In The Footprints Of A Whale

Tyler Durden's picture


It was only last week that we highlighted the facts and fiction behind JPMorgan's prop-trading CIO office activities and Bruno' London Whale' Iksil's magnificent market cornering 'hedging' activity. Well, Bloomberg's chart-of-the-day provides the clearest and most destructive indication of just how ridiculous this supposed 'hedge' position had become. Thanks to Mary Childs and Shannon Harrington's data scrubbing, its turns out that, according to the DTCC, the net notional of contracts on Series 9 on the Investment Grade credit index (this is the credit derivative index that is most closely tied to the massive haul of outstanding tranche deals that remain in the market) surged an incredible 65% (to $148.2bn) in the last 14 weeks. As is clear from the chart, relative to every other credit derivative index this level of activity cornering, which managed to drive the index 18% below its 'fair-value', stands out rather dramatically and perhaps should jog a few regulator's from their porn-surfing lunch-breaks. The footprints of this particular whale seem a little too large to ignore but that then again, Spain did manage to sell some short-term debt so who cares?


Charts: Bloomberg

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Tue, 04/17/2012 - 15:54 | 2352525 Cognitive Dissonance
Cognitive Dissonance's picture

It is all about keeping the financial Ponzi going. Nothing else matters.


In fact......some real regulation will just hasten the collapse.

Animal spirits anyone?


Tue, 04/17/2012 - 15:55 | 2352529 NewThor
NewThor's picture

Give me the Dragon, the Unicorn and the Lion.

Tue, 04/17/2012 - 16:07 | 2352567 Joe Davola
Joe Davola's picture

Had to happen, Chronicles of Narnia sequels are starting to re-use random items as part of the title.

Tue, 04/17/2012 - 16:12 | 2352581 francis_sawyer
francis_sawyer's picture

It's more like the "Scarecrow", the "Tin Man", & the "Lion"...

...& Toto too

Tue, 04/17/2012 - 16:17 | 2352601 NewThor
NewThor's picture

This cast of characters won't rule the roost forever,


they will eat themselves and suffer divine strikes of lightning

their old english New York minute is almost up.

The PIG never rules for very long.

PWND bitchez.

Tue, 04/17/2012 - 16:43 | 2352653 Mach1513
Mach1513's picture

Forgot the phoenix.... and the tortoise.

Tue, 04/17/2012 - 15:58 | 2352539 SheepDog-One
SheepDog-One's picture

Well, theyre still not going to find any retail to pass off the pump to so I guess theyre entertaining themselves manipulating broken empty markets, gee have fun with that fellas.

Tue, 04/17/2012 - 16:04 | 2352560 ACP
ACP's picture

A few connections, some social engineering, a big-ass sell order and bada-boom! you got yourself a crash!

Tue, 04/17/2012 - 15:56 | 2352532 PaperBear
PaperBear's picture

There’s that word ‘notional’ again. I think a four letter expletive would be more appropriate.

Tue, 04/17/2012 - 16:05 | 2352565 NewThor
NewThor's picture

Credit default swaps are shit.

Tue, 04/17/2012 - 15:57 | 2352536 SheepDog-One
SheepDog-One's picture

This 'market' is totaly fukered. Its all 'bullish' though I guess as long as someone bought some debt with a gun to their head. And I wouldnt count on this grabbing some 'regulators' attention away from their busy porn surfing schedule, why would it.

Tue, 04/17/2012 - 16:14 | 2352585 NewThor
NewThor's picture

If the 'Markets' are global central banks' magicians making up the Plunge Protection Team, then the 'Markets' aren't fukered, they are the FUCKER.

their Machina is working as intended.

yee Old PPT went in strong waves today

stopping the slide of the

all bitten forbidden APPL

while pumping the MSM with

all tasty distracting disinfo.

A White House Cumgate over $47 dollars?

bad seeds for sure


Tue, 04/17/2012 - 16:49 | 2352666 Mach1513
Mach1513's picture

Uh... He's managing "risk." Something that, in the past, banks avoided. Now they lay it off to other suckers for pennies.  Doesn't matter what you call it. It is s**t.

