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Key JPMorgan Charts
For those strapped for time, here are the key charts from the numerous JPM slidepacks just released.
CIO/Treasury snapshot. Note the ridiculous move in VaR which as everyone knows has about the same credibility as a JPM CDS blotter.
JPM Syntetic Credit Portfolio update aka CDS exposure which as we now know is all a big fudge. The Net Notional as of April 30 and Jue 30 shows just when the CIO book was unwound.
More details on Synthetic portfolio from the horse's mouth:
- Significant risk reduction has allowed us to transfer substantially all remaining synthetic credit positions to the IB
- CIO synthetic credit group closed down
- The IB has the expertise, capacity, trading platforms and market franchise to effectively trade and manage the remaining positions and maximize economic value going forward
- Expect combined IB & synthetic credit portfolio risks to be within IB’s historical VaR & stress risk levels
- IB RWA as of 7/2/12 will increase by ~$30B
- IB VaR as of 7/2/12 (spot) has increased from $74mm to $113mm
- Retained simple, transparent and easy to explain credit hedge within CIO
- Portfolio hedge position is short credit in a small number of indices (~$11B notional)
- Identified to hedge a subset of AFS assets
– Hedge mitigates ~1/3 stress loss in several scenarios - Hedge will be reduced over time, as macro-economic conditions change
- Standalone VaR for hedge portfolio $133mm3; Basel 2.5 RWA4 on portfolio hedge ~$34B
Peripheral European Exposure: call it over $18 billion in real terms, because we now know what JPM's "hedging" means:
Net Interest Margin at record lows. Thank you ZIRP. Good luck with continued profits going forward without the benefit of your CDS-based "prop desk" hedge fund:
And finally, the "Net Income" piggybank that Loan Loss Reserves is getting smaller and smaller by the quarter, with only $24 billion left, down from $36 billion two years ago. What happens when this runs out?
And how much reserves are "released" each quarter:
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$JPM Bad management 101: You send your more competent people to the trading desk and the less competent to the risk management
...and send the most criminally inclined to headquarters.
or the President Trainingcamp
LOL! The bankers wanted to be gamblers instead of boring traditional bankers. So they did just that.
Now they have screwed up traditional banking so much there are no margins and no wants to borrow anymore.
So it's too late to back for them. Only solution: gamble even more and maybe win it all back miraculously.
Spot on. I know a couple local bankers. There strategy was simple. They called it the 3-6-3 plan. Pay customers 3% on deposits, charge 6% interest on loans (after doing your due diligence to make sure the risk was acceptable- FYI, that is the bank's job), and get on the golf course by 3:00 PM so you don't ruin a good thing.
And we know JPM never takes a loss. They only add to losers and try to wait it out on unlimited margin.
They send the most criminally inclined and least competent to Washington, D.C.
I think that's the point. Large companies with multiple operciones by billions of dollars, need a management internal control very strong. It is surprising that in this case the internal control failed.
I wish Mr Dimon was making his trip to DC next week rather than mid June.
Never understood why anyone invests in a bank. They can all just make up the numbers...until they get caught.
So? At worst, they settle and pay a fine. If it gets really bad, the taxpayers will bail them out. Wash, rinse & repeat.
I guess this means Dimon gets Geithner's job at the Treasury next?
Shareholders get very little of the profit even in the fat years. Not enough to justify the risk they take imo.
Bove: Bank stocks are historically cheap....
R-i-g-h-t!
Load 'em up in the back of your pick-up next to F**k Book!
You read constantly that banks are lobbying regulators and elected officials as if this is inappropriate. We don't look at it that way. J.Dimon ~~ “So the unwanting soulsees what's hidden,
and the ever-wanting soul
sees only what it wants.” Lao Tzu
"We fix our eyes not on what is seen, but what is unseen. For what is seen is temporary, but what is unseen is eternal"
2 Corinthians, 4:18
No reason not to book loan loss reserves as profit. All the risky loans they pawn off on fanny or the muppets or the fed. everything else is guaranteed (student loans, treasurys, etc.). BONUS TIME!
If JPM fails, and it just might, it would be The Big One.
Warren Buffett is a tool
Strapped for time? Apparently we only have time. Who would have thought disintegration would take so long.
You just fill er' up like putting air in tires.
JPM has zero chance of failing. That said, if the IB has so much insight into the credit cds market why didn't they alert the executive suite to the potential risks they saw developing in the CIO position. On the bright side, they at least don't think we are dumb enough to pin it on one 25 year old trader like the French pulled off.
I thought the same about Lehman Brothers.
Cramer? "Bear Stearns is fine." 3-11-08
Bernanke? "We're not going to monetize the debt." 2-15-10
Timmy? "No risk of that." April 2011
More than half their profit comes straight from the usa gubbermint.
Here's an idea. Gross revenue minus expenditures and loss equals profit.
Can we force corporations to use that simple equation from now on? No, using actual math would show that the hundreds of bilions in corporate profits don't actually exist.
Using corporate math, the US government owes me a full refund on all tax dollars I have paid over the past ten years. I should be allowed to apply all my accumulated debts over time to offset my income making it look like I did not make any income at all, or at least put my income below the taxation threshold.
After all, debt is a net loss and corporations can use losses to offset tax liability. Money that goes towards paying debt really can't be counted as income because it doesn't go into the bank. Why should I have to pay taxes on the full amount of my income, when at the end of the year my total net income minus expenses is way below the gross level earned?
I demand equal treatment, all people should be allowed to use corporate accounting methods for personal finances!
The SEC pretty much treats "Loan Loss Reserve" accounting as fraudulant earnings manipulation these days.
. . .
. . .
That is, for everybody except the TBTF.