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Is JPM Staring At Another $3 Billion Loss?

Tyler Durden's picture


"[The trading loss] plays right into the hands of a whole bunch of pundits...."


                                                         - Jamie Dimon

There are a lot of moving parts in the Dismal tale of Dimon's demise. The starting point is that Bruno Iksil in the JPMorgan CIO Office, under the premise of hedging the bank's credit portfolio's tail risk had placed various tranche trades (levered credit positions with various risk profiles) in the only liquid tranche market that still exists - CDX Series 9 (an 'orrible portfolio of credits with an initial maturity at the end of 2012). These positions were low cost  (steepeners or equity-mezz) but needed a certain amount of day to day care and maintenance (adjusting hedges and so on). As the market rallied, the positions required increasing amounts of protection be sold to maintain hedges (akin to buying into a rally more and more as it rises). His large size in the market left a mark however that hedge funds tried to fix - that was his index trading was making the index extremely rich (expensive) relative to intrinsics (fair-value).

This is the 10Y IG9 credit index (dark blue) and its fair-value (light blue) and the difference or skew (orange). What is clear is that the index remained massively rich to its fair-value through this period (red oval) and it was not until the last two months or so that the skew (red arrow) began to compress as perhaps Iksil got the nod and more and more people realized the arb...(or understood from where the technical pressure was coming in the index rallying)...

Hedge funds began to try to arb this position and got frustrated at the lack of convergence -  and this is how we initially got to hear about Bruno Iksil - the London Whale - since those funds suggested someone was 'cornering' the index market in credit.

Critically - this is akin to looking at the 500 names in the S&P 500 - weighting them and seeing the S&P 500 index should trade at 1200 but it is trading at 1400 so you sell the index 'knowing' that the index is mispriced - (this never occurs in stocks since they are instantly and everywhere arbed between the index and its components - but can occur in credit because of illiquidity or in this case flow - what we call 'technicals').

This was very evident when one looks at the net notional being soaked up by the Whale and this 'hedge' position had clearly grown extremely large as it became a momentum trade not a hedge (at which time we suspect Iksil started to lose control). In early April, as news of this broke across the market, the credit and equity markets were beginning to quiver again at European contagion and US macro data and as a proxy for the volatility JPM must have been feeling we can see very significant (2-3 sigma) swings in the credit index they held. This would more than likely have triggered a risk manager to come along and look over the trader's shoulder - suggesting humbly that he exit/hedge/don't panic.

This is IG9 10Y spreads (upper pane) and their rate of change (lower pane) - (h/t @swaptions for idea) and as is clear the 3-sigma multiple day move likely scared a few risk managers (and Iksil) into fessing up...

Evidence from the HY market suggests that the trader used more liquid on-the-run indices to hedge as the spread of the HY18 credit index blew notably wider relative to intrinsics and net notionals dropped modestly. The market calmed down a little and it appeared from net notionals and the index skews that he tried again last week to unwind some more of the huge position that had clearly tripped various risk limits and VaR controls. This is where we find ourselves now - the net notionals remain huge (and implicitly on JPM's shooulders), his lack of selling has left the credit index maybe 20bps rich to where it might trade given its rough correlation with the S&P 500 and this would imply at least $3bn of losses already in addition at fair-value.

As is evident, IG9 credit index and the S&P 500 have moved in a very correlated manner - and IG9 net notionals (the amount outstanding in IG9 CDS) has risen alongside these moves as JPM built a bigger and bigger longer and longer credit position. The red vertical arrow shows the current dislocation if one assumes the cessation of Iksil's unwind efforts stalled IG9's selloff - which is the $3bn loss that remains to be seen and the black dotted line is an indication of the kind of notional unwind that would occur - which with a market moving as it is - would be highly disjointing.

Of course, the situation is far worse because 1) any efforts to unwind such a huge position will lead to the market yawning wide and swallowing him in illiquid bid-ask spreads; and 2) the rest of the world knows their position - so why would the hedge funds not push their position. Perhaps this explains why JPMorgan's CDS has remained relatively wide while its exuberant stock price shot up on stress-test ebullience - only to plummet back to CDS reality this evening. Critically, JPM will need to use whatever method they can to hedge this now over-hedged and over-long position - which likely means credit instruments such as JNK, HYG, HY18, and IG18 will all get their share of strange attraction as the trader mispriced not just the basis risk (the volatility between the hedge and its underlying) but the attraction of running with a trend when you have a bottomless pit of money to cover it - until now.

It is already evident in the on-the-run liquid indices - HY18 for instance has exploded wider twice now - in line with the net notional reduction and hedging moves from JPM's IG9 position...

This chart somewhat relates to the IG9 skew chart above in that it represents how far above 'fair' the spread of the index trades relative to the underlying names - the spikes show that there was huge technical demand for the index protection relative to the underlying risk of the portfolio.

and perhaps there was already concern in the market with regard JPM's counterparty risk or exposure from hedgies' trades as CDS has been far less exuberant than stocks...


Of course noone knows for sure what exact positions Iksil had on - though it is clear what hedging he needed to do to manage his hedges. As Peter Tchir ( @TFMkts ) noted this evening - perhaps this mark-to-model irregularity is what the Fed discovered and gathered all the banks last week to ascertain just who has what exposure to whom? As we tweeted earlier, perhaps Iksil just got carried away - and please understand that while CDS do indeed provide leverage, so do many other financial instruments - it is not the instrument that caused this - it is the trader as "you don't hedge risk when you bet on momentum continuing you idiot!"

