 billion and chase still wont give me a rate only refi, fuck those crumb bums!

Tue, 05/22/2012 - 04:20 | 2450105 The Alarmist
The Alarmist's picture

I haven't done much analysis beyond a quick look at insider trades, but a lot of JPM stock was picked up in the low thirties (restricted or options?) and dumped in the low forties in recent months. That egg-on-face is probably easier to wear with a few extra bucks in the bank.

Tue, 05/22/2012 - 05:08 | 2450131 macholatte
macholatte's picture



Executive Pay

Ina R. Drew

2010 Compensation Record
  • Salary$500,000
  • Bonus$5,000,000
  • Stock Awards$8,937,000
  • Option Awards$1,108,000
  • Other$398,231
  • Total$15,943,231


Tue, 05/22/2012 - 08:46 | 2450319 GetZeeGold
GetZeeGold's picture



The Smartest Guys in the Room...move over for the next batch.


Tue, 05/22/2012 - 08:54 | 2450407 blindfaith
blindfaith's picture



Let's see here....110,100 subject to 6.3% Social Secirity tax is $6,936, and 500,000 subject to ordinary income tax ( less deductions, and gosh don't you know there are going to be a bucket full) might make the taxes 50 to 60 at worst. 

So let's do the math...the total tax burden on this $15,9433,231 is about 60 to 70K or 0.00439 PERCENT  !!!  And all you cry baby right wing no tax jerks think this is in YOUR best interests??  DO YOU???

All the rest is subject to long term Cap gains...when they are taken.  And, if you don't think there are ways to reduce this tax, then you need a new accountant.  Right Ina, tell them what fools they are..go on tell them.

Tue, 05/22/2012 - 10:15 | 2450815 chenn
chenn's picture

I think you forgot to include the $5,000,000 bonus in your calculation.  This will certainly not be a long term cap gains tax but will be taxed immediately.  So there is another $700,000 if we compute the tax at the magically low 14% you are using.  Of course, that doesn't include any state taxes either.  But hey, facts are annoying aren't they.

Tue, 05/22/2012 - 10:58 | 2451008 William113
William113's picture

GMAC is filing for bankruptcy. I received the notice last week. I have not seen it in the MSM yet. I guess GM doesn't want to share their big profit.

Tue, 05/22/2012 - 08:24 | 2450313 goldfish1
goldfish1's picture

Eleventy Quillion.

I think that's starting to approximate the extent of the fraud of the fiat.

Tue, 05/22/2012 - 08:07 | 2450284 JPM Hater001
JPM Hater001's picture

I would respect a good old fashion jump.

Tue, 05/22/2012 - 00:41 | 2449824 Dr Benway
Dr Benway's picture




Tue, 05/22/2012 - 01:24 | 2449892 tenpanhandle
tenpanhandle's picture

Who's he?

Tue, 05/22/2012 - 01:49 | 2449925 Dead Canary
Tue, 05/22/2012 - 00:27 | 2449798 NemoDeNovo
NemoDeNovo's picture

Well on that there is Good News & Bad News...........

-Good News: There is a "Possibility" that may not happen

-Bad News: There is a Probability that something of that sort may very well happen

Now please note I think anyone who doubts this as a real world probability is a a Damn Fool and/or too ignorant for their own good.  That being said I can't say what it will be or when, but one thing is for certain - We will ALL know it when it happens......

Kepp your eyese open, as the times they are a changin



Tue, 05/22/2012 - 00:43 | 2449830 BlueCollaredOne
BlueCollaredOne's picture

I agree but 9/11 was about a 2 trillion dollar "misallocation". We are still dealing with foreplay numbers, but pretty soon, we're all about to get fucked.

Tue, 05/22/2012 - 01:36 | 2449903 Hugh G Rection
Tue, 05/22/2012 - 08:25 | 2450316 goldfish1
goldfish1's picture

$ 2.3 Trill eleven years ago.

Tue, 05/22/2012 - 01:08 | 2449868 SpeakerFTD
SpeakerFTD's picture



I think your interpretation might be slightly off...


"In other words $31.5 billion is how much pain JPM is allowed, in the NY Fed's view, to suffer before losses and dividends/buyback would jeopardize the capital structure, and the buyback process should be halted"

 As I read it, The $31.5 billion represents the losses that would occur under the market stress scenario for trading assets.   These losses would theoretically reduce the Tier 1 Common Ratio from 9.9% to 5.9% with a minimum value through the period of 5.4%.   The total losses under CCAR that would have been necessary to endanger the capital structure are $31.5 billion PLUS the difference between that calculated ratio and the 5% minimum (discussed on pg. 26 along with other min ratios).  But this calculation also includes the theoretical revenue of 59.3B through 2013 and loan provisions of 48.9B, which together are a net positive, at least looking at 2013, so I think trying to use those numbers gets pretty messy pretty quickly.

In short, I don't think that $31.5B number has much meaning, and it certainly is not "how much pain JPM is allowed".

But I think you are on the right track.   The following scenario seems more plausible to me.   Rather than the possibility of a truly astounding loss, what seems more likely is that they have  lost enough to reduce their Tier 1 Common Ratio >= 0.4% (probably materially more), enough that, if CCAR were conducted today, they would fail and their capital plan would be invalidated.     In other words, the  amount of pain they are allowed is only the amount required to reduce the Tier 1 Common Ratio by 0.4%.  In addition, if they are still carrying a position, a theoretical CCAR calculation now would show an even more pronounced loss, so potentially their loss could be less than 0.4%, but if the Fed were vigilant, they could calculate a higher potential loss, and that alone would put handcuffs on the capital plan.

