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Is JPM Staring At Another $3 Billion Loss?
"[The trading loss] plays right into the hands of a whole bunch of pundits...."
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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maybe they have some puts in place to help recoup? Naaaa...they wouldn't do something like that would they?
Just remember Jamie, neither you nor any JPM executive intended to violate the securities laws. Say it ten times. Touch yourself gently. Then have a cookie.
Defense lawyer memory sanitization begins at 8:30 a.m. tomorrow. Night night.
- John Corzine
Jamie... Channel your inner Corz...
Shine on, you crazy Dimon.
I hope he bleeds non-stop from every orifice.
You forgot to add the link to it:
http://www.youtube.com/watch?v=o6u4X-obat4&feature=fvst
http://www.youtube.com/watch?v=o6u4X-obat4&feature=fvst
Does anyone remember where I laid down the keys to my new Yacht? It was a gift from the taxpayers and I have not had a chance to make a run in it yet. I think Jamie and I will make a quick trip to Belize tomorrow if I can find where I put the keys.
Relax everyone, Lloyd.
...doing GOD's work...GS-DickinDaMuppets
Happy sailing. You see, that is what happened to JPM here. Since Goldman is doing "God's Work" (and providing jobs for 10,000 women...nice PR stunt by the clowns at GS), this is why tragedy befell JPM. Maybe JPM should focus less on being a vampire squid and being more altruistic like GS.
IF YOUR HAPPY AND YOU KNOW IT CLAP YOUR HANDS (repeat)
Asia going all USD bids again = risk aversion
0223 GMT [Dow Jones] The USD/CNH, or offshore USD/CNY, rises to 6.3165, from 6.3125 late Thursday in Asia, tracking a higher onshore USD/CNY, says a senior trader at a U.S. bank. "The USD/CNH is likely to keep an upward bias amid the uncertainty in Greece.
Greece? haha, try JPM blowout and Spain yields blowing out in the next 6hrs.
To me it's not about the what but the where. I mean "London again?" This is EXACTLY what happened at AIG--"a little special operations group for the CEO to stay in the game." And now "you're backed into a corner" and "blah-blee-blah" and shit. Amazingly "as with Roy Lichtenstein at AIG" Jamie "didn't see it coming either." I'm sure it's one of those instances of "WE BETTER GET TO THE BOTTOM OF THIS PEOPLE" as you plumb the depths of "the hole of my undoing." ENTER THE HUMORIST JAMIE! THAT HUMORIST IS YOU!
http://www.youtube.com/watch?feature=player_detailpage&v=WumFLdxmSOc
Another nice ZH writeup on the not-so-easy-to-ferret-out that is available only from ZH. Much appreciated.
Seriously, this is an outstanding analysis. I'm a fucking idiot and even I understood enough of it to make me feel less of an idiot. That said, I'm still really dumb.
tyler for president, i mean really
I smell gas and I'm getting a little dizzy.
Perhaps a nice Friday morning Federal raid of JPM's offices, complete with real time Dimon and other corporate officers hard drives being mirrored onto the Internet for all of us to examine would add some transparency and stability to these "oh-so-important markets".
Jamie to Bernanke: We'll just have to cover our commodity shorts . . . in other words: http://www.youtube.com/watch?v=Z_JOGmXpe5I&feature=results_main&playnext...
At what price should we be looking to go long?
Some potential for a bounce @ $25 neckline support:
http://1.bp.blogspot.com/-OdHp7Xr0Ymw/T6ZxApBAglI/AAAAAAAACpk/PuoceV9CAzw/s1600/120506-B.png
That's $13 below the current after hours price.
Most likely it will slice right through the multiiyear neckline so I wouldn't get your hopes up.
Tyler, thank you for the explanation of JPM's problem trade...very interesting. So if most everyone here assumes JPM acts as the Fed's henchman to stifle gold and silver, might their attention be distracted from this endeavor for awhile? Also, assuming that this could get worse, it probably triggers QE sooner than most people think.
Check out that 3 month VaR reset coming soon to a Ponzi near you. Oh wait did I have an IRA at Dean Witter?
Tomorrow is the 11th. Should be an interesting day.
