Jamie Dimon

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Frontrunning: October 14





  • Headline of the day: U.S. Risks Joining 1933 Germany in Pantheon of Deadbeat Defaults (BBG)
  • As Senate wrestles over debt ceiling, Obama stays out of sight (Reuters)
  • The "Truckers Ride for the Constitution" that threatened to gum up traffic in the capital was a dud as of Friday afternoon (WSJ)
  • China New Yuan Loans Top Estimates as Money-Supply Growth Slows (BBG)
  • Vegetable prices fuel Chinese inflation (FT)
  • China Slowing Power Use Growth Points To Weaker Output Data (MNI)
  • London Wealthy Leave for Country Life as Prices Rise (BBG)
  • Gulf oil production hits record (FT)
  • Every year like clockwork, analysts start out bizarrely optimistic about future results, then “walk down” their forecasts  (WSJ)
  • Weak Exports Show Limits of China’s Growth Model (WSJ)
 
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The Fed's Broken Piping In One Chart: JPM "Purchasing Dry Powder" Rises To All Time High $550 Billlion





As of the most recent data, which saw JPM's deposit holdings surge by the most ever (except of course for the inorganic "acquisition" of WaMu in Q3 2008) or $78 billion in just one quarter, while loans continued to be flat, we now knows that JPM had marginable power to chase risk higher to the tune of $552 billion, an all time record in excess deposits over loans!

 
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JPM Hammered By Massive $9.2 Billion In Legal Expenses, Posts First Loss Under Dimon; Takes $1.6 Billion Reserve Release





So much for the JPM "fortress balance sheet." Moments ago the bank which 18 months ago stunned the world with the biggest prop trading loss in history, just reported its first quarterly loss under Jamie Dimon, missing expected revenue of $24 billion with a print of $23.88 billion, but it was net income where the stunner was in the form of a $0.4 billion net income. The reason: the fact that from the government's best friend, Jamie Dimon has become the punching bag du jour, and having to pay $9.15 billion in pretax legal expenses, the biggest in company history. Considering that the other key component of Q3 net income was a whopping $1.6 billion in loan loss reserve releases, one wonders just how truly strong Q3 earnings really were. But of course, this being Wall Street, all negative news is "one-time" and to be added back. Which is why JPM promptly took benefit for all charges, which means adding back the $7.2 billion legal expense and $992 MM reserve release after tax benefit. In short: of the firm's $1.42 in pro forma EPS, a whopping $1.59 was purely from the addback of these two items.

 
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No Farm Payrolls





With the government shutdown stretching into an improbable 4th day (and with every additional day added on, the likelihood that the impasse continues even longer and hit the debt ceiling X-Date of October 17 becomes greater), today's monthly Non-Farm Payroll data has quickly become No-Farm Payroll. However, just like on day when Europe is closed we still get a ramp into the European close, expect at least several vacuum tube algos to jump the gun at 8:29:59:999 and try to generate some upward momentum ignition in stocks and downward momentum in gold. In addition to no economic data released in the US, President Obama announced last night he has cancelled his trip to Bali, Indonesia, to attend the APEC conference and instead to focus on budget negotiations back at home - which is ironic because his latest story is that he will not negotiate, so why not just not negotiate from Asia? Ah, the optics of shutdown.

 
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Jamie Dimon No Longer Chairman Of JPM's Primary Banking Subsidiary





Hidden deep in the pages of JPMorgan's Living Will report just realesed by the FDIC, the WSJ has found that CEO Jamie Dimon (still Chairman of the overall JPM entity) has relinquished his position as Chairman of the banking conglomerate's major deposit-taking subsidiary. While the bank claims this is "solely to create a more uniform structure among our subsidiary boards," one can't help but feel this is driven by unrelenting pressure from the administration (and its regulators) as the deposit-taking subsidiary had its confidential management rating downgraded from a 2 to a 3 on a scale of 5, a rare score for such a large institution; and faces public enforcement actions demanding changes to alleged risk-management, anti-money-laundering and debt-collection weaknesses.

 
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Guest Post: Will Iran Become Obama’s Symbolic Last Stand?





Still three-plus years left in Obama’s presidency, where mediocrity has been elevated to a highly acceptable statusA good and intelligent man has proven to be an incapable leader, often by making poor choices in the advice received... However, not all has to be lost for Obama; he still has time to reweave a legacy that now appears grey and bleak.  And that reweaving will not be on the domestic front; for the economic future of 80 percent of Americans has already been cast... the slope pointing downward no matter what hopeful lies are manufactured in Washington.  Reweaving, for Obama, should take place at the international front; a great opening has appeared before him partly by chance and partly by what other world leaders have to gain as well.