Anyway, that's my take.



Tue, 05/22/2012 - 01:27 | 2449895 tenpanhandle
tenpanhandle's picture

What about the coffee fund in the Memphis office?

Tue, 05/22/2012 - 03:36 | 2450083 trebuchet
trebuchet's picture

so what is your calc of the loss? 

 quick before market opens, we will know where a safe bail point to cover the shorts will be

Tue, 05/22/2012 - 04:57 | 2450114 Cadavre
Cadavre's picture

$31.5 billion is ....

That's the question. Provisions are expectations - like a possible legal settlement before the details are formalized.

But there was other stuff. Happened after CNBC warned prospective protestors the police would hurt them if they attended the the NATO / G8 Jubilee (While MSNBC was calling the demonstrators "Anarchists"). Now just guessing, mind you, that the importance of NATO/G8 seminars prior to the G8 Necromonger's White Shoe Boyz Ball and final determination of the austerity stipend they'll bleed from the commons (AGAIN), as well as distribution of the austerity "haul" remaining, after the CDS writers are printed out of harms way, and, of course, to the high margin industries patriotically blood clot scream profiting (BIG TIME) off the Global Forever War On Anything and Everything Including Afghani Opium Money Laundering  (hear pretty soon, even ant mounds will be required to scan worker ants coming and going to "work".)

The CPD, in their best reincarnation of the CPD, had their Bahrainy SS "on".

The provision could be principal due to bondholders because, and probably as well, for a bunch, as always, uncollateralized wet paper US money centers through thier  usual London Shadow Counter gates. Why do uncle's bunion tell him JPM, G, MS - and all the usual suspect guys wrote a bunch of CDS on the predictably gonna go south for eternity Greek debt (AGAIN)? And, furthermore, they ain't got the collateral to cover their promises (AGAIN)?

31 Billion is the conservative "public" print. Something is going on and it probably makes 31 billion look like chump change.

Back to lame stream "snarkle" moment: So the CNBC breaks away from what sounded to be a "happy days are here again" market barking, but smelled more an inside inside play day than typical HFT dead cat bouncing theatrics, and blasted the "prez" summary of the Jubilee (so far). Right around the quib from the Oromney not unexpectedly and unequivocally disingenuously on  US military personal having a "can die", or was it "can do" attitude (? explains why military have donated to Dr Paul than the others COMBINED EVUN!), the "Real Change You Can Believe In" guy says:

"The European banks will need to be recapitalized."

Huh - err - hmmm - WTF does that mean?

Did the Emperor For A Day JUST SAY the FED was going to print "re-capitalizing" EZ banks (AGAIN)?

The inside play day seems to be hoping that be the case.

How would that work(anyhow)? EZ Banks would get "dollars" from the and then they would use it to pay the bond holders -(RIGHT?) in EUR EQUIVALENT (for the moment) USD - OR, more simply, another miraculous out of thin air, first you don't see, then you do see, WAD of EURs?  The market sure looks like it is expecting some heavy FED printing but not much EUR printing. When there is no capital. magic witll draw it from the ether.

The lobbyists will figure it out - they always do.

What if that malarkey about the "winner" of a currency wars is the last sovereign with the capacity to inflate is a bunch of horse-shit? (sure glad we didn't step in it!).

It goes to show: If the only way to push price is to inflate the fiat, it must f*cking be g*d's work and that be for sure!

Tue, 05/22/2012 - 08:30 | 2450327 goldfish1
goldfish1's picture

Inflate the fiat, indeed is the lifeline they're clinging to. Now, how does that translate to us and the opportunities and precautions.

Greater minds please advise.

Tue, 05/22/2012 - 13:46 | 2451632 trebuchet
trebuchet's picture

long gold or gold mining stock imho


@SpeaFTD so if your calc is right, that 31.5bn =4% of Tier I core and if 0.4% deterioration is required to stop their stock buy bakc plans then the loss is >3.1bn, which seems entirely plausible, but under estimated. 


Surely, not all the way to 31.5Bn?? the fed would be rolling the printing presses by now

Tue, 05/22/2012 - 01:13 | 2449885 Peter Pan
Peter Pan's picture

"somebody needs a 911 part deux"

As long as it hits the whole of Wall Street and not just Dimon's and Corzine's files.

Tue, 05/22/2012 - 05:51 | 2450151 francis_sawyer
francis_sawyer's picture

Well if anyone wants my input, I'll go with the Sta Puft Marshmallow Man as the bringer of destruction... Krugman would have a field day with that...

Tue, 05/22/2012 - 03:13 | 2450066 BlackholeDivestment
BlackholeDivestment's picture

prains ''somebody needs a 911 part deux'' you really think just a few buildings will do it for them this time?

Tue, 05/22/2012 - 08:56 | 2450413 prains
prains's picture

no it's not so much the buildings that have to fall but the flag wrapped unified front against the evil axis along with 24/7 cnn coverage of every able bodied navel staring hero would sure help about now

Tue, 05/22/2012 - 10:09 | 2450789 battle axe
battle axe's picture

Oh shit....

Tue, 05/22/2012 - 00:05 | 2449746 ACP
ACP's picture

Can't wait to hear the painful truth. It'll be my guilty pleasure to read all about it. JPM scum.

Tue, 05/22/2012 - 00:11 | 2449759 DeadFred
DeadFred's picture

Order(s) of magnitude. Tyler you made my day and I haven't even read the article yet :)

Tue, 05/22/2012 - 08:59 | 2450426 goldfish1
goldfish1's picture

You think you're going to hear the truth?