This is SO fuckin' beautyful! And wasn't Dimon on his soapbox just last week sayin' how people shouldn't be 'dissing the banksters because they're doing such a GREAT JOB! This made my fucking night!
So does the $2 billion (or $5 billion, or whatever) represent a gain to some JPM counterparty, or did that money just "vaporize" into derivative money heaven?
JPM's market cap is $155 billion, so this loss seems like pretty small beer, unless the whole banking sector is in such a precarious state that it can't withstand a little CDS hiccup. It certainly seems possible that we're going to see further confessions from JPM in the days ahead, and maybe even cascading defaults from some of the downstream dominos, as "notional" value becomes all too real.
Yeah, I'm having trouble figuring out what the BFD is. That "rogue trader" lost what, over a billion, not too long ago, and society didn't collapse from that. Now don't get me wrong, I'd like nothing more than to see some bastards get their comeuppance, but I can't figure out how this affects anyone but some poor scapegoat at the trade desk that they'll pin this whole clusterfuck on. Sucks for him, but I'm sure his new Lamborghini will be some consolation at his newfound lack of a job.
Lehman Brothers lost a couple billion and it turned a 500 billion dollar bankruptcy. Leverage....it's all borrowed money. All these "bets" or trades are leveraged to 20x or 30x or 100x. To have a sudden conference call indicates panic. They don't have control, they can't unwind the position and the losses can keep growing.
Besides which, with their position exposed, and with no way out, JPM will be taking it up the arse from the counterparties over coming hours and days - €2b will seem small beer when the dust settles.
Thanks. Will be fun to watch.
Does this mean JPM isn't going to cover their PM shorts?
There are still sharks in the oceans who will circle this pool of blood and flesh.
If I got this right, does this mean that hedge funds will be the predators they are and make it worse for JPM?
I smell pattern.Second week some news on thursdays.Eh,why tomorrow wasnot friday the 13.....
Tyler I wish you would do your homework like CNBS before you go about posting all this technical gobbledegook. You know us Muppet folk can't understand anything at all about investing, or risk, or hedging, etc. Jamie Demon is a hero for holding an urgent conference call after hours on a Thursday and reassuring us all that this is nothing but a simple and isolated incident of sloppiness.
Here is Brian Williams once again doing your job the way you're supposed to be doing it:
http://www.msnbc.msn.com/id/3032619/#47379644
Now get on board with the program before you scare us simple folk
(all of the above is total sarc - Tyler and ZH, I am immensely impressed with your work overall, and on this piece in particular. Fan-freaking-tastic job well done. My hat off to you!)
Couldn't they have just hedged their position by buying a shit-ton of JPM puts right before their news conference? It's not like the SEC would have investigated that trade. So why not go for it, and you may even turn a profit on the deal.
...well that could explain The Bearshankme's comments today that the banks are "healing"....it would make the puts cheaper....just sayin'
You know, trying to make sense of these banksters is like trying to get inside the head of a career criminal....bottomline is that we decent people simply don't think like they do. We don't wake up every morning wondering how we can defraud the world on a grand ($ billions) scale . I wonder how much better the banking industry, the nation, and the world would be if they devoted the same amount of time and effort they expend on their criminal enterprises to investing in small businesses instead. You know...that old, crazy, outdated concept of loaning money to hard working people with interesting ideas that might or might not make it and could even result in job and wealth creation.....
listen to me...ain't I such a silly old man
It just goes to show that if the regulators are not allowed to do their jobs, the police cannot arrest anyone, to co-located HFT machines run on the pico second, the congress does not reinstate some sounder practices in this gamed "market" then incidents like this will come again and again.
You ask about Black Swans.
Wait until a Rothschild, the Russians or the Chinese are on the other side of the next "dilemma." The next Soros/BOE is waiting in the ether.
With Basel III the blood will be in the frenzied water as the nets are hauled in.
Karma kills.
Hmmmm, all this is starting to come together now as to why T. Rowe Price suddenly and with very little warning closed their huge High Yield Corporate Bond fund to new investors last month.....
I sense a great disturbance in the financial Force, the sound of trillions of dollars in derivatives screaming in terror as they face wholesale, mindless destruction...
