• Sprott Money
    05/26/2016 - 05:58
    How many “emergency” “secret” meetings do the central planners around the world need to have before the citizens of the respective countries begin to fully understand and take notice that something...

So How Are JPM's Prop "Counterparties" Faring?

Tyler Durden's picture




 

We already know that JPM has lost billions on its prop trade, and as suggested earlier (and as the FT picked up subsequently), JPM's prop desk (not to mention its actual standalone hedge fund, $29 billion Highbridge, which nobody has oddly enough discussed in the mainstream press yet) is so large that unwinding the full trade, as well as all other positions held by the CIO, would be unwieldy, allowing us to mock "the fun of negative convexity - especially when you ARE the market and there is no-one to unwind the actual tranches to." The FT then phrased it as follows: "I can’t see how they could unwind these positions because no one can replace them in terms of size. It’s a bit of the same problem they face with the derivatives trade," said a credit trader at a rival bank. "They pretty much are the market." Which actually is funny, because if the media were to actually read a paper or two on how the market works, and puts two and two together, it just may figure out that the biggest beneficial counterparty for JPM is none other than the Fed, using the conduits of the Tri-Party repo system. But that is for Long-Term Capital MorganTM and its new CIO head Matt "LTCM" Zames to worry about. In the meantime, a question nobody has asked is how have the purported JPM counterparties, the most public of which are BlueMountain and BlueCrest who leaked the trade to the press in the first place, and are allegedly on the other side of the IG9 blow up doing. Well, according to the latest HSBC hedge fund update looking at the week ended May 11, not that hot.

Now one thing we know is that when it comes to reporting one's results to an aggregator: when you have a profit you never under-represent it. And in this special case, since the funds are likely eager to recruit more like-minded hedge funds to their side of the trade, the best way to do it is by showing profits.

Which, for the early part of May, when the bulk of the JPM losses took place, are oddly missing for the two biggest players across from JPM...

So: where are the profits really going?

And is there much more here than the "access journalism" press has been let on to know?

0
Your rating: None
 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Thu, 05/17/2012 - 20:52 | 2437998 francis_sawyer
francis_sawyer's picture

evil speculators!

Thu, 05/17/2012 - 21:18 | 2438044 Central Bankster
Central Bankster's picture

:)

 

Well we all know Jamie Dimon is "the best risk manager" .

Thu, 05/17/2012 - 21:21 | 2438051 Global Hunter
Global Hunter's picture

according the Kenyan president he's the smartest banker we got

Thu, 05/17/2012 - 22:58 | 2438301 jeff montanye
jeff montanye's picture

but let us not mock just negative convexity.  let us mock jamie as well:  http://poemshape.wordpress.com/2009/04/01/shelleys-sonnet-ozymandias/

or http://www.online-literature.com/shelley_percy/672/

Thu, 05/17/2012 - 21:35 | 2438095 stocktivity
stocktivity's picture

How many hedgies bought Apple after earnings near $600 ....if Apple keeps dropping, some other big name will be in trouble soon. How many ways can you spell "Margin Calls"?

Thu, 05/17/2012 - 22:33 | 2438245 The trend is yo...
The trend is your friend's picture

my guess is dimon has lost 20 billiion.

Thu, 05/17/2012 - 23:18 | 2438358 Harlequin001
Harlequin001's picture

On what basis? Just curious...

Thu, 05/17/2012 - 23:55 | 2438436 tekhneek
tekhneek's picture

Oh y'know... just guessin'

Fri, 05/18/2012 - 01:51 | 2438668 Harlequin001
Harlequin001's picture

Maybe, happens a lot out here. Still curious though...

Thu, 05/17/2012 - 22:39 | 2438261 Buck Johnson
Buck Johnson's picture

No place for them to unwind there positions too.  I think because of this we will see QE3 or some type of intervention before Sunday night/Monday morning.

Thu, 05/17/2012 - 23:02 | 2438320 jeff montanye
jeff montanye's picture

and blythe was sure she was earning brownie points with the knockdowns in the p.m. department.

Thu, 05/17/2012 - 23:22 | 2438366 Raynja
Raynja's picture

that or she made her bonus makng $ to fund margin calls by cashing in sold calls. interesting the london whale floated to the top at the same time the fed couldn't find anyone to ride the maiden lane.

Thu, 05/17/2012 - 21:43 | 2438123 stocktivity
stocktivity's picture

Wow!..Nikkei down 200.

Fri, 05/18/2012 - 00:11 | 2438474 Mentaliusanything
Mentaliusanything's picture

Wake me when it is 200

Thu, 05/17/2012 - 20:55 | 2438003 Caviar Emptor
Caviar Emptor's picture

TBTF blows up a trade. Do they neeed to unwind? Is there some room for negotiation? Maybe Ben can just make it all go away

Thu, 05/17/2012 - 23:23 | 2438368 Ident 7777 economy
Ident 7777 economy's picture

"TBTF blows up a trade."