Addendum - VaR is almost entirely useless as a risk statistic in regard to the kind of highly non-linear positions that we are talking about here and so the doubling of JPM's VaR suggests the tail-risk (or conditional VaR) is considerably larger.


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Thu, 05/10/2012 - 21:10 | 2415762 Jacque Itch
Jacque Itch's picture

This is so f'n great.  I predict this is the Bear Stearns moment from Summer 2007.


Thu, 05/10/2012 - 21:12 | 2415768 realtick
realtick's picture

Fuckin' A

Thu, 05/10/2012 - 21:15 | 2415778 LetThemEatRand
LetThemEatRand's picture

Fuckin' chaos.  The friend of the fucked and the damned.  See you in Hell, Jamie fucking Dimon.  Fuck you you fuckity fuck.

Thu, 05/10/2012 - 21:17 | 2415789 AlaricBalth
AlaricBalth's picture

The lights are burning bright tonight at 33 Liberty Street. Dudley is trying to determine what the hell happened and who else has similar exposure to this debacle.

Thu, 05/10/2012 - 21:40 | 2415849 knukles
knukles's picture

Geez that's generous.
Dudley hisself wouldn't know a CDO from a CLO from a CFO from an IdontNo if one of 'em pissed in his shoe while he was playing with himself.

At least Dimon has Blythe who is a wiz bang tried and seasoned pro at handling other people's hedges when the they turn into real money nightmares migrating mysteriously onto JP's own books.  Hedges, other people's hedges, mind you and your own fucking business.

But never fear.  The book is run out of London.  No grasshoppers, not London as in the Disney failed reincarnation nothing like the glorious civil past of the '60's that some of us ex-pats still long for, but the City, where infinite rehypothication and no return of other people's monies ever takes place, Peter Pan. 

And soothing all open wounds, Paul Krugman'll publicly speak in some obtuse evil breathed manner seemingly vilifying the banksters while pleading for more QE to ensure the survival of the monied classes and trickle down Obamanomics, while Ben opens the Discount Window late at night for a Red Light Whore's Special at Attractive Rates for His Favored TBTF Owners. 

Or else they'll really fuck up that other client's hedge in the gold and silver markets and make that Other Asset category on the FED's balance sheet into Other Fucking Labilities, real quick.

Thu, 05/10/2012 - 21:51 | 2415921 The Alarmist
The Alarmist's picture

Depends on whether we are talking log-normal or log-stable distributions ... tails are a lot fatter than most people think.

Thu, 05/10/2012 - 22:04 | 2415972 fuu
fuu's picture

I wonder if Jamie really meant to say, "We are not going to panic or do anything stupid." Did he really want to be the first one to use the term "panic"?

Thu, 05/10/2012 - 22:28 | 2416031 The Alarmist
The Alarmist's picture

The first thing they did wrong was to talk to anyone about anything.

First rule about Fight Club ....

Thu, 05/10/2012 - 22:52 | 2416059 ndotken
ndotken's picture

JPM is only in trouble because they don't have another MF Global from which they can steal client funds to cover proprietary trading losses.

Thu, 05/10/2012 - 23:02 | 2416122 boogerbently
boogerbently's picture


How bad could it be? WSJ says Jamie apologized....


Thu, 05/10/2012 - 23:59 | 2416196 flacon
flacon's picture

It's not nice to pick on bankers. Jamie Dimon told me so! Besides, if they weren't doing God's work... who would? /sarc



Stop Picking on Bankers, JPMorgan Chief Says



“We try to do the best we can every day,” Mr. Dimon said during a panel discussion.


Mr. Dimon said at the World Economic Forum that he was sick of “this constant refrain — bankers, bankers, bankers.”


PS. Dimon, you filth. Bring you face right here to me and let me tell you what I really think of you!

Fri, 05/11/2012 - 01:33 | 2416308 Oh regional Indian
Oh regional Indian's picture

Feels funny though that JPM would be one to shake this hard. We are all sure they will be bailed out, why so much noize? It's all thsi noize that has me looking into all different corners, askign what is it that they are hiding?

Something already happening is getting worse or soomething big is upcoming. Otherwise, 970 mil to absorb a single notch downgrade is chump change for a JPM. 

Even the notional/real risks/losses issue is not IT, because IT has not been decisively cleard (ie. is notional real?).


Something much bigger stinks... Is China really crumbling?

Why is Putin missing the G8? 

Is the Phillipines the center of the geo-political stress that has been building? Russ-ina vs. the rest/west?




Fri, 05/11/2012 - 02:17 | 2416364 delacroix
delacroix's picture

maybe they're looking at a failure to deliver, on silver contracts. the derivitives, guarding their shorts, are going to get very pricey, and they just keep shooting themselves in the dick. they have adversaries, that they have fucked in the past, and no one plays nice, when the stakes are this high.

Fri, 05/11/2012 - 02:37 | 2416386 DeltaCharlie
DeltaCharlie's picture

Wait a goddamn minute! Did not the Fed today say that US banks are in much better shape?

Poker players every last one of them!!

Fri, 05/11/2012 - 06:28 | 2416518 GetZeeGold
GetZeeGold's picture




Just a flesh wound.....bailout XVI imminent.


Fri, 05/11/2012 - 03:04 | 2416409 Oh regional Indian
Oh regional Indian's picture

Yup Dela, we all remember what happened to Bear. But these are even weirder times. And this is JPM.