May the Fourth be with You - Star Wars day - was about when all this started unraveling. Coincidence ???
Ahhh, JaDim ... I thought I recognized your foul stench ... the more you tighten your grip, the more billions will slip through your fingers.
there was ~15000 in-the-money put options that expire tomorrow traded today. Just a coincidence, right?
It's getting dark.... and.... I feel so cold....... I see, I see grandma.... and Elvis.
From what I've seen ... only fox & Fox Business are giving this any attention (Lou Dobbs siad they called Fed, UStreas & NYFEd but no one would talk)
Evidently folks don;t understand the mark-to-market concept ...nor the leverage toxicity of synthetic credit derivatives ... combined with the fact that JPM is one of THE largest market makers.
Mark-to-market has validity when you have a 'market' typical daily buyers & sellers. Many small stocks do not .... but they are more of an episodic market. But derivatives ... well that is why AIG HAD to be SAVED. And AIG had to be saved because despite the fact that Sec Trsy Paulson wanted Lehman to fail as their were no bidders or Fuld was a dickhead as a negotiator not understanding the 'glory' had ended. The issue that caught everyone unawares was the oldest of the 'money market' funds, Prime Money market fund, held a bunch of Lehman notes and so threatened the entire 'money market' system because they could not hold 'the buck (the $1 conversion level established as a convention for fund shares commonplace through these funds) ... which is defacto & unregulated 'savings' in the USA. For 3-4 weeks Paulson had to scramble and convince Pelosi & Ried, that they might hate him and Bush et al but they faced a massive liquidity crunch unless they acted ... the deep abyss. There was no choice then. oh there were plenty of errors that stretch back to LBJ/Nixon/FordCarter. This time ... post Dodd-Frank no less (Dodd is as corrupt as they come) ... this happens .... at the last remaining 'well-run' USA bank?
Where is the news media? Covering the slaughter of innocents from MF Global I'm sure ..... no they cannot get enough of gay marriage
Schadenfreude returns like a carrier pigeon.
Sign on Eric Holder's door: DO NOT DISTURB!
No fuking doubet they just pay off the right whore and go on........... when will it stop?????????????
those fukers are doing this on our dime in the name of "stability"...... the fukers should hang.... It may come..... It is getting to the poiont that people or sheeple will nopt put up with it..................
No fuking doubet they just pay off the right whore and go on........... when will it stop?????????????
those fukers are doing this on our dime in the name of "stability"...... the fukers should hang.... It may come..... It is getting to the poiont that people or sheeple will nopt put up with it..................
Gonna wait for silver to get crushed if the huge margin calls go out- Been keeping dry powder for awhile now. The metals will get smacked with everything else until the paper clears. We have a long way to go.
$36 on ebay
charted price tells one story, but not the whole story.
good time for china to get the price of silver up.. expose jpm's big short
Good morning everybody........... Apparently we as in Mr Jamie Dimon does not need any regualtion as he hgas everything under control............... How many people is he ghoing to have to fuk to make up for this................ Hidden fees just went up 50%..........Why are they in business.......... they should be hung......they have no right to go on.......WTF????????????????
Good morning everybody........... Apparently we as in Mr Jamie Dimon does not need any regualtion as he hgas everything under control............... How many people is he ghoing to have to fuk to make up for this................ Hidden fees just went up 50%..........Why are they in business.......... they should be hung......they have no right to go on.......WTF????????????????
I just thought of what Zero Hedge needs to come up with, so that average people can understand some smidge of what is going on here.
Just as the atomic scientists came up with the "doomsday clock" we need to create the "Financial Doomsday Clock" and every time something like this happens then Tyler et. al. can hold some kind of press event and move the minute hand closer to midnight, while using the opportunity to explain to Joe and Jill Sixpack just exactly how and why they are doomed...
What's te point of any clck when we all knw it's really 5 past midnight already...
Yes...Extended time. Play to the whistle!
All of this could have been avoided if we just had more switches for the SEC and other Regulators to be asleep at.
Silence and no comments from the FED et al, Jamie growing mad on te call with those asking what else was out there...