 
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From Whale To Rat: DOJ Has Cooperating Witness In JPMorgan Case





Over the past week, many have been scratching their heads over why JPMorgan is so eager to comply with the DOJ's investigation into the banks misrepresentation of the quality of its RMBS bundled mortgages, having gone so far as to suggest a number that could be as large as $4 billion in cash (with a $7 billion non-cash component), though still shy of the DOJ's $20 billion ask. The reason, as the WSJ reports, may be very simple one: a rat is providing the Feds with information deep from within the house of the whale. "The Justice Department's pursuit of possible criminal charges against J.P. Morgan Chase & Co. is based in large part on a key cooperator from inside the bank who is aiding the government and has provided information suggesting the bank vastly overstated the quality of mortgages that were being bundled into securities and sold to investors, according to people familiar with the matter."

 
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Frontrunning: September 27





  • House GOP banking on Plan C (Politico)
  • Pimco shook hands with the Fed - and made a killing (Reuters)
  • BlackBerry's Torsten Heins has a $55 Million golden parachute (Reuters)
  • JPMorgan Urged to Pay More in Mortgage Deal (NYT)
  • Soros Adviser Turned Lawmaker Sees Crisis by 2020 (BBG)
  • U.N. Members Agree on Syria Disarmament (WSJ)
  • U.N. Says Humans Are 'Extremely Likely' Behind Global Warming (WSJ)
  • The non-falsifiable threats emerge: Shutdown Would Shave Fourth-Quarter U.S. Growth as Much as 1.4% (BBG)
  • Swaps Rules Worry Industry: Coming Regulations Have Market Players Concerned About Possible Disruption (WSJ)
 
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JPMorgan's Mortgage Settlement May Reach $20 Billion





While a mortgage-related lawsuit and/or a settlement was long in the making, and was well-known to most in the industry, it is the monetary aspect of the resolution that is slowing down the outcome. Because if the NYT is correct, not even taking credit for all its fake "earnings" in the form of a complete reserve release would save JPM: "Underscoring the breadth of the scrutiny, the people said, JPMorgan and the Department of Housing and Urban Development briefly discussed the possibility of striking a wide-ranging settlement to conclude many of the looming mortgage investigations from federal authorities and state attorneys general. But the housing agency floated a price tag of about $20 billion for the settlement, the people said, effectively derailing settlement talks with JPMorgan lawyers, who were stunned by the size of the proposed penalty and expected to pay a fraction of that sum."

 
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Fraud Fortress: JPM Settles London Whale, Admits To Violating Securities Laws





"By late April 2012, JPMorgan senior management knew that the firm's Investment Banking unit used far more conservative prices when valuing the same kind of derivatives held in the CIO portfolio, and that applying the Investment Bank valuations would have led to approximately $750 million in additional losses for the CIO in the first quarter of 2012." Translated: Jamie Dimon lied to Congress.

 
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Frontrunning: September 18





  • Fed likely to reduce bond buying, pass policy milestone (Reuters)
  • Fall in Home Loans Pushing Fed Away From Taper in Mortgage Bonds (BBG)
  • Russia says U.N. report on Syria attack preconceived, political (Reuters)
  • China House Price Surge Raises Prospect of Steps to Cool Market (FT)
  • Cyprus Plans to Complete End of All Capital Controls... some time in 2014 (FT)
  • GOP Reworks Budget Terms (WSJ)
  • U.S. Navy was warned that Washington shooter 'heard voices' (Reuters)
  • Berlusconi Impeachment Vote Looms (WSJ)
  • Ageing could weaken central banks, spur rate volatility (Reuters)
 
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Deep Thoughts From Jamie Dimon's Daughter On Fi-Nance, "What The Hell Is A Bond", And Who Should Get Taxed





One would think Laura Dimon, the daughter of one James Dimon, would be on familiar terms with such concepts as bonds, capital structure and finance (especially the more arcane substrata thereof). After all the father of the graduate from the Columbia School of Journalism (author of such previous pieces as "The Last Office Taboo for Women: Doing Your Business at Work" which examines "the lengths women go to avoid getting caught in the stall") is none other than the CEO of the largest bank in the US, best-known for such "one-time items" as constantly recurring legal charges associated with financial innovation gone horribly wrong (today's rumor of a $750MM settlement over the bank's London-based prop trading group being a case in point). As it turns out, one may be mistaken...

 
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JPM's London Whale Fine: At Least $750 Million





What started off as a tempest in a teacup just ended up becoming not only the largest, $6.2 billion prop trading blunder in JPMorgan history, but the latest ligitation headache for Jamie Dimon amounting to at least $750 million to get the government off his back, and who will of course neither admit nor deny it used customer deposits in an attempt to corner the IG and HY markets:

  • JPMORGAN SAID TO AGREE TO AT LEAST $750 MILLION IN WHALE FINES
  • JPMORGAN SAID TO SEEK END TO U.S., U.K REGULATORY PROBES IN Q
  • SOME WHALE SETTLEMENTS MAY BE ANNOUNCED AS EARLY AS THIS WEEK
  • JPM TO ADMIT FAULTY INTERNAL CONTROLS IN WHALE SETTLEMENT: WSJ

Of course, we hope that as part of the settlement JPM will announce just what it is investing its current $500 billion in prop trading dry powder in as we disclosed last week.

 
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