Very very strange. And if it is silver....

Take a read of this:


Fri, 05/11/2012 - 03:53 | 2416429 Escapeclaws
Escapeclaws's picture

Unfortunately, he is so hard to understand. Does this make sense to you?

"Recall that basis is the spread between the nearest futures price and the cash price. The grain elevator operator buys cash grain during the harvesting season to fill his elevators to the brim. He tries to buy cash grain at the widest possible basis (known as carrying charge). He is planning to sell it when the basis is getting narrower. His profit is just the shrinkage of the basis. What is the explanation of this peculiarity? When the grain elevator operator buys cash grain, he sells an equivalent amount in the futures market. He must hedge his inventory because the capacity of his elevator storage space is so huge that even a minor fall in the grain price will wipe out his entire capital, if his cash grain is left unhedged."

Fri, 05/11/2012 - 04:49 | 2416445 Oh regional Indian
Oh regional Indian's picture

Escape, all he has done there is explain the very basis (!)  and reason for what it means to hedge? He writes a little circularly (he is hungarian after all).

From my understanding, what he is hinting at is that if properly Hedged, using the word in the correct context, it's trading on basis that keeps the warehousers, (liek a CME) functional, which keeps the whole system chugging along.

Any experts?



Fri, 05/11/2012 - 05:23 | 2416474 Husk-Erzulie
Husk-Erzulie's picture

Great Resource!  Thanks ORI.

Fri, 05/11/2012 - 05:28 | 2416483 Oh regional Indian
Oh regional Indian's picture

Welcome Husk, I think Fekete is the sharpest Monetary theorist alive currently.


Fri, 05/11/2012 - 08:21 | 2416694 Jendrzejczyk
Jendrzejczyk's picture

Very difficult to wrap the brain around that one, but many of his other writings aren't so impenetrable.

Fri, 05/11/2012 - 08:30 | 2416697 JOYFUL
JOYFUL's picture

Bro, if yu ever tried to make a livin outta the old-fashioned [barbarian!?!?]style produce n sell pre\post-reality style economic system, Feteke aínt hard to read, he's hard to refute...

man was exiled to the CodBanks Kingdom of NFLD, were's da boys was still flingin fish into flash freezers when the rest of Norte Merika had already descended in a "service economy" hell which Dante described so poignantly well five centuries before us...jus close enuff to the last bit of real economic action to get the gist of what real tings was all aboot!

In Merik astan, the last holdouts of the production as value formula, the old guard grain growers of the Great Midwest went down in November with the Corzine Corporal n CME Company. just like the last of the Louisiana shrimpers[in the Great Gulf golpe] before them.

This is it folks...what ZH was born for: that scion of the wealthy moneychangin messianic Sabbatean Smyrna\Salonikan, Jamie Papademetriou\not!\ Dimon is goin down like Capt Smiths' unsinkable cruiser, right before our matter how many bought n paid for congressmen\senators\ event that will prove, in retrospect, to have been but the tip of an international style iceberg!

Funny that a post-western Easterner\E'tranger like ORI was the first to sniff n scratch the really real deal that is goin down now, in live time. Congrats to yu, Vivek...yu will be legendary!


Fri, 05/11/2012 - 07:18 | 2416576 dcb
dcb's picture

I can assure you that a person with his (dimon's) dgree of narcissistic personality disorder this won't phase him. There people believe they walk on water and are immune to the real world

Thu, 05/10/2012 - 23:08 | 2416132 Jim B
Jim B's picture




Fri, 05/11/2012 - 01:47 | 2416337 e_goldstein
e_goldstein's picture

Sure, by then, his shit was out of the ballgame, so why not?

Thu, 05/10/2012 - 21:58 | 2415946 tekhneek
tekhneek's picture

beautiful knuk. just so damn beautiful.

Thu, 05/10/2012 - 22:08 | 2415978 Piranhanoia
Piranhanoia's picture

Knockturn Alley, London.

Thu, 05/10/2012 - 22:44 | 2416077 saulysw
saulysw's picture

Logged in just to say how much I enjoyed reading that...

Thu, 05/10/2012 - 23:06 | 2416123 Turd Ferguson
Turd Ferguson's picture

me too, though I must admit I only understood about 25% of it.

Fri, 05/11/2012 - 01:34 | 2416309 ceilidh_trail
ceilidh_trail's picture

I got about 21.7% of it...

Fri, 05/11/2012 - 01:35 | 2416311 OldPhart
OldPhart's picture

That's about 24x more than I understood.

Fri, 05/11/2012 - 07:15 | 2416567 blindfaith
blindfaith's picture



And, everyone expects the wonders of government to undrestand.   The SEC, DOJ and the rest are like doctors who get a visit from the pharmaceutical salesman...'it is all good, now go back to sleep, and we will look out for America's best interests and won't do anything bad...we promise this time". 

The governemnt here and in Europe have allowed all this to grow worse than before, and everyone kept their mouths shut inorder to make a few bucks.