 

THOUSANDS of checks to cut; or alternatively, several big ones to brokers in EUR?

 

 

 

Fri, 05/18/2012 - 00:46 | 2438543 decon
decon's picture

I wonder if there's any connection with this blow up and Dimon's unusually vocal complaints to Bernanke about Frank/Dodd at that press conference on 6-6-11?  It seemed really odd at the time that Dimon would air his bitching at that venue.

Thu, 05/17/2012 - 20:57 | 2438007 chrisd
chrisd's picture

nice of the FT to credit you

Thu, 05/17/2012 - 20:58 | 2438009 vincent
vincent's picture

QE money bitches!!

Thu, 05/17/2012 - 21:01 | 2438011 Central Bankster
Central Bankster's picture

Maybe they are long some allocation of stocks/bonds and this trade is their hedge against systematic risk?  EL OH EL.

Thu, 05/17/2012 - 20:59 | 2438013 Burr's 2nd Shot
Burr's 2nd Shot's picture

I'll take Vaporized for the win please, Tyler.

Thu, 05/17/2012 - 22:13 | 2438195 imbrbing
imbrbing's picture

What is "where did it all go?"

Fri, 05/18/2012 - 06:37 | 2438849 odatruf
odatruf's picture

Corzine worked hard to earn the moniker, damn you.  He didn't need a second volley unlike our third Vice President.

So, you'll take "Corzined" for the win, dear sir.

Fri, 05/18/2012 - 07:36 | 2438918 Burr's 2nd Shot
Burr's 2nd Shot's picture

Heard on ZH, circa 1804.

"Weehawken, Bitchez!"

Can you imagine the Pay-Per-View possibilities of a Geithner-Biden duel? 

Thu, 05/17/2012 - 21:05 | 2438025 kurt
kurt's picture

Where's the Beef?

Thu, 05/17/2012 - 21:06 | 2438026 spooncutter
spooncutter's picture

whats the difference between "losing" funds like MF global and "losing" money like JPM?

Fri, 05/18/2012 - 01:44 | 2438655 Marco
Marco's picture

The former shouldn't be legal (yes, I believe in regulation to a certain extent) the latter should be the risk of doing business (I also believe hedge funds should be allowed to blow themselves up).

Thu, 05/17/2012 - 21:08 | 2438028 chump666
chump666's picture

What the f*ck are they unwinding into?  Equities?  Nope, they would be cutting positions to cover holes.

Write-downs baby...

And we haven't yet seen a major spike in risk aversion, persistent selling but looking for that absolute fear trade. 

Fri, 05/18/2012 - 04:42 | 2438795 Bolweevil
Bolweevil's picture

JNK

Thu, 05/17/2012 - 21:08 | 2438029 q99x2
q99x2's picture

Probably called in the guy from LTCM to see if there was any possible remedy before calling the next meeting at the FED to let them know that ice-nine has re-entered the system.

Thu, 05/17/2012 - 21:08 | 2438030 junkyardjack
junkyardjack's picture

JPM:  Heads they win, Tails you lose

Don't bet against the Fed...

Thu, 05/17/2012 - 21:10 | 2438032 piceridu
piceridu's picture

I'll take "Hedging a Hedge" for one thousand Alex

Thu, 05/17/2012 - 21:10 | 2438033 Caviar Emptor
Caviar Emptor's picture

Just stick it all into the mattress. From now on there's no reason why a TBTF bank should take any risks. And if anything goes wrong just send the bill c/o Ben APO Guantanamo

Thu, 05/17/2012 - 21:11 | 2438034 veyron
veyron's picture

Fed will set up an SPV and absorb the losses of this and every other shitty CIO trade.  

Thu, 05/17/2012 - 21:27 | 2438071 Zero Govt
Zero Govt's picture

Ben the bankers pooper scooper will be round in a jiffy

Thu, 05/17/2012 - 22:49 | 2438285 Cadavre
Cadavre's picture

Ben the bankers pooper scooper will be round in a jiffy

But why? Ben's a rock star! He never pays for lunch! Mean, like, and after all, the TV set been saying the economy is recovering - everything is up, and that the apparent  capitulation by always heroic money center HFT mills [and enjoyably obviously predictable] bull chumming  uptick stuffings may offer a good opportunity for individual traders to reenter the market. Right ... like there will will be lines around the block clamoring for entry into Schwab strip mall kiosks all over the country - any minute now - yep real soon .. you wait you miss the big score - just watch the Cramer teeter todder shtick ... you're getting sleepy .. when the count hits three you be a born again true believer!