Yeah, this ain't the bottom, there is more coming. Jamie and The Ben Bernank know it...
I still believe this shit was leaked, Jamie had no intention of telling the world until Friday PM...
Brace for impact.
Oh, there were comments. Why, just this morning Ben Shalom Bernake said banks were healing and said banking "conditions" have improved "significantly."
Verbal equivalent of putting grenade in mouth and pulling pin.
The hedgies are gonna take JP down.
This is the "Michael Douglas" moment in "Wall Street, The money never sleeps".
He got fucked first, then he fucked back.
http://www.youtube.com/watch?v=xzPFCKDexok&feature=related
It's not about the money, it's a game.
Fucking unreal. Art imitating life or the other way around?
Still in the asylum, though they allow me to walk around by myself close to the hospital area for 2 hours a day. Trying to get early retirement so i can get back atleast a fraction of what i've paid to the thieves in my life. hi turd.keep up the good work, if.i.was.rich i'd have a custom sharpie made of electrum sent to you. Don't worry peeps it's just a question of a critical mass of ppl waking from the bad dream, millions are opening their little eyes each day.. Greetings, Nemesis Nomos / After a friend of Another
i guess the lord's business was put on hold to do satan's.......
jpm will be bailed out - it all good baby....
The three billion loss is JPM's ... that is a flat out lie .... It is ours the taxpayer, via re-capitalization through the FED (just wait and see)
Hey Jamie, where is that "Royal Straight Flush" now, you arrogant twit!
http://www.youtube.com/watch?v=Lk0cMx10SF4
Far to much is being made of this. 2 mill, 3mill, 5mill, 10mill, it's just walk around money to JPM. Give this a couple days, and it will completely disappear off of the radar.
It will tear a chunk of confidence out of the so-called liquidity/market makers that being these over-leveraged investment banks, that and the derivative time bomb has been ticking for years...it might have gone off.
This will 100% have a ripple effect on top of all the other HUGE problems brewing.
EBT doesn't have to be paid out until the end of the month.
The only thing worse than zombies are hungry zombies.
Hands off the EBT Jamie.
Gold and banks crash together. JPMorgan is a very big bank. The crash will be very big.
I know it doesn't make sense at all but gold has gone straight down (despite everything I read here, like the $1,6000/oz support or China is buying ...) since JPM said it was losing money.
I smell a Lehman coming!
God I hope so... Tired of this shit, ready to get it ver with.
JPM going down will do us all in.
Is it possible there are good guys out there showing teh JPM they are not so spesh? Did Wall Street Josey Wales show up and take a little skin?
Let me guess. Buffett will get a sweatheart deal by providing a cash injection. This time he needs to do it, to protect his position.
Bartiromo must be crying her eyes out....she always did cling to his every word! She acted just like a giddy schoolgirl during their recent interview.
It couldn't have happened to a nicer bunch of guys...
Unfortunately, I don't think Au is going to benefit from this.
Anyone know how any of the law suits are going against JPM for manipulation? Don't seem to hear much about that.
"you don't hedge risk when you bet on momentum continuing you idiot!"
Classic...
Was the $JPM News Leaked? 13,800 May $41 Puts Traded Ahead of the News
http://ibankcoin.com/news/2012/05/10/was-the-jpm-news-leaked-13800-may-4...
HAHA yeah JPM CIO hedging tail risk
This is hilarious, he has to go, he has dimissed 1st rate managers for far far less in fact for nothing at all in the case of some senior managers, it will be interesting how he spins this to save his job, still the general public shouldnt have too much to worry about the loss will be funded from accruals to the staff bonus pool(....but not Jamie's)
What would be great is if the Great Collapse takes gold back to $35 an ounce and K-Cups are worth $5000 each.
I think we should just admit that these folks are not really smart at all, they are just real good at inventing infinately clever ways to bugger themselves.