Fri, 05/11/2012 - 07:15 | 2416573 disabledvet
disabledvet's picture

"Wall Street gibberish." Zero Hedge specialty unfortunately. The nub of the issue is pretty simple: "is the risk you're taking on the pro growth side or the recession side?" this is a simple choice...on that must be made early since "it will be made often going forward." In other words "bulls and bears make money"...Zero Hedge is a bear and "there lingua gibbera" is oriented towards "impressing those of that ilk." As it is "they have been pretty much completely wrong both empirically and intently." I would recommend more clarity on THAT side of the ledger as well. Having said that "i'm the bull who is disgusted with the American banks" and have felt for some time "these folks will make the same mistake again" (as occurred in 37-38.) Haven't even been disappointed in the PLACE of Criminal Syndicate...let alone the timing. TOO MUCH MEDIA New York. It IS your undoing...and rightfully so. Indeed "the silence from GOVERNMENT is what is deafening" is it not?

Fri, 05/11/2012 - 07:34 | 2416611 Northeaster
Northeaster's picture

Outstanding. Thank you.

Fri, 05/11/2012 - 08:42 | 2416773 Rollerball
Fri, 05/11/2012 - 01:46 | 2416321 RECISION
RECISION's picture

Don't worry, most of it is a made up language anyway.

Designed to obscure the fact that they are just running the same old tired scams and cons they always have.

They just hope that YOU wont recognize their code words for what they really are.

Fri, 05/11/2012 - 04:26 | 2416449 jeff montanye
jeff montanye's picture

there's a lot to what you say.  the banksters do their worst shit with their pants on.  were it not so, the people would be a lot wiser to them.  seems impossible that so transparent a fraud as obama would be able to don the disguise of someone who cares about the rule of law and helping the little guy but get ready for fooling some of the people all of the time:

Fri, 05/11/2012 - 07:11 | 2416560 youngman
youngman's picture

I don´t understand it I admit...never will nor want to.....but I would think that after 2008 and the end of the world that the bankers said we were close to...why the hell are they still doing it...what it tells me ..they lied..they still are lying...and they are crooks...bring back Glass- Steagle....and let the gamblers ...gamble without Government backing and more importantly Government money....but make it HFT´s

Thu, 05/10/2012 - 23:17 | 2416148 a growing concern
a growing concern's picture

I believe the term is 'clusterfuck'.

Thu, 05/10/2012 - 23:53 | 2416192 Troy Ounce
Troy Ounce's picture

I bet they all are spending the night at 33 Liberty:
Corzine, Blankfein, Greenspan, Obama, Summers,
Masters, Madoff, Gensler, Holden, Geitner, Dudley,

Holding hands in a circle, campfire, singing:
"We Shall Overcome" and "Cumbaja, My Lord".

Thu, 05/10/2012 - 21:20 | 2415793 tmosley
tmosley's picture

Now that's something we can all agree on.

Thu, 05/10/2012 - 21:24 | 2415814 LetThemEatRand
LetThemEatRand's picture

Strange bedfellows, etc.  Fuck the bankers.

I didn't down arrow you.

Thu, 05/10/2012 - 21:28 | 2415825 smlbizman
smlbizman's picture

gravity is puttin on the metals ..

Thu, 05/10/2012 - 21:31 | 2415837 tmosley
tmosley's picture

Gravity is an interesting name for a vampire squid.

Thu, 05/10/2012 - 21:33 | 2415845 Paul Atreides
Paul Atreides's picture


Everbody I mean EVERYBODY should go out and buy some physical silver tomorrow, doesn't have to be a lot if we can get everyone on board we can do some damage. With JP Morgan floundering NOW is the time to put the squeeze on those naked shorts.

Second Friday in May? Time to take the silver away!


Start spreading the word tweets have been started, loop in hash tags like #endthefed #ronpaul #crashjpm #crashjpmorgan #silver #gold #commodities #tbtf #jpm

I will commit to a tube of silver maples 25oz.

Thu, 05/10/2012 - 21:49 | 2415911 fightthepower
fightthepower's picture

I have two words for you. Monster Box.

Thu, 05/10/2012 - 21:56 | 2415934 Paul Atreides
Paul Atreides's picture

I would if I had the funds!!!

It's definitely not going to be my first tube....

Thu, 05/10/2012 - 21:57 | 2415935 Temporalist
Temporalist's picture

I'm surprised the shiney hasn't doubled to $60 on this news.

Thu, 05/10/2012 - 21:59 | 2415937 Paul Atreides
Paul Atreides's picture

Another good reason to load up tomorrow morning...I tried to get the word out but I am a nobody in the metal space, spread the word!

Fri, 05/11/2012 - 06:39 | 2416526 Chaffinch
Chaffinch's picture

At these silly discount prices it would be rude not to buy more. Took another 3kg off the London market. Wish I could buy more!

Thu, 05/10/2012 - 22:00 | 2415955 GeorgeHayduke
GeorgeHayduke's picture

"I'm surprised the shiney hasn't doubled to $60 on this news."

Because it's all manipulated. They can't let silver run or the gig is truly up for the douche bags.

Thu, 05/10/2012 - 22:33 | 2416043 Prometheus418
Prometheus418's picture

You're all welcome. *sigh*

Kind of like washing the car brings on a thunderstorm, I locked in the terms of sale on a good-sized handful of silver right before this news broke.  Had to do it to free up some liquidity, figures it would be right before JPM takes one in the nose.  

Well, you win some, you lose some- at least my stash is still 85% intact.   Going to be hard to make that trade tomorrow, but seeing as how I'm not a bankster, I suppose I'll have to deliver the shiny.  At least it's going to a good private home with steady hands, and not back into the market.