Tue, 05/22/2012 - 00:09 | 2449752 williambanzai7
williambanzai7's picture

Jamie's got a gun...


Tue, 05/22/2012 - 09:12 | 2450492 fuu
fuu's picture

Jamie's crying.

Tue, 05/22/2012 - 00:08 | 2449753 Sockeye
Sockeye's picture

Nice find. Don't know how you do it.

Tue, 05/22/2012 - 00:09 | 2449756 JustPrintMoreDuh
JustPrintMoreDuh's picture

2 billion, 30 billion ... whatever.  Whats a few more billion here or there at this point?


Tue, 05/22/2012 - 00:35 | 2449814 hmmmstrange
hmmmstrange's picture

Rounding error

Tue, 05/22/2012 - 02:35 | 2450013 Oh regional Indian
Oh regional Indian's picture



Tue, 05/22/2012 - 01:04 | 2449873 FlyoverCountryS...
FlyoverCountrySchmuck's picture

What's a few billion here or there, to a buddy of OBAMA, when you can bribe open the Treasury (Campaign 'Donations') to cover your losses

Tue, 05/22/2012 - 01:32 | 2449898 Kiwi Pete
Kiwi Pete's picture

Is it Bank run or bank Run! 

Tue, 05/22/2012 - 00:09 | 2449757 chump666
chump666's picture

Brilliant Zero Hedge.




Tue, 05/22/2012 - 00:20 | 2449758 strannick
strannick's picture

Dear JPM depositors.

How do you like buying chips for Jamie's gambling stack? Glass-Steagle smeagle.

Remember Bear Stearnes promising how solvent they were? The vultures didnt buy it then either.

Tue, 05/22/2012 - 00:39 | 2449820 Tapeworm
Tapeworm's picture

BSC didn't have FDIC backing.

Tue, 05/22/2012 - 00:50 | 2449841 Major Major Major
Major Major Major's picture

More importantly, no access to the discount window (by one day)...


Tue, 05/22/2012 - 00:11 | 2449760 Conman
Conman's picture

Could this be the charcoal colored avian animal we were looking for?

Tue, 05/22/2012 - 01:09 | 2449880 Soul Train
Soul Train's picture

Isn't it a wonder that in today's equity market rally today that JPM and most other similar financials did not participate?


Tue, 05/22/2012 - 01:32 | 2449899 tenpanhandle
tenpanhandle's picture

most prayers end with amen

Tue, 05/22/2012 - 00:12 | 2449761 Seasmoke
Seasmoke's picture

Jump Jamie , you fucker

Tue, 05/22/2012 - 03:52 | 2450093 BeetleBailey
BeetleBailey's picture

...and the chump even lied to his own daughter! The horror!

His response of "every five to seven years" as to his own daughters query as to what is a financial crisis, was off by a full year!

Hang the fuck!

Tue, 05/22/2012 - 12:32 | 2451375 liverdiefree
liverdiefree's picture

And take Lloyd with you

Tue, 05/22/2012 - 00:13 | 2449764 AC_Doctor
AC_Doctor's picture

Choke of a bag of dicks, Senor Dimon...

Tue, 05/22/2012 - 00:15 | 2449771 Bay of Pigs
Bay of Pigs's picture

Whatever evil befalls JPM it won't be enough. Not nearly enough.


Tue, 05/22/2012 - 00:23 | 2449796 Psyman
Psyman's picture

They are about to be visited by the evils of tax payer funded bailouts and record bonuses this Christmas!

Tue, 05/22/2012 - 01:06 | 2449877 FlyoverCountryS...
FlyoverCountrySchmuck's picture



The TV told me that Obama said, 'THE ERA OF BAILOUTS IS OVER!'

How can this be????

Tue, 05/22/2012 - 01:48 | 2449926 tenpanhandle
tenpanhandle's picture

And he was, er... right.  It is far past the point to blame Bush with his bailouts, so, the Bush bailouts are over.  Now we will move forward with "prosperity through fairness".  The wealth of the middle class and the rich consist of ill-gotten-gains and therefore should  patrioticly be given to Jerry Brown who will then distribute this wealth to the deserving, thusly, making the needy  (and close friends) the recipients of these ill-gotten-gains.  While two wrongs don't make a right, they certainly make a left. 

The Teleprompter has spoken!  Omen.

Tue, 05/22/2012 - 00:15 | 2449772 Terra-Firma
Terra-Firma's picture

leave gambling to the gamblers and banking to the bankers. I prefer cautious retrained growth of prudent and scared bankers to the reckless misguided and profligate risk taking of central bank liquidity soaked self absorbed bangelers.

Tue, 05/22/2012 - 01:33 | 2449900 walküre
walküre's picture

We all prefer that to be the case but it wasn't and it isn't going to happen for if the banks were to be cautious, the entire ponzi villa would simply come crashing down faster than the hours it took for the alleged collateral damage on WTC7 to collapse that building magically into its footprint.

Bankers in shackles are useless to the system. Abuse, manipulation and fairy tale returns are encouraged by the political class that lives off the scum and their scams.

Tue, 05/22/2012 - 09:02 | 2450441 goldfish1
goldfish1's picture

Let's reset the 1% to max of $500,000. That might take some of the larceny incentive away.

Tue, 05/22/2012 - 00:15 | 2449773 Milton Waddams
Milton Waddams's picture

I imagine Bernanke sighing while shaking his head in disappointment as he pulls out his checkbook and asks Jamie 'how much do you need this time?'

Tue, 05/22/2012 - 00:24 | 2449797 wee-weed up
wee-weed up's picture

Bernanke double face-palm!