Tue, 04/17/2012 - 15:58 | 2352540 101 years and c...
101 years and counting's picture

in plain english please.

Tue, 04/17/2012 - 16:15 | 2352577 Raynja
Raynja's picture

The whale is trying to make enough money betting against gross trying to front run the fed that jpm can buy pimco for pennies on the dollar with the cds profits

Tue, 04/17/2012 - 16:20 | 2352603 foofoojin
foofoojin's picture

neighborhoods 1-8 have had alot of fires . you invest in a neighborhood (trench 9). you buy fire insurance on the houses in the neighborhood from multiple insurance companies to hide you intent. however when you buy the fire insurance you use stats and a false realtity where the fires have stopped on the agent and so the cost of that insurance is relatively low. you buy. buy more. buy even more over the last 16 weeks. somebody totals up all the moneys that will need to be paid out if neighborhood nine burns down (the chart red line). zerohedge picks it up and now we watch everyone living in that false reality stick there heads up there A@# even more.


notional value is total moneys in event of CDS.

Tue, 04/17/2012 - 15:58 | 2352542 vote_libertaria...
vote_libertarian_party's picture

Beyond my paygrade...


So does this say credit worldwide are getting riskier?  So why is this a shock?

Tue, 04/17/2012 - 16:22 | 2352612 mayhem_korner
mayhem_korner's picture



It says that anyone who wants to play in the credit index space is going to have to go through Bruno the Hun. It also says that if the masses as a whole believe credit in this wedge of the world's debt is getting riskier, then Bruno and the boyz stand to return even more than the 18% they've already engineered.

Tue, 04/17/2012 - 16:02 | 2352553 mayhem_korner
mayhem_korner's picture



Awareness deficiency like this...

Tue, 04/17/2012 - 16:08 | 2352576 Cognitive Dissonance
Cognitive Dissonance's picture

I don't see no stinking bear (market). :)

Tue, 04/17/2012 - 16:04 | 2352564 Village Smithy
Village Smithy's picture

Were they making money on the CDS's or driving the index down so they could buy it cheap? Probably both.

Tue, 04/17/2012 - 16:08 | 2352572 Cognitive Dissonance
Cognitive Dissonance's picture

Markets don't move. They are moved.

Tue, 04/17/2012 - 16:26 | 2352626 ZeroPower
ZeroPower's picture

It's all about the individual tranches and not so much "making money on the CDSs".

Tue, 04/17/2012 - 16:49 | 2352668 DeadFred
DeadFred's picture

So I get that they either know what will happen or can make it happen but what is their bet? Default or no default? Or is the object to make money just from the manipulation? Swaps and spreads are not my strongpoint but it's important to know what the whales are thinking.

Tue, 04/17/2012 - 16:55 | 2352682 Everybodys All ...
Everybodys All American's picture

That is a parabolic move in credit risk in a world of make believe US economic recovery! That being said who would trust the credit default swaps to pay off on financial armeggedon?

Tue, 04/17/2012 - 16:58 | 2352692 Miss Expectations
Miss Expectations's picture

This is as good a place as any...Exploding Whale Video:

Tue, 04/17/2012 - 20:09 | 2352911 Downtoolong
Downtoolong's picture

This calls for the CFTC to hold its 13,234th hearing on whether or not we need position limits in key index markets. Of course, JPM and all the major Wall Street banks will be invited as always to provide guiding comments and opinions from the industry.

Tue, 04/17/2012 - 22:48 | 2353464 slewie the pi-rat
slewie the pi-rat's picture

tyler:  this link doesn't work very well

It was only last week that we highlighted the facts and fiction behind JPMorgan's prop-trading CIO office activities and Bruno' London Whale' Iksil's magnificent market cornering 'hedging' activity.

i think i musta missed whatever it is that this doesn't link to...

Wed, 04/18/2012 - 10:08 | 2354668 futuretrader21
futuretrader21's picture


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