I really don't understand the problem. Did not the fed just recently do one of those stress test things? Certainly, if not surely, part of the stress test was a complete anal review of this exact situation. Certainly, if not surely, JP got an A+ grade with worse stresses than this. Certainly, if not surely, they tested what would happen if you were down graded one, two, three times a lady. And, they still got an A grade. Right? So, what's the problem? We can trust Ben, right? We can trust Jamie, right? Besides, in Jamie's own words, no customer funds were involved. Who cares about customer funds when you are backstopped by tax payer funds. So, relax, chill, wait for the logical, sane explanation for the whole situation. Do like me, go to a crapple store and buy a new toy. Then, go home and buy 100 shares of crapple.
Dude.... Seriously?
Trench 9? wait is that the same trench 9 from http://www.zerohedge.com/news/footprints-whale.. im confused. did we just identify the counter party?
At least no customer funds were involved...JPMChase is very good to its' customers:
http://www.americanbanker.com/issues/177_49/chase-credit-cards-collections-occ-probe-linda-almonte-1047437-1.html
"[The trading loss] plays right into the hands of a whole bunch of pundits...."
Sorry, Jamie, no. I don't give a rats behind about any pundit. The trading loss plays right into my short position.
Will it Blend?
With the proper amount of lube anything will fit!
I want to add something witty and bitterly sarcastic but I feel like so many have already killed it that commenting here is like going last at a gangbang.............well i'm that type of guy. I dont care how many dicks have been inside her I just want to bust a huge nut like the savage that I am. I can't wait like corporaphilac without nerves trying to touch but he can't quite feel what he so desperately longs to feel. DO NOT GIVE WALL ST YOUR FUCKING MONEY. DON'T USE AN ATM. GROW YOUR OWN VEGETABLES. DO SOMETHING TO UNDERMINE THESE FUCKS EXISTENCE OTHER THAN POSTING HERE. IF YOU MEET A ROMNEY SUPPORTER OR ANYONE EVEN PERIPHERALLY ASSOCIATED WITH PRIVATE EQUITY DON'T BE CIVIL.
Very good article...
Helpful piece and fantastic thread. Love this site.
A tribute to the financial elite fraudsters, history's best bank robbers:
http://www.youtube.com/watch?v=vw8UvMR6rPY
Meanwhile, for the rest of us,
break your back to earn your pay,
and don't forget to grovel.
slippery greeeeeasy pole dance? à la JPM bust lust?
Pundits and empire freaks :
"Never ...in the course of human events.... has so much been owed by so many to so few." Winston Churchill 1940...
"Never... in the course of human events... has so much been owed by so many because of so few." FP 2012.
Oh, "The FEW", the happy few...the game was : privatise profits and socialise debts thanks to Tarp/QE. Is the wind turning, can the FED/ECB/BOE/BOJ be forced to throw in the towel? Or tell another "happy few" behemoth, we are gonna let the market Lehman you! Musical chairs on the Titanic...
Dimonos falling.
That is sadly, not enough to bankrupt them.
I don't know whether this is relevant or not. Yesterday received a 7 pp. letter saying that MorganStanleySmithBarney is tearing all of its PM accounts away from Citigroup. 6 July deadline. Put this together with the current pound-down of PMs, and I think the rats are getting ready to head for the lifeboats. Citi to sink first?
Define your terms. What is a "PM account"? Is it a precious metals account? Or is it the uberdouche "private [wealth] management" or "portfolio management" tag that bankers use for their richest clients?
Maybe it's as simple as Citi jettisoning its investment in MorganStanley. See http://blogs.wsj.com/deals/2012/04/16/whats-the-plan-for-morgan-stanley-...
I would not be surprised to see this stock end the day up. Bizarro world.
I think JPM volunteerd to be the fall guy in order for the FED to print 2 trillion dollars.
Anyway we know $2 billion is the tip of the iceberg and has been press-managed. That it happened in London is also fitting and should give Barnier chance to take another look at Casino Capitalism on The Island.........be interesting to know just how little control JPM has over its traders and for Shareholders to ask about Worst Case Exposures
...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. Note, 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!"...
Barracudas and whales :
Will the HF barracudas now start attacking a stalwart pillar of US/WS/capitalism. Bite the hand that feeds their Zirped-leveraged plays on Japan, China and Eurozone by going predatory on home turf?
In this pond there are no friends and memory/loyalty is Alzheimered into limbo. Friend n foe; all the same, we bite when we feel like it; any, all meat, is red meat. Jack is beginning to jacksaw his own bean stalk below him, while he climbs to dizzy heights looking for that golden pot...delusion of never ending illusionary fiat capital rip-off.
Is this man joking, trying to shut the barn door once the horse has fled...?
SEN. CARL LEVIN: What Happened Today At JPMorgan Is A Stark Reminder Of The Need For Regulators To Establish Tough Standards - Business Insider
Credit Default Swaps
Country/Sector Credit Default Swap 1 day 5 days Germany 88.490 +0.33 +3.94 USA 40.455 -0.41 +0.58 US Banks CDS Average 237.890 +0.63 +16.48 Bank Credit Default Swap 1 day 5 days Bank of America 268.528 -4.17 -0.24 Barclays Bank 201.973 +0.93 +18.39 Banco Santander 396.535 -0.32 +9.96 Banco Popolare 636.828 +3.35 +77.34 BNP Paribas 269.284 +0.81 +27.06 Banco Bilbao Vizcaya Argentinia 433.885 -0.22 +30.59 Citigroup 230.959 -3.23 +1.1 Commerzbank 268.143 -1.45 +20.29 Crédit Agricole 332.956 +5.46 +29.21 Credit Suisse 174.070 -0.07 +8.5 Deutsche Bank 188.223 -0.19 +14.68 Goldman Sachs 285.305 +1.23 +13.56 HSBC 150.749 +0.96 +9.87 ING-Bank 277.356 -1.7 +14.54 J.P. Morgan 108.422 +0.2 -1.58 Morgan Stanley 385.707 -1.39 +20.92 Royal Bank of Scotland 306.383 +4.18 +21.72 Société Générale 335.424 +4.22 +34.75 UBS 185.714 -0.23 +10.18 Unicredit 490.323 -0.1 +41.05Source: www.cds-info.com
Is this the start of the long goodbye Jamie?
I hope so, but don't make it too long.
PS. Don't forget to cover all your silver shorts before you go.
"It is so unfair that the man boy Gaelic Kenyan Prince, who favors us with his Presidency, is impeded in his kampf to liberate us from the inherent evil of Capitalism by having to carry the selfish political baggage of the gay marriage bung holer bundlers !" Monedas 1929 Comedy Jihad Happy Days Tour
does this mean the whale will not be getting his bonus this year ?
now you're dreaming
yen cross where's your two cents ?
Talk about centralisation! The credit system, which has its focus in the so-called national banks and the big money-lenders and usurers surrounding them, constitutes enormous centralisation, and gives this class of parasites the fabulous power, not only to periodically despoil industrial capitalists, but also to interfere in actual production in a most dangerous manner— and this gang knows nothing about production and has nothing to do with it.”
Steve Keen posted this quotation on his DebtWatch Blog - I think Karl summed it up beautifully.....it is the Bankers not the Proletariat
Plus these same guys are the custodian of the SLV and worst still a designated vault of the crimex! You can expect many more shoes to fall.
Get yr physical gold and silver now!
Just goes to show (again), as if additional evidence were needed, the "stress" are completely arbitrary. They are designed to arrive at a predetermined conclusion of soundness in order to gull the gullible into thinking all is well. Reality, on the other hand, is merciless and unstoppable.
am headlines
"gold slides as risk aversion pushes up dollar"
what i like (?) about when a bank loses loads-a-money is they single out the trader, sack him, then get the Govt to jail the poor sod like it was not the banks fault (for employing him)
blame the little guy
when are company losses not company losses? ..when it's a Bank
Sounds like Wells fargo is doing some dodgy Accounting.
Discussed in the second half of the below show.