Tue, 05/22/2012 - 00:30 | 2449806 WonderDawg
WonderDawg's picture

To which Jamie says, "Look, bitch, no one asked your opinion. Shut the fuck up and give me the money."

Tue, 05/22/2012 - 01:12 | 2449886 wee-weed up
wee-weed up's picture

And by the way... it's not his checkbook - it's OURS!

Tue, 05/22/2012 - 00:15 | 2449774 dfornika
dfornika's picture

So... about one order of magnitude then?

Tue, 05/22/2012 - 00:16 | 2449777 GoldmanSux
GoldmanSux's picture

Something tells me you will be the only ones asking the necessary questions

Tue, 05/22/2012 - 00:18 | 2449783 suckerfishzilla
suckerfishzilla's picture

This story is proof that ZH doesn't just report the bad news.  I'm suckin up junk mercury dimes like there's no tomorrow. 

Tue, 05/22/2012 - 01:53 | 2449929 tenpanhandle
tenpanhandle's picture

Can you suck a roll of mercs through a 10 ft garden hose?  JPM, AKA "10 ft garden hose" really wants to know.  Actually, I'm a little curious also.

Tue, 05/22/2012 - 02:01 | 2449940 tenpanhandle
tenpanhandle's picture

Sorry folks.  I guess thats about it for me.   I think it must be a humidity problem or something.  Afterall, they say that so far its the hottest year ever.  Only in the man made global warming croud can a rise in temperature from 10 below zero to 5 below zero be considered getting hotter. 

Tue, 05/22/2012 - 00:19 | 2449784 cherry picker
cherry picker's picture

If the post is halfway on target, how many others are out there like JPM and if there are many, when it hits it will make Lehman look like child's play.

My neighbor is a pro gambler and makes a living playing on sites dedicated to such endeavers.  He is disciplined and spends 10-14 hrs a day at his trade four days a week.  It is his money he is working with and risking.  I respect him in how he makes his living, unlike those who play with anothers coin and when they lose, expect Bennie to fill their coffers again.

Tue, 05/22/2012 - 10:15 | 2450813 Da55id
Da55id's picture

So, you're saying he's in the stock market?

Tue, 05/22/2012 - 00:19 | 2449785 lotusblue
lotusblue's picture

Great dig Tyler! Corressponds with the rumors floating around.

I wouldn't have put it together.

There will be blood.

Tue, 05/22/2012 - 00:21 | 2449790 Psyman
Psyman's picture

The blood of the sheep (tax payers, depositors) is a delicious feast for the vampiric banksters.

Tue, 05/22/2012 - 04:51 | 2450121 Mary Wilbur
Mary Wilbur's picture

I'm afraid I'm one of the sheep.

Tue, 05/22/2012 - 09:06 | 2450455 goldfish1
goldfish1's picture

Sheep's on the menu, better stay close to your shepherd.

Tue, 05/22/2012 - 00:20 | 2449789 Psyman
Psyman's picture

No big deal, they'll just get a tax payer funded bailout.  Or rehypothecate depositor funds.


Nothing to see here, move along.

Tue, 05/22/2012 - 01:24 | 2449891 Axenolith
Axenolith's picture

No WAY they'll get a bailout, ZERO chance unless the Kenyan goober is prepared to 100% be a 1 termer.  The Admin will walk on fire, screw farm animals, grandmas and demons to prevent a bailout before November and if there is one, it will be the indication that TPTB are rotating in a new sheep herder, and B.O. needs to get the classified ads out.

Tue, 05/22/2012 - 02:13 | 2449958 tenpanhandle
tenpanhandle's picture

no way.  A massive bailout will occur, timed just right, to be felt right at November.  Gas prices will hit $2.89 a gallon and the voice of a 16 year old virgin, being held against her will in a polygamist compound in Utah, will reverberate throughout the land.


Tue, 05/22/2012 - 02:15 | 2449959 tenpanhandle
tenpanhandle's picture

If Obama had a daughter, it would look just like her.

Tue, 05/22/2012 - 00:21 | 2449791 Sabibaby
Sabibaby's picture

Ecomonics and Math don't mix so don't combine them and everything will be ok. 

Tue, 05/22/2012 - 00:21 | 2449792 Gamma735
Gamma735's picture

Why is there so much opaqueness in banking?  Is it because they don't want was seeing the Ponzi scheme?  But don't worry, JPM account holders, the Fed will rescue JPM, but not you.  

Tue, 05/22/2012 - 01:14 | 2449888 Richard Chesler
Richard Chesler's picture

Opaqueness makes it easy for corrupt presidential scumbags to praise the "smartest" banksters.

Tue, 05/22/2012 - 09:02 | 2450444 pods
pods's picture

Much easier to steal shit in the dark.

Tue, 05/22/2012 - 00:22 | 2449794 jonjon831983
jonjon831983's picture

This is bullish right? Shows the stress tests are legit!

We're ok!



Tue, 05/22/2012 - 00:22 | 2449795 world_debt_slave
world_debt_slave's picture

the only thing the Fed gives the muppets is a good reaming

Tue, 05/22/2012 - 00:29 | 2449805 oogs66
oogs66's picture

ZH jumping the shark?  Talib and Bove both idiots.  ZH been spot on, but where evidence on this ?

