Heh, I think I'll try that line on this-here barmaid... *hick*

Big nothingburger considering the size of JPM and the strength of their earnings. They are earning 4-5 billion per QUARTER.

With regards to confidence being lost (which I'm not sure why you would lose confidence over a trade gone bad???), they said the same thing when Greek CDS holders got screwed. I don't think the CDS market has imploded.

Quote:

They own the printing press. We'll run out of affordable food and energy first.

Nothingburger.

Tack a few more bucks onto a $16 box with 4 corndogs in it and this is all fixed.

Wake me where something REALLY happens.

A stop at breakeven and see what happens, IMO.

N/not investment advice

My first thought was, "So what will we find out about BAC?" JPM = FRBNY, and is having to fess up to a speed bump. What is likely to come out about BAC, GS, C, MS, and WFC?

Cockroaches, right?

If clients that are substantially cash equivalents start b'ching about underperformance YTD, that would make one take action or not depending on POV.

N/not investment advice

Jamie refused to answer q's regarding specific trades or positions and sounded terse when BOA's Guy asked him regarding such.

Jamie said that it may change over the near term, meaning worse, and he won't disclose what the positions are in.

If it was a 12bips move to lose 2bn before taxes, that gearing DV01 must be nasty. 200 million in loses per bp on the wrong side.

This is, by the way, just what Karl and others have been warning about - that the implied backstop from the FOMC and USTreasury is having traders continue to be reckless knowing that you and I will back up their bad bets.

Oh, and again, this originated at the London CIO Prop Desk of JPM, so it's likely this is geared to infinity because there are no limits to gearing in The City.

Quote:

Bruno Iksil is a trader for JPMorgan Chase & Co. In April 2012, Iksil's big position in credit default swaps was said to be disrupting that part of the derivatives market. Reports at the time speculated that these trades could be exempt from the Volcker rule as the bank used them in an attempt to hedge or offset a position elsewhere.[1]
Background

Iksil joined JPMorgan in 2005. He works in London in the bank’s chief investment office, where more than 400 traders from across Wall Street oversee $350 billion in investments. Before that, he worked at the French investment bank Natixis (KN) from 1999 to 2003.[2]

I want to know who was on the other side of the trade and made $800 millon. Somebody is going to post blowout earnings.

The other side of JPM's trade was probably some hedge fund that you'll never hear about.

My prediction: futures will be flat at the open and we'll close slightly up tomorrow.

And I wouldn't rule out that JPM shorted the futures market today in anticipation of this announcement. Probably made half of the $800mm back and have already sