Frontrunning: May 17

Tyler Durden's picture
  • As ZH warned last week, JPMorgan’s Trading Loss Is Said to Rise at Least 50% (NYT)
  • Spanish recession bites, may be prolonged (Reuters)
  • SEC Probes Role of Hedge Fund in CDOs  (WSJ)
  • Obama Lunch With Boehner Ends With Standoff Over Budget (Bloomberg)
  • Hilsenrath: Fed Minutes Reflect Wariness About Recovery's Strength (WSJ)
  • N. Korea Ship Seizes Chinese Boats for Ransom, Global Times Says (Bloomberg)
  • Greece Plans for June 17 Vote Under Caretake Government (Bloomberg)
  • Hollande turns to experience to fill French posts (FT)
  • ECB Stops Loans to Some Greek Banks as Draghi Talks Exit (Bloomberg)
  • Spain Urges EU to Provide More Support (WSJ)
  • North Korea resumes work on nuclear reactor: report (Reuters)
  • Fed’s Bullard Says Labor Policy Is Key to Cut Joblessness (Bloomberg)
  • China Expands Scope for Short Selling, Securities Journal Says (Bloomberg)

Overnight press digest:


* In the wake of losses at JPMorgan, the White House is seeking to ensure a tough interpretation of a regulation designed to prevent banks from making bets with their own money.

* Some of Facebook's biggest holders are selling up to $3.8 billion in extra shares in Friday's IPO, in some cases at Facebook's request. Goldman Sachs and Tiger Global will now sell as much as 50 percent of their stakes.

* Pinterest, the online scrapbooking website that has become the latest Silicon Valley darling because of its rapid user growth, has raised $100 million in a financing round that values the start-up at $1.5 billion, said people familiar with the matter.

* U.S. securities regulators are investigating hedge-fund firm Magnetar Capital, which bet on several mortgage-bond deals that wound up imploding during the financial crisis.

* In a key pretrial ruling in the insider-trading case against Rajat Gupta, a federal judge said he would allow prosecutors to play at trial three wiretap recordings, which lawyers had sought to keep from a jury.

* A General Motors Co lawyer demanded the widow of a car-crash victim drop a plan to seek punitive damages from the auto maker, even though the company's government-brokered overhaul doesn't bar plaintiffs from going after such legal penalties.

* Skechers USA Inc will pay $50 million to resolve federal and state allegations that it deceived the public by making unfounded claims that its "toning shoes" would help consumers tone muscles and lose weight, under a settlement announced Wednesday.




Royal Dutch Shell expects U.S. natural gas prices to double by 2015, rebounding strongly from the 10-year lows they have hit as a result of the shale gas boom as U.S. domestic demand for the fuel grows.


Spain's government will on Thursday announce the appointment of Blackrock and Oliver Wyman as independent valuers of the real estate loans that lie at the heart of the country's banking crisis.


Senior European leaders are attempting to turn Greece's repeat national election next month into a referendum on the country's membership of the euro, a high-stakes political gamble that officials believe can win back voters disillusioned by the tough bailout conditions but eager to stay in the single currency.


Some of Facebook's earliest backers plan to sell an additional $3 billion worth of shares in Thursday's initial public offering, as they take advantage of a wave of public interest in the social network group's flotation.


The Bank of England has reduced its forecast for UK economic growth and increased its inflation forecast, predicting inflation will remain above its 2 percent target for another year.


ICAP, the world's largest interdealer broker by market capitalisation, is in talks to buy Plus Markets Group , the UK exchange for fledgling companies that is planning to close after failing to secure a buyer.


Britain's prime minister, David Cameron, will on Thursday warn that the single European currency could unravel in a way that "carries huge risks for everyone" unless the euro zone's 17 members move rapidly towards full fiscal and political union



* Hedge funds and other investors taking advantage of JPMorgan Chase's distress have fueled faster deterioration in the underlying credit market positions held by the bank.

* Despite the overwhelming level of interest in its IPO, Facebook is facing fresh concerns over its ability to attract enough advertising revenue. Will the social network reach its advertising potential?

* Without the four wiretapped conversations, prosecutors would have to rely only on circumstantial evidence to prove their case that Rajat K. Gupta, a former Goldman Sachs director, participated in insider trading.

* As with past technological threats, network executives are closing ranks against a Dish Network device that undermines the broadcast business model.




- Ottawa has placed 905,000 hectares of the northern offshore up for bids, clearing the way for energy companies to snap up exploration rights for an area half the size of Lake Ontario.

- The Charest government, abandoning any hope of negotiating a settlement with striking students, announced it is suspending classes in colleges and universities where students are still on strike.

Reports in the business section:

- Canadians are spending far more on goods in the U.S. than federal data suggest, raising the stakes for domestic retailers trying to find ways to draw customers back into their stores.

- Enbridge Inc, in the race to move oil from western Canada and the United States to refineries in the east, has solidified plans to reverse the flow of a key oil pipeline, a plan the energy industry had been pushing for to alleviate the crude glut in the Midwest.


- The Conservative Party will ask the Federal Court to throw out a citizen advocacy group's legal challenge that claims misleading telephone calls in the last election affected the results in seven ridings.


- IMF head Christine Lagarde warned that any Greek departure from the euro "would be extremely expensive and hard, and not just for Greece".

- Canada's largest pension fund manager is investing $300-million to build a 45-storey office tower in downtown Chicago, the largest real estate project launched in the city in the past five years.


European Economic Update:

Spain GDP (Constant s.a.) -0.3% q/q -0.4% y/y – in line with expectations. Consensus -0.3% q/q -0.4% y/y. Previous -0.3% q/q -0.4% y/y.
Ukraine Industrial Production -3.4% m/m 0.0% y/y – lower than expected. Consensus -2.0% m/m 1.3% y/y. Previous 9.8% m/m -1.1% y/y.
Russia Gold & Forex Reserve USD 518.8B. Previous 522.9B.
Czech Republic Export Price Index 2.5% y/y. Previous 4.2% y/y.
Czech Republic Import Price Index  4.2% y/y. Previous 5.8% y/y.
Czech Republic PPI (Industrial) 0.0% m/m 2.2% y/y – lower than expected. Consensus 0.2% m/m 2.4% y/y. Previous 0.3% m/m 3.0% y/y.

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michaelsmith_9's picture

Very bearish here for the CADJPY, and is an example of wher price action is headed in terms of equities - down.  -

DoChenRollingBearing's picture

Great, just as I am visiting S. Korea, the North starts stinking up the joint.

Interested in Seoul?  Google: "Seoul, Korea, Goldman Sachs 666" and see some of this amazing city!

WallowaMountainMan's picture

from the nyt article on jpm's positions:

'Many of the positions are highly illiquid, making them difficult to value for regulators and the bank itself.'

that must be a tough position to hedge. is this when, like notional becomes whatchacallit? oh, yeah. federally insured.

taniquetil's picture

JPM loses $3B of its own capital on a bad trade: Politicians flip the fuck out, and Elizabeth Warren starts talking.

MFGlobal fleeces $1B from clients: No politicians care. Elizabeth Warren doesn't say a word.


Is there something I'm missing here?

Oh yeah:


Looks like JPM bought off the wrong people this time.