Don't cha' see: When there ain't no buyers nowhere - the problem is not the risk associated with the unconverted paper held by "Street" gang, the problem is buyer perceptions.

Forget reality. The  problem is perception!

Saw weekend gold nose dive - knew something was up. Then saw gold and market indexes traveling the same down path - double dog knew something was up - Germans are pestering their D-Bunder to repatriate off shored German gold under watch and key in US, France and UK. The 2.3 Billion JPM headline is being offed by some as ruse, a false flag, a diversion to hide an alleged wad of recent JPM naked short offers. Don't know `bout the underly. Easy to speculate the totally artificial down turn of last weekend's o/n Gold tick may have had something to do with alleged naked Morgue shorts. Easy to speculate why: 340 tonnes of offshored German gold. What if some of the offshored German gold was loaned out? The custodians would need to get it back. In a time where demand is high, the best way to lower the cost of (re)acquiring the needed German gold would be to do what the Street gang always do: Write a bunch of naked shorts!

Didn't Chanos do that to Lehmans?

Thu, 05/17/2012 - 21:12 | 2438037 BalanceOrBust
BalanceOrBust's picture

JP Morgan is fubared.   They (and they are not alone) are so deep into it only the Fed can save them (at the expense of taxpayers).  

 

I say let the big banks fail.  All of them.  They fubared all of society and should go down.  Whatever hell breaks loose as a result will be better than the hell of propping them up so that rich bankers can collect more bonuses at taxpayers expense.  I would rather a cataclysm that a slow erosion of Main Street that kills us all and benefits a few banksters.

Thu, 05/17/2012 - 21:13 | 2438039 JohnSilent
JohnSilent's picture

Wait for it, wait for it... The moral hazard is about to bloom!

Thanks in advance Uncle Ben!

Thu, 05/17/2012 - 21:20 | 2438042 Global Hunter
Global Hunter's picture

I have to admit I have no idea what is going on anymore, on the bright side I'd make a good candidate for a job at JPM, the Fed or the NY Fed as I'm uterly clueless. 

edit: all I can make of it is their position is so big that as the market moves and they begin to adjust their hedge that their sheer size moves the market and they have to conversely re-hedge (ie start out buying move the market up turn around and start shorting).  So they're just in a loop now.  Do I have this anything close to what's going on?

Thu, 05/17/2012 - 21:46 | 2438130 Gamma735
Gamma735's picture

I have no idea if you are right.  I thought JPM positions were so large that nobody has the resources to buy them.   Or in other words, that if they start to unwind them, there is no market for them and the price craters.  But I maybe wrong.

Thu, 05/17/2012 - 21:56 | 2438150 Global Hunter
Global Hunter's picture

Think you're right there, they became the whole market in whatever they're doing.  

Thu, 05/17/2012 - 23:51 | 2438428 PersonalRespons...
PersonalResponsibility's picture

Haven't they always been?

Thu, 05/17/2012 - 21:17 | 2438043 Reese Bobby
Reese Bobby's picture

New FT Alphaville story on JPM's CIO.  Ouch.

 

Thu, 05/17/2012 - 21:35 | 2438094 junkyardjack
junkyardjack's picture

Looks like they are in European mortgages, nothing to see here...

Thu, 05/17/2012 - 21:19 | 2438046 IMA5U
IMA5U's picture

the final battle between blue mountain and the last of the cds prop desks?

 

or are there more....

 

 

Thu, 05/17/2012 - 21:21 | 2438052 slewie-the-pi-rat
slewie-the-pi-rat's picture

"access journalism"

 

how 'bout abscess journalism?

 

Jamie one more question (and thanks for the excellent wh'orederves the other night)...

Thu, 05/17/2012 - 22:12 | 2438192 fuu
fuu's picture

Fake slewie.

Thu, 05/17/2012 - 21:23 | 2438057 insanelysane
insanelysane's picture

Wonder if the Fed is taking the position as collateral for some LTRO.  Love the fact that all of this crap traded through the UK office but the good old Fed comes to the rescue because you can never leave one of your own behind.  No conflict of interest or illegal foreign activity going on here.  Bet it in the UK and get insurance from the US.

Thu, 05/17/2012 - 21:24 | 2438065 Ted Baker
Ted Baker's picture

THE OTHER SIDE OF THE TRADE IS NOT BLUECREST OR BLUEMOUNTAIN BUT.......

THE PUBLIC RELEASE WILL BE MADE END OF MAY OR FIRST WEEK OF JUNE..GOOD LUCK EVERYONE

Thu, 05/17/2012 - 21:26 | 2438068 mickeyman
mickeyman's picture

Maybe the counterparties are those mysterious Chinese groups on whose behalf JPM is allegedly shorting silver.

Do NOT follow this link or you will be banned from the site!