First half worth a watch too. Is Jamie Dimon really a fecal matter eating tapeworm?
http://www.youtube.com/watch?v=qSTqFbr033g&feature=player_embedded"]http://www.youtube.com/watch?v=qSTqFbr033g&feature=player_embedded
Time to Show Jamie The Door
http://displacedema.blogspot.com/2012/05/show-jamie-door-jp-needs-new-ceo.html
JP Morgan CEO, Jamie Dimon, received over $23 million in compensation in 2011, up 11 percent from the previous year. Wall Street's most profitable bank had its second straight year of record profit in 2011 with $19 billion in net income Dimon’s base salary was boosted to $1.5 million from $1 million last year. He also received $17 million in stock options with a $4.5 million cash bonus. Dimon's compensation is the highest among his banker peers. Behind him is Bank of America CEO, Brian Moynihan, with $18 billion and Wells Fargo CEO, John Stumpf at nearly $20 million.....source
received over $23 million
CASH no doubt.......
When you're too big to fail, hedging becomes risk.
Seems like it's about time for Blythe to make another appearance on CNBC to champion JPM's commitment to expanding futures index trading in every market known to man. You know, for the little people, for the children.
$5 billion is just not what it used to be. I remember the times when people would freak out about a $100 million loss anouncement
That's what QE is about - you get relaxed about Zeroes......and promote them to Government
Just when are Americans going to get a grip on their banking system and politicians ?
ITS OFFICIAL US WILL ENTER A DOUBLE DIP RECESSION ON THE 15TH OF JUNE UNLESS US GET MORE ASSISTANCE FROM FED.........
As a primary dealer, JPM will just steal some more free money from the FED and move on. This will pass and they will laugh it off. I hate fucking JPM!
How can they call these Gambling Joints banks?
If jpm is tanking, then why is silver not going up. the conspericy theory was that jpm was keeping silver down
There was a movie once about a boy who did good deeds without wanting anything in return. The kid died in the end trying to protect a friend. The movie's title was Pay it Forward.
This Dimon character and all of his cronies and henchmen who are trying to cover up massive theft and mask it with techno bullshit will find out what Pay it Backward is all about soon enough. If the government doesn't get them, something else eventually will.
Mark my words.
Peanuts according to Deutsche Bank
Hilmar Kopper said that some time ago
Ho worries, mate. There is plenty of Free Taxpayer Money and newly printed money from Bernanke to Bail the banks out and hand them record profits again, this time for 2012.
Thanks for the article. I think the market does not need this bad news. Investors aresufficiently sensitive. JPMorgan These losses can be interpreted as a phenomenon thatwill be repeated in other similar institutions. Unfortunately, this incident is introducedanother element of uncertainty.
JPM made the announcement because they know they can get away with it. a $2.00 drop is nothing & will be sitting @ $44.00 next week. Hoodwinked are we AGAIN LOL .... I don't like my kids anyways ...
Love your posts Tyler, but I'm trying to understand what JPM has been doing-might do next (aren't we all) and it seems to me that your premise in the 1st paragraph of "As the market rallied, the positions required increasing amounts of protection be sold to maintain hedges" doesn't necessarily tally with your graph of CDX9 and its basis to single name CDS. The graph shows the index cheapening as spreads blow out which to me suggests that CDX9 protection was being SOLD on the way up BEFORE the rally. Granted this basis (or "skew" in credit trader speak-what a ridiculous term for this...) remained wide on the strong rally that followed but the basis often cheapens on rallies so that is not so unusual other than for its large size.
If indeed this activity is related to the hedging of tail risk, could it not be that JPM owns CDX9 super senior protection for this purpose, as the market blows out early summer 2011 that position gets shorter so they try to monetize some value/hedge some delta by selling CDX9 index protection into the move. When the rally kicks in later in the year someone clearly is still a heavy seller of CDX9 protection (how else to explain the stubbornly large size of the basis). if it is JPM why would they be doing that? Difficult to say without seeing how the tranches were trading.
Would be great if you could do a post including analysis on tranches too, in particular the super senior.
lesson learned... get more time next time on my Strangle. I had a JPM put & call and sold both last week. Today had 8 days to expiry so naturally I didn't expect anything useful from it. Well... would have tripled my price of sell vs buy just on the Put. Damn.
There's supposed to be a JPM shareholder meeting in Tampa on Tuesday.
Memo to Mr. Dimon:
Do not where Armani suit as tar and feathers stick to it.
Also,did I read somewhere's that this CIO unit was responsible for one quarter of JPM's profits?
I am sick of this HR/HY stuff where the public gets the bill when it goes wrong.