Fri, 05/11/2012 - 02:02 | 2416354 putaipan
putaipan's picture

ah... if for no other reason than to support max's impersonation of jamie as an overgrown tapeworm ..... go buy an ounce tommorrow.

that goes for all you chinese barbarian relic collectors, indian'too poor to buy gold' untouchables , dinar investing pious folk ,and God fearin' libertarians reading zh...tell a friend- go buy an ounce tommorrow.

Fri, 05/11/2012 - 00:14 | 2416224 spooncutter
spooncutter's picture

im all about the monster boxes as well. SO glad i got some at $49/oz too, im all about sticking it to JPM at every opportunity

Fri, 05/11/2012 - 01:28 | 2416298 TraitorsHang
TraitorsHang's picture

I've got some at 49. Just remember that if you've kept the pressure on, you've probably alos got some at 15 (or lower).

Stack. Go boating. Pray that we all lose our shirts because of how comically wrong we were. Know that we won't.

Fri, 05/11/2012 - 02:06 | 2416361 jomama
jomama's picture

so jelly.

Thu, 05/10/2012 - 21:57 | 2415939 Decolat
Decolat's picture

Don't mind if I do.

Thu, 05/10/2012 - 22:04 | 2415965 sof_hannibal
sof_hannibal's picture

occupy SILVER

Fri, 05/11/2012 - 03:09 | 2416412 tocointhephrase
tocointhephrase's picture


Thu, 05/10/2012 - 22:19 | 2416006 WmMcK
WmMcK's picture

I'm in for 1k tomorrow, all Ag. And a couple of oz of PT when/if it touches 1450.

Thu, 05/10/2012 - 22:23 | 2416014 Essential Nexus
Essential Nexus's picture

But I want to take advantage of the arbitrarily low price.  :(

Thu, 05/10/2012 - 23:03 | 2416124 Lost Wages
Lost Wages's picture

I was gonna lay off the buying for awhile and build up some more cash, but I'm down for $400-500 worth of silver tomorrow when the local shop opens. Feel free to unleash the ol' 3AM raid tonight, JPM, maybe I can squeak in one more ounce.

Thu, 05/10/2012 - 23:06 | 2416129 Gooseleg
Gooseleg's picture

30 more oz on the way.  Too bad I lost the rest of my stack in a terrible boating accident.

Fri, 05/11/2012 - 00:51 | 2416266 mt paul
mt paul's picture

get a bigger boat...

Fri, 05/11/2012 - 02:07 | 2416365 putaipan
putaipan's picture

...was gonna make my first boat joke. but really, i don't get it .... i just give all of mine away to friends. great gifts.

Thu, 05/10/2012 - 23:10 | 2416135 R3VOLUTION
R3VOLUTION's picture

I'll join you.  BTFD!

Fri, 05/11/2012 - 01:10 | 2416280 Bizaro World
Bizaro World's picture


Unfortunately, I see JPM surviving relatively unscathed but you have to commend Max/Paul/others for trying. Meanwhile, opportunity to add more PM hedge during a dip.

Fri, 05/11/2012 - 01:17 | 2416290 TraitorsHang
TraitorsHang's picture

I blew my load at 30.50. Will commit to an additional 10oz.

Fri, 05/11/2012 - 01:56 | 2416348 jomama
jomama's picture

i am supposed to pick up 100oz. this coming thursday... does that count?!

Fri, 05/11/2012 - 04:42 | 2416454 DutchDude
DutchDude's picture

2x 1 kilo umicore andorra coinbars... headin' my way >:)

Fri, 05/11/2012 - 08:22 | 2416698 n8dawg84
n8dawg84's picture

27 ASE and 4 Roosevelts!

Fri, 05/11/2012 - 09:29 | 2416952 EFNuttin
EFNuttin's picture

Looks like you have gotten a lot of readers on board.  How much silver do you plan to unload on them?

Thu, 05/10/2012 - 21:29 | 2415834 The trend is yo...
The trend is your friend's picture

Daughter: "Daddy, what's a financial crises"

Jamie Dimon: "it's when daddy gets drunk and gambles a little too much with other peoples money dear"


An oldie but a goodie

Thu, 05/10/2012 - 21:44 | 2415897 knukles
knukles's picture

Daughter:  And how's that different for a crash, Daddy?

JD: A Crash is when we load 12 1/2 tons of the Treasury's gold on the Gulfstream and fly to the ranch in Paraguay with the Bushs, honey.

Daughter:  Can I get a horse, Daddy?

Thu, 05/10/2012 - 22:46 | 2416083 fuu
fuu's picture

el fuego

Thu, 05/10/2012 - 23:39 | 2416172 vamoose1
vamoose1's picture

now that  rocks

Thu, 05/10/2012 - 21:30 | 2415835 nmewn
nmewn's picture


Thu, 05/10/2012 - 21:37 | 2415859 LetThemEatRand
LetThemEatRand's picture

We can certainly agree about who is a COMPLETE FUCK.  Jamie Dimon comes to mind. And his banker ilk.  FUCK THEM.  Twice.  Or Thrice, if that's a word.

Thu, 05/10/2012 - 21:58 | 2415943 Marginal Call
Marginal Call's picture

A guy like me from the west coast doesn't understand how a guy like Jamie can just walk around.  What's wrong with New Yorkers?  If he lived in my city, city busses would jump curbs at the sight of him, semis would run red lights seeing him in the crosswalk, and waiters at fine restaurants would dump super aids infested dressing in his salads.


If I saw him on the streets, I would run him down.  And a jury of my peers would find me not guilty because I suffered from the first ever case of post partum depression discovered in a middle aged childless male.