Tue, 05/22/2012 - 00:32 | 2449808 prains
prains's picture

Presenting Exhibit A - page 73 of 82:

Tue, 05/22/2012 - 00:39 | 2449821 oogs66
oogs66's picture

yes, JPM, under extreme stress, counterparty and otherwise would lose $22 billion and still pay a dividend.  Yes, awful on a company that makes that in more than 1 year.  of all places, never has ZH been used so much by the bears to push their agenda :(

Tue, 05/22/2012 - 00:39 | 2449822 oogs66
oogs66's picture

yes, JPM, under extreme stress, counterparty and otherwise would lose $22 billion and still pay a dividend.  Yes, awful on a company that makes that in more than 1 year.  of all places, never has ZH been used so much by the bears to push their agenda :(

Tue, 05/22/2012 - 04:45 | 2450116 Jendrzejczyk
Jendrzejczyk's picture

ZH is the shark.

Tue, 05/22/2012 - 00:34 | 2449812 JohnKozac
JohnKozac's picture

Damn! You guys are smart.

Tue, 05/22/2012 - 00:36 | 2449815 earleflorida
earleflorida's picture

excellent news !!!

and the other diamond across [barclay's plc] the pond, selling what's left in its final holdings of blk inc. for ~ $6bn. fink is nervous

note: dimon tried to fuck diamond with the lehman [n.american brokerage house] deal and billion's in useless commercial paper called racer's. the two hate each other! funny

Tue, 05/22/2012 - 00:38 | 2449817 Inthemix96
Inthemix96's picture

How much more bullshit are we going to have to put up with before this fucker goes down?

Goes to show living your life a good and respectible way was bollocks, what we all should have done was live like demon and his ilk, rob plunder steal and then get a gold plated tax payer funded bail out.

Fuck this, this is a game I no longer want to play.

When this finally ends, there is going to be some serious payback, and to you mr fucking big shot dimon, the world is waking up you cunt, do you think all that money will help you at the end? When all is said and done you provide nothing, fuck all, you help no one but yourself and steal off the backs of the rest of us.

You and your other parasitic friends will get exactly what you deserve, and I for one will laugh out loud when your recompense comes due, and don't worry son, you deserve it. Every bit of it.

Tue, 05/22/2012 - 01:46 | 2449921 Axenolith
Axenolith's picture

Dude, quite a bit, they weaseled out of paying the financial piper 105 years ago by sacrificing ~250,000 of our boys on the alter of European war loans...

Tue, 05/22/2012 - 02:04 | 2449942 Inthemix96
Inthemix96's picture

True that axe.

Thing is theres this thing now called the interweb. Even dickheads like me can find out pretty much whatever we want to, people are learning and waking up.

ZH has given me more knowledge than I care for to be honest, there are some things I have learned that are not good for ones blood pressure.

Jamie fucking dimon is one of them.

Tue, 05/22/2012 - 00:39 | 2449819 Clashfan
Clashfan's picture

Terrific read, thanks.

"two shorts months" --?

"substantial, that" --lose the superfluous/erroneous comma

Can't you guys edit these pieces after they've been posted to remove errors like this? This is one I'd really like to share with certain people, yet I know they will be bothered by such errors. It's frustrating.

Seriously, though, still a fantastic piece, the type I just don't find anywhere else on the web. I offer sincere gratitude.

Tue, 05/22/2012 - 00:50 | 2449842 garypaul
garypaul's picture

Losing the comma would turn the adjective 'substantial' into a verb thus causing ambiguity in the meaning. Learn English!

Tue, 05/22/2012 - 03:06 | 2450060 Clashfan
Clashfan's picture

Gary, I'm not sure how you see that it becomes a verb? Here?


==Or is the hit to just this quarter so substantial, that spreading the loss over a period of time has become meaningless, and the Fed has barred JP Morgan from any other future buybacks, i.e., capital outflows, until such time as the trading/realized loss has been offset and the hit to the balance sheet has been undone?==


Turning substantial into a verb is impossible, first off. Second, so and that are correlatives. Look them up and see how they're punctuated. Blessings, man.

Tue, 05/22/2012 - 07:24 | 2450232 fredquimby
fredquimby's picture

Or is the hit to just this quarter so substantial, that spreading the loss over a period of time has become meaningless, and the Fed has barred JP Morgan from any other future buybacks, i.e., capital outflows, until such time as the trading/realized loss has been offset and the hit to the balance sheet has been undone?

You cannot put a , before and and there should be no comma after or before i.e.


Humpf, these Americans really don't know their grammar do they Clashfan ;)

Tue, 05/22/2012 - 12:18 | 2451310 Clashfan
Clashfan's picture

Fred, commas are fine before and if there is a series of three or if a second independent clause follows. I'm fine w/the one before ie, too (though you may be right about special rules for that abbreviation), but not the one after ie, which is another error. Offsetting that abbreviation with two commas does look especially egregious.

Tue, 05/22/2012 - 02:54 | 2450048 LudwigVon
LudwigVon's picture

"and subsequently the slower media corroborated""and subsequently the slower media corroborated""and subsequently the slower media corroborated""and subsequently the slower media corroborated""and subsequently the slower media corroborated""and subsequently the slower media corroborated""and subsequently the slower media corroborated""and subsequently the slower media corroborated""and subsequently the slower media corroborated""and subsequently the slower media corroborated""and subsequently the slower media corroborated""and subsequently the slower media corroborated""and subsequently the slower media corroborated""and subsequently the slower media corroborated""and subsequently the slower media corroborated""and subsequently the slower media corroborated""and subsequently the slower media corroborated""and subsequently the slower media corroborated""and subsequently the slower media corroborated"

But now you want editing, proofreading and a slow-bow on top for your content-ignorant when syntax sceptical uber-audience?