Thu, 05/10/2012 - 22:04 | 2415971 Cursive
Cursive's picture

@Margin Call

Where's is this?  Oakland?  Because most of the Left Coast I've visited is very aloof and leave-and-let-live.  L.A. and San Fransisco are extremely corporatist.  Admitedly, I don't know anything of the Pacific NW except for MSFT, flannel and disillusioned grundge rock.

Thu, 05/10/2012 - 22:18 | 2416002 Marginal Call
Marginal Call's picture

We gave you Nirvana, Jimi Hendrix, Boeing, and we hate everything.  Bill Gates has to give away half his money just not get called out for the piece of shit he is.  Scott Bezos had to drive a Toyota.


If you are over 40, you remember when plumbing was new.  We are like another planet.

Thu, 05/10/2012 - 22:52 | 2416097 GMadScientist
GMadScientist's picture

How many times are you people gonna rebuild that shithole on top of the last fuck-up? 

An entire town built and paid for by whores!



Thu, 05/10/2012 - 22:57 | 2416111 GMadScientist
GMadScientist's picture

You should've left the airport hotel.

Watts '65, SF '79 (Milk), LA '92,...

When were you born?

Thu, 05/10/2012 - 22:11 | 2415986 Dr. Engali
Dr. Engali's picture

Hmmmm... We in the Midwest were kinda wondering the same thing about a guy like governor moonbeam. He must not go out in public.

Thu, 05/10/2012 - 21:28 | 2415826 xela2200
xela2200's picture

So are we to understand that hedge funds will take advantage of this to fleece JPM for whatever they are worth?

Thu, 05/10/2012 - 21:37 | 2415862 Desert Irish
Desert Irish's picture

Yes but as long as they are not persuded to do otherwise......and that's the kicker.

Thu, 05/10/2012 - 22:35 | 2416045 Acorn10012
Acorn10012's picture

Here's hoping the hedgies eff Jamie and the Dimons straight to hell.

Thu, 05/10/2012 - 22:35 | 2416046 Chaffinch
Chaffinch's picture

Isn't there some kind of professional courtesy thing where sharks avoid eating other sharks? - sorry, no, that's lawyers isn't it - carry on guys - grind them into the ground and then just keep on going.

Fri, 05/11/2012 - 00:40 | 2416255 Nobody For President
Nobody For President's picture

Like Jamie did with LTCM? or Bear Stearns?

The Bear folks have got to have some grim grins about now, as in "How's it feel, you mother fucker?"

Be careful who you shit on on the way up...

Fri, 05/11/2012 - 07:16 | 2416574 youngman
youngman's picture

I bet the Hedges are working overtime to find out where these bets are placed......and I hope they rake them over the coals...

Thu, 05/10/2012 - 22:03 | 2415964 Jack Burton
Jack Burton's picture

Jamie Dimon brings to mind some of the old saying we had when I was in the military many years back. Our language was pretty extreme! Thinking of Dimon just makes me want to say to him "Eat Shit and Die Mother Fucker!"

This scumbag fuck has no reason to exist. Look at those financial engineering positions that have left them up to their lips in shit!

Seriously, what is it all about. What has that sort of thing got to do with the real economy. People who work for a living, or build things or develop high tech or manufacture real things, they don't deal in this exotic CDS crap and all these out of control scheme to skim money out of the economy.

Dimon! Die mother fucker, die so we can all piss on your useless grave.

Fuckwit Dimon. Financial engineer in hell buddy!

Thu, 05/10/2012 - 22:13 | 2415992 LetThemEatRand
LetThemEatRand's picture

I am not a religious person but I believe in good and evil.  
There is day.   There is night.  There is nice.   There is mean.  There is helpful.    There is fuck you you fucking leach, I am rich and go fuck yourself! 

Dimon is fucking evil.


Thu, 05/10/2012 - 22:39 | 2416055 Chaffinch
Chaffinch's picture

I feel you're still bottling stuff up Jack. Let it all out - we don't mind the occasional profanity - we are here to listen.

Fri, 05/11/2012 - 01:16 | 2416288 The Alarmist
The Alarmist's picture

I wouldn't take the trail unless this MF was walking point.

Thu, 05/10/2012 - 22:10 | 2415985 WmMcK
WmMcK's picture

Best post with high "fuck" index.

Fri, 05/11/2012 - 03:22 | 2416419 Ratscam
Ratscam's picture

reminds me of the lyrics of Tupac song hit em up

Thu, 05/10/2012 - 22:30 | 2416035 raki_d
raki_d's picture

Fuckin Cockroaches

Thu, 05/10/2012 - 22:41 | 2416064 Thunder_Downunder
Thunder_Downunder's picture

Another take away for budding traders... 


You can have a perfect quarter, a perfect year... and still blow from being stupid...

Thu, 05/10/2012 - 21:32 | 2415846 reTARD
reTARD's picture

Oh NO!!! What would this do to all those naked paper shorts on silver and on gold shares? LOL

Thu, 05/10/2012 - 21:43 | 2415899 Central Bankster
Central Bankster's picture

We already have seen people buying to cover their Nat Gas contracts to raise equity against other trades, thats for sure.

Thu, 05/10/2012 - 21:40 | 2415885 Hulk
Hulk's picture


Thu, 05/10/2012 - 23:57 | 2416139 chump666
chump666's picture

I wish the Hulk would squash Bernanke's head like a pea. 

He encouraged risk taking/spec trades as the global economy falls apart, thus Wall Street buying up and cornering corp CDS's and every other derivative you can think of...warning shot was the liquidity pull on the TVIX a little while back. 

This is just the beginning.

Fri, 05/11/2012 - 05:56 | 2416497 adoyi
adoyi's picture

All hail TYLER, the all seeing eye on the zero hedge pyramid. You have saved us ur believers from being turned to sheeple and royally fucked by these banksters.

You deserve a Nobel Prize in a special category- Standing up for the little guys I.e. Those who cared to listen.

Thu, 05/10/2012 - 22:46 | 2416079 ghenny
ghenny's picture

Go Jamie.  This is great news.  Now we may finally get some really serious financial regulation and even perhaps Glass Steagal back.  This might even embolden Holder to start prosecuting all the nice boys that brought us the great 2008 meltdown. Who knows.  We live in very interesting times. 


Thu, 05/10/2012 - 22:52 | 2416096 phungus_mungus
phungus_mungus's picture

Is it dead yet?

Fri, 05/11/2012 - 08:17 | 2416685 UGrev
UGrev's picture

I'd poke it with a stick, but all I have is this gun...

Thu, 05/10/2012 - 22:55 | 2416102 ghenny
ghenny's picture

Great stuff. Go Jamie.  KIng of the crony capitalists.  Jamie may get us Glass Steagle back after all and Holder may start doing some serious prosecuting for a change.  This gives him great air cover.  Thanks pal.  Who would have thought you'd be helping us 99% to finally put you in and your illegal online betting buds in the pockey .

Fri, 05/11/2012 - 07:26 | 2416598 youngman
youngman's picture

This is much bigger than Jamie ...he lost all of his Credibility last well as JPM....the so called leader 1 bank..the best.....but also the US Banking system lost in the eyes of the they see we still are playing at the casino...we did not learn or change anything after the 2008 crash...the end of the world they told we will see monies and business leaving the USA...going closer to home...more security...looking for honesty...The USA just lost bigtime because of the Greed of the bankers ...just to eek out another .25% or something.....lost billions today in stock values...and probably trillions in the future in business deals....

Thu, 05/10/2012 - 22:58 | 2416108 Waffen
Waffen's picture

Is this really a big deal? We are talking about JP Morgan here.

Thu, 05/10/2012 - 23:00 | 2416117 WatchingIgnorance
WatchingIgnorance's picture

Where's MDB and Max Fisher to call us dumb and retards and tell us about the green shoots everywhere?

Hehehe . . . oh yeah, they gave their money to Dimon.


(or in their case . . . worthless)

Thu, 05/10/2012 - 23:19 | 2416150 Tijuana Donkey Show
Tijuana Donkey Show's picture

MDB is Jamie Dimon, and Max is the Bernak. Didn't you get the memo?

Fri, 05/11/2012 - 03:18 | 2416416 sof_hannibal
sof_hannibal's picture

and Robert Brusca, PhD is a Fed Reserve Twitter Bot

Thu, 05/10/2012 - 23:28 | 2416159 williambanzai7
williambanzai7's picture

This reminds me of the Chinese gambler scenes in Luck.

Thu, 05/10/2012 - 23:45 | 2416175 Gloomygus
Gloomygus's picture

This article is a technical masterpiece, and I applaud you. However, I am not a hedge fund trader. Lately I have been immersed in the science of deceit. At present the Fed has its back to the wall, as all the Feds do, and it is facing huge political blowback for bailing out its friends in '08 and really everyday thereafter. And so the Fed will refuse to defray its closest confidants losses for this very public and lamentable and confessed mistake, only to offset these losses with QE3 as the economy weakens for all sorts of unanticipated reasons in a few short weeks. This obvious error was no error at all - it provides political cover for a far more harmful (to ordinary people anyway) policy to appear on the horizon shortly. For such smart people, please don't ignore the obvious.

Thu, 05/10/2012 - 23:53 | 2416188 Gloomygus
Gloomygus's picture

This "mistake" was no mistake at all. It is the first step in a sequential set-up. You're being set-up (again).

Fri, 05/11/2012 - 00:24 | 2416240 streetcrawler
streetcrawler's picture

It's going to be like the helicopter scene from Margin Call.

Fri, 05/11/2012 - 05:10 | 2416469 joe6px
joe6px's picture

What is the connection between BofA and MS.Chase?  Other than the Fed..  I think student loans and Eur debt.  Print off Eur and buy back college loans to win 2012 election, no other hope but to buy off the young voters.  No jobs so eat the student loans to win.

Thu, 05/10/2012 - 21:10 | 2415764 James_Cole
James_Cole's picture

Looks like it might be a bad week for Iksil. 

Thu, 05/10/2012 - 22:08 | 2415977 Cursive
Cursive's picture


LOL.  His punishment will be all-night clubbing with "The London Whale Trader" Alex Hope.

Thu, 05/10/2012 - 21:11 | 2415766 Corn1945
Corn1945's picture

What the hell do they care?

It's like gambling in Las Vegas with someone elses money. 

Thu, 05/10/2012 - 21:12 | 2415767 The trend is yo...
The trend is your friend's picture

time for jamie dimon to get in front of congress and appese the crowd

Thu, 05/10/2012 - 21:15 | 2415780 AlaricBalth
AlaricBalth's picture

"I'm sorry Congressman, I do not recall that sequence of events."