Tue, 05/22/2012 - 03:16 | 2450070 Clashfan
Clashfan's picture

Actually, Ludwig, I'm a big fan of the website and often share pieces with friends who are not necessarily "content-ignorant" and are quite well educated. Sites that are off the mainstream radar are tough enough to push to mm-brainwashed people without me having to apologize for the lack of editing. These folks are not ignorant, but they read Krugman, watch CNBC, etc., and are generally wary of sites that might be deemed "conspiracy theory" or whatever.

In some ways, credibility is like a market: Things affect it whether we want them to or not, and a lot of it is based on perception. Constant grammatical errors do affect a website's credibility, then, especially in educated crowds.

That's just the way it is. In my own, somewhat obnoxious way (apologies, honestly), I'm trying to help.

I do know people who need to be reading this site, and I am putting the articles in their faces. I wouldn't even mention the problem if it were merely occasional, but it's endemic on this site.

That won't stop me, of course, from enjoying the site or from reccommending it, but refraining from comment on some of these grammatical guffaws is difficult for me.

Maybe I should just be a yes-man, cheerleader type on here? Buy me some pom-poms then.

Tue, 05/22/2012 - 03:25 | 2450076 Bolweevil
Bolweevil's picture


Tue, 05/22/2012 - 03:42 | 2450089 Apostate2
Apostate2's picture

'reccommending' ?

Guffaw grammatical. Please refrain.

Tue, 05/22/2012 - 04:08 | 2450099 John_Coltrane
John_Coltrane's picture

"These folks are not ignorant, but they read Krugman, watch CNBC,"  You've just contradicted your assertion regarding their state of knowledge or lack thereof (i.e.  ignorance).  If they weren't ignorant reading Krugman and watching CNBC would certainly make them so.  And since you state they do so, ergo ignorance is ensured. 


Tue, 05/22/2012 - 06:49 | 2450197 mvsjcl
mvsjcl's picture

A bear trap of logic snapping shut.

Tue, 05/22/2012 - 12:23 | 2451340 Clashfan
Clashfan's picture

JC, I think the phrase used, to which I respond, is "content-ignorant," specifically. These people know who Dimon is, know who JP Morgan is, and can tell you the definitions of many of the acronyms on ZH (which always impresses me). They know a good bit about the economy and invest. They are not "conspiracy theorists," however, and they ignorantly read and watch the mm. Hence the problem.

No, actually, I clearly am implying (not outright stating) that there is a problem with them when I say that they need to be reading sites like this. There's a problem with their approach to the media in general, and they are very well-educated and somewhat influential people.

Getting them to read a site like this more regularly would be a victory of sorts.

The frequent grammatical errors in many pieces are a problem. Hate the message, not the messenger.

Tue, 05/22/2012 - 06:11 | 2450168 MeetTozter
MeetTozter's picture

never about the grammar, always about the flow

Tue, 05/22/2012 - 08:15 | 2450302 my puppy for prez
my puppy for prez's picture

Here is what you do before you send it to friends.  Click on the "printer-friendly" version.  This also eliminates ads, and comment board.  Then, you email it to yourself.  Now open the emailed article in your inbox, press "forward", then edit to your heart's content before clicking "send".  Problem solved!

Tue, 05/22/2012 - 12:25 | 2451346 Clashfan
Clashfan's picture

Uh, puppy, that won't work for two reasons. One, the purpose would be to steer them to the site. That's what I want to do. And when they get here, they'll see the poor editing everywhere. Two, I'm not spending my time editing someone else's work for free. That's what I do (occasionally) on the threads anyway. ZH should fix the errant posts. Can't they see some of these obvious errors once the pieces are up and posted? Some of them are embarrassing. I see them daily.

Tue, 05/22/2012 - 00:41 | 2449826 giddy
giddy's picture

Nice research!  Figured the actual losses to be at least 10X ($20b) the amount JPM estimated.  How can it be otherwise?  No different than "guessing" subprime was worth about 10 cents on the dollar back in 2007.  Seen this one before...  

Tue, 05/22/2012 - 00:42 | 2449828 Psyman
Psyman's picture

As a tax payer it does not please me to hear that the TBTF banks are having financial troubles.  Because I know it is I that will be picking up the tab.


This anti-big bank herd mentality on ZH is an interesting phenomenon.  It's schadenfreude combined with masochism.  Must be more Germans here than I thought.


It seems to me that we should hope and pray for the success of the TBTF banks because within the context of the fascist American empire they will never be allowed to fail.  So it is better for them to succeed without bailouts than for them to fail and be bailed out again, and again, and again.

Tue, 05/22/2012 - 01:39 | 2449907 walküre
walküre's picture

you're fucking kidding right, MDB's illegitimate brother?

Tue, 05/22/2012 - 03:02 | 2450052 LudwigVon
LudwigVon's picture


Tue, 05/22/2012 - 06:51 | 2450198 mvsjcl
mvsjcl's picture

Troll much?

Tue, 05/22/2012 - 08:52 | 2450375 jayman21
jayman21's picture

Psyman - you will quickly realize that the average ZHer is not German, French, English, Asian.....I could go on and on but wants his/her freedom back.  We are a little more awake than the average sheep.  If you do not have a tin foil hat, I suggest buying one and let the thought process begin.

Some Links from other ZHers:


If you have 6 hours and want to walkthough history


The whole German vs. French thing vs. English thing is over done.  It is another way to distract us from achieving freedom.


Tue, 05/22/2012 - 00:49 | 2449840 Cult_of_Reason
Cult_of_Reason's picture

JP Morgan: trader's losses could exceed $7bn

The crisis at JP Morgan escalated yesterday as it emerged its trading losses in London could rise to as much as $7bn...

Tue, 05/22/2012 - 08:02 | 2450277 GoingLoonie
GoingLoonie's picture

Hey COR thanks for sharing the link.  Hard to get real news in the US.  And I like the outfit!

Tue, 05/22/2012 - 00:51 | 2449843 jonjon831983
jonjon831983's picture



Now up to 7Bn


So... I am not sure if I understand.  These expire in 2017.  How does it effect them now?  Like, it obviously seems like a big deal... but is it really?  If say the trade turns their way before 2017 expiry?

Tue, 05/22/2012 - 00:53 | 2449846 stop.snitching
stop.snitching's picture

As much as I'd like to believe this, I think the real explanation is that the 31.5 billion was breached already through the approximately 20% decline in stock price which amounts to about 30 billion dollars. A 30 billion trading loss would imply a naked short CDX position of TWO HUNDRED BILLION DOLLARS losing 15 percent. Not likely, especially since another internal department was buying some of the protection the CIO was selling.

Tue, 05/22/2012 - 00:57 | 2449852 marketcycles79
marketcycles79's picture

My friend echen at Humblestudent blog has been providing great cycle work on the markets for years. Please see his work at

I highly recommend the analysis provided and think it is a unique insight to the markets not found elsewhere.


Tue, 05/22/2012 - 01:37 | 2449858 Youri Carma
Youri Carma's picture

If JPM's "CIO’s “non-vanilla” portfolio is now over $150 billion in size," and they are alowed to lose $31.5 billion that would be exactly 21% of that portfolio.


JPMorgan unit has $100 billion in securitized assets, structured debt: FT
17 May 2012, (Reuters)

JPMorgan unit has $100bn of risky bonds
18 May 2012, by By Sam Jones in London and Tracy Alloway and Tom Braithwaite in New York (Financial Times)

Tue, 05/22/2012 - 01:00 | 2449859 adr
adr's picture

The real question is: Did JPM's loss trigger emergency action by the Fed over the weekend, lending billion of dollars to the investment banks to pump the market in order to paper over the last few weeks of losses?

"Ben it's Jamie. Uh we've got a problem here. The bets went bad and it will take down a couple hundred billion worth of market funds. I need $100 billion deposited in our account Sunday night. A 5% jump in our momo basket should be enough to cover the base loss. Typical terms, .25% goes back to the Fed at the end of the day on top of the $100 billion. I'll let you know on Monday if everything was taken care of. The cash should spark a rally for the next few days. Has the last 100 times we pulled this shit. We'll make sure to put Cramer on it. Thanks, a new 13 yr old Thai virgin will be showing up at your getaway pad tonight. Have fun, the Di Man."

Judging by the performance of the momo hedge fund darlings like Apple, Priceline, and Autozone today. All driving higher with interchangeable chart performance. The answer to that question is yes.

Really Apple and Priceline up 4.5% in one day?

The bull is out of shit. This has moved on to full Minotaurshit. Or the defecation of some other mythical being.

Tue, 05/22/2012 - 01:05 | 2449862 Dr. Kananga
Dr. Kananga's picture

"This anti-big bank herd mentality on ZH is an interesting phenomenon."

I wouldn't say this site is anti-bank. ZH is the biggest bunch of pro-capitalists around.

Capitalists believe in the value of failure--brutal bone-breaking-to-the-curb failure, when it's warranted by stupid behavior or outright malfeasance. Keeps the market functioning.

Every time a loser is propped up, it comes at the cost of others who are a bit more responsible.

Wed, 05/23/2012 - 02:09 | 2454072 Psyman
Psyman's picture

So why do you cheer at the prospect of further bailouts?

Tue, 05/22/2012 - 01:02 | 2449866 Milton Waddams
Milton Waddams's picture

Looks like IG paper is about to surge relative to SG.  Or SG is about to plunge relative to IG.



Tue, 05/22/2012 - 01:08 | 2449867 holdbuysell
holdbuysell's picture

" also the fact that it is highly unlikely that JPM was actually able to trade out of the now super-illiquid tranche positions that were the cause of these market technicals - leaving basis risk even larger on this hedge of a hedge]"

Seems that JPM and the Fed are now diametrically opposed. What helps one hurts the other and vice versa.

Am I seeing this right?

Tue, 05/22/2012 - 01:04 | 2449872 FreeMktFisherMN
FreeMktFisherMN's picture

Got a question. Do FAZ and the VIXes go the same way usually? I know VIX is volatility and so not necessarily limited to bearishness as far as when it goes up, but I'm pretty new into investing. Mostly in PMs but may consider a few stocks (definitely not a big player) which would only consist of bear trades and miners. And how are the Vixes distinguished?


Tue, 05/22/2012 - 02:42 | 2450035 RmcAZ
RmcAZ's picture



These should make you do a double take the next time you think about doing any sort of trading with these leveraged ETFs (or even the non-leveraged ones for that matter.) Unless you know exactly what you are doing and you are making very short term trades, you are likely to get burned.

I would stick with physical metals.

Tue, 05/22/2012 - 01:05 | 2449875 xtop23
xtop23's picture

It would serve Dimon right if TPTB decide hes a liability and he ends up having a Breitbart needle-gun angioplasty.

I suppose if Corzine still hasn't taken the elevator to the pearly gates, Jaime's still doing God's work and covered.

I hope by the third act of this play some of the main characters die, otherwise I want a refund.

Shakespeare would be bored so far.