Thu, 05/10/2012 - 21:23 | 2415802 slewie-the-pi-rat
slewie-the-pi-rat's picture

time for jamie dimon to get in front of congress


more like time for the organ grinder to get in front his stable of monkeys

Thu, 05/10/2012 - 22:16 | 2415999 Dr. Engali
Dr. Engali's picture

You've grown an extra hyphen Slewie.

Thu, 05/10/2012 - 22:25 | 2416024 knukles
knukles's picture

Whaddafuck is with all these guys?
How many we up to now, 4 or 5?

Thu, 05/10/2012 - 22:54 | 2416099 Hulk
Hulk's picture

derivatives suck...

Thu, 05/10/2012 - 23:15 | 2416143 knukles
knukles's picture

Gold Star

Fri, 05/11/2012 - 00:41 | 2416257 slewie the pi-rat
slewie the pi-rat's picture

that was a great rant, k-nuk!

Thu, 05/10/2012 - 23:19 | 2416149 THX 1178
THX 1178's picture


Thu, 05/10/2012 - 22:39 | 2416061 gmrpeabody
gmrpeabody's picture

Good eye...

Fri, 05/11/2012 - 01:00 | 2416272 Nobody For President
Nobody For President's picture

Alaric - that is not a lie:

"I'm sorry Congressman, I do not recall that sequence of events." 


That is plagiarism.

Thu, 05/10/2012 - 21:13 | 2415773 urbanelf
urbanelf's picture

Where are the god-damned Silver Bears?

Thu, 05/10/2012 - 21:25 | 2415810 Chaffinch
Chaffinch's picture

I need those Bears to tell me what the hell IG9 and HY and stuff means!
But I get the main part of the story which is that Jamie Dimon has got something to worry about - yes?
; )

Thu, 05/10/2012 - 21:30 | 2415839 xela2200
xela2200's picture

HY --> High Yield

IG9 --> Credit index


He reeks.

Thu, 05/10/2012 - 21:44 | 2415895 Chaffinch
Chaffinch's picture

Thank you Xela. CDS I think I understand already (some kind of insurance on someone else's debt, but the insurance never pays up because the insurance company never admit that a default has occurred - right?). Is '9' as in IG9 a reference to a time period - like September? Or 9 months from now?

Thu, 05/10/2012 - 22:05 | 2415974 WmMcK
WmMcK's picture

Or ice 9?

Thu, 05/10/2012 - 22:27 | 2416032 knukles
knukles's picture


Thu, 05/10/2012 - 22:30 | 2416039 Chaffinch
Chaffinch's picture

Short or long?

Thu, 05/10/2012 - 22:29 | 2416036 Chaffinch
Chaffinch's picture

Or Plan 9?

Thu, 05/10/2012 - 21:39 | 2415867 urbanelf
urbanelf's picture

Honestly, I'm feeling a bit Silver-Bear-dissillusionment.  Those cartoon characters claimed to have inside info, but didn't have the clarvoyance to see this coming.  Cartoon bears used to be the most reliable news source.  Now what?

Thu, 05/10/2012 - 21:44 | 2415901 Chaffinch
Chaffinch's picture

I guess they have to hibernate over the winter.

Thu, 05/10/2012 - 22:11 | 2415989 Piranhanoia
Piranhanoia's picture

If they haven't done an update,  carry on as last instructed.

Thu, 05/10/2012 - 22:31 | 2416038 sumo
sumo's picture

My guess: the cartoon bears had a contact close to Bart Chilton.

What the bears didn't get and refused to believe is that Chilton is controlled opposition. He is there simply to deflect public anger away from the CFTC. He is not there to do anything useful about markets. The bears got played badly.

On a related note: at long last Ted Butler has recognized that Gensler - the smiling ex-Goldman sociopath, key member of the PPT, ally of Corzine - may not quite deserve the effusive praise that Butler gushingly bestowed in the past.

It's like Charlie Brown finally decided not to kick the football. Better late than never, Ted (you chump).

Thu, 05/10/2012 - 23:46 | 2416177 vamoose1
vamoose1's picture

 to  sumo.


    chilton  is  classic  repressive tolerance    right  out  of  marcuse   one  dimensional  man,  and  lets  not  get  me  started  on  the  foul  ferret  fensler.

Thu, 05/10/2012 - 21:14 | 2415774 mendolover
mendolover's picture

Wow I wish I could understand all this shit!  This must be how these bastards get away with this shit.  Not enough people that matter can understand any of this.

Thu, 05/10/2012 - 21:20 | 2415800 cherry picker
cherry picker's picture

I don't understand it either, and if it is not biology, physics or chemistry and this difficult to make light of, it is obvious many of the players don't understand it either.

For this alone, it shouldn't be.

Thu, 05/10/2012 - 21:25 | 2415816 Hubbs
Hubbs's picture

Me too. The more crooked the corkscrew gets, the deeper you can twist it into the cork.

Thu, 05/10/2012 - 21:27 | 2415818 Chaffinch
Chaffinch's picture

Thank you Mendolover, Cherry Picker & Hubbs (sounds like the name of a law firm!) - I am glad I am not the only one here who is struggling!

Thu, 05/10/2012 - 22:12 | 2415988 SamuelMaverick
SamuelMaverick's picture

I have been here two short years and I am still learning the lingo.  The first six months were a brutal learning curve with me having to continually look up the definitions of abbreviations every day.

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