Tue, 05/22/2012 - 02:18 | 2449966 slackrabbit
slackrabbit's picture

damn right...i want a gun fight and a car chase....this is worse than the Mass Effect 3 ending...

Tue, 05/22/2012 - 01:53 | 2449930 q99x2
q99x2's picture

I thought it was age but most people I know are beginning to have serious recognitions of coincidental events like synchronisity is vaporizing reality. Variations of experience are collapsing toward zero. No I'm serious its like gonzo is headed our way.

Tue, 05/22/2012 - 02:16 | 2449964 slackrabbit
slackrabbit's picture

gonzo passed my 5 minutes ago ... ;-)

Tue, 05/22/2012 - 02:01 | 2449938 icanhasbailout
icanhasbailout's picture

anyone got a few hundred thousand JPM shares I can borrow for a while?

Tue, 05/22/2012 - 02:38 | 2450030 walküre
walküre's picture

do you care where they're from?

Tue, 05/22/2012 - 02:05 | 2449943 Dorky
Dorky's picture

Anytime the loss is greater than the margin requirement, the loss is as good as 100%, isn't it?

Tue, 05/22/2012 - 02:15 | 2449960 slackrabbit
slackrabbit's picture

"While we do not know the combined loss on these two line items.."


Don't worry Tyler, neither does Jamie...nor the CIO office....nor the Fed.

In short everone knows, but nobody knows...

Tue, 05/22/2012 - 02:38 | 2450031 RollOnShabbos
RollOnShabbos's picture

Basel III goes into affect next year. JPM will be required to hold 8% of it's risk-weighted-assets as capital. This is why the stock repurchase program was suspended.

Tue, 05/22/2012 - 03:03 | 2450057 Moon Pie
Moon Pie's picture

I am so over with Tyranny.  Political, financial or otherwise.  Meh.

Markets aren't markets anymore....they're slaughter pens.

...unless you were at Artwalk this weekened on Balboa Island...nifty buys there.

Tue, 05/22/2012 - 04:03 | 2450097 Rick Blaine
Rick Blaine's picture


Buy the dip!

Tue, 05/22/2012 - 04:18 | 2450104 luna_man
luna_man's picture



Nothing but... NIGHTMARISH nights, for you jamie, my boy!

Not even, them good drugs can help.

Still sittin on top of the world? 

Tue, 05/22/2012 - 05:05 | 2450127 ebworthen
ebworthen's picture

Even with $31.5 billion in losses they will be bailed out again, and also get their bonuses.

What's to stop them?

Tue, 05/22/2012 - 05:50 | 2450150 cnhedge1
cnhedge1's picture

Are concerns over a Greek Euro exit overdone ?

Is the Euro area Credibly on Target?

Tue, 05/22/2012 - 06:27 | 2450179 Super Macro
Super Macro's picture

You miss the BIG PICTURE.


JPM investments are putting the cash on its balance sheet to work by investing in the bond markets in what is suppose to be HIGH AAA LIQUID instruments. THIS IS VOLCKER RULE AT WORK. Clearly the "prop traders" at JPM went a bit further than they should have gone by speculating in derivatives and esoteric type credit related products as so called "hedges". Note the words "prop" and "hedge". 


Now forgetting about JPM for the moment. The entire global banking system has done exactly the same. From Japan, China, Australia, Germany, Ireland, America ALL banks have dramtically increased what is called LIQUID BOOKS. 


Around the world (1)central banks through QE have bought trillions of government bonds (2)central banks and SWFs have bought trillions of government bonds (3)global bank balance sheets and ALL country commericla banks have bought government bonds and "AAA" bonds. The latter have all collapsed courtsey of JPM "hedge fund prop traders". 


Also these very same prop traders over the past three years are the top customers of Deutsche, GS, JPM, MS, BarCap etc. This business has now taken a huge huge hit. That means the LIQUID ASSET BOOK business must be changed. Regulators will change it. 


The losses across the entire banking system are not $7billion , they are tens and tens of billions. This implies QE3, QE4, QE5 is on the way. The clues are any and all central banks EASING. This will be excellent news for non FIRE industries. FIRE groups again MUST shrink. 


So in summary the big picture is....BUY STOCKS BUY STOCKS BUY STOCKS in real companies who can take advantage of interest rates that are at multi decade lows. If a CFO and Board cannot and does not take advantage of borrowing at say 2% to increase his business then do not touch the stock with a barge pole. 


Across US, Europe, Asia, LATAM any good sized corporate across any industry that is not a FIRE company has just being given a huge gift. Like 2009 to 2010 real company stock prices will double 2012 to 2013.


Good luck. Sell FIRE buy REAL companies. Flip your pensions now...the big rotation since 21007 should intensify more and more. 

Tue, 05/22/2012 - 08:45 | 2450367 nowhereman
nowhereman's picture

Say What?  Yes, Good luck with that.

The Really, Really Big Picture ...

The so called "market" is a figment of your imagination.

Tue, 05/22/2012 - 07:20 | 2450229 The game
The game's picture

All A Bunch of Fucking PIGS!

Tue, 05/22/2012 - 08:07 | 2450285 farmerjohn2112
farmerjohn2112's picture
Everybody knows that the dice are loaded  Everybody rolls with their fingers crossed  Everybody knows that the war is over  Everybody knows the good guys lost  Everybody knows the fight was fixed  The poor stay poor, the rich get rich  That's how it goes  Everybody knows...
Tue, 05/22/2012 - 08:09 | 2450289 icanhasbailout
icanhasbailout's picture

Ever play the card game Illuminati? It comes with loaded dice, seriously.

Do NOT follow this link or you will be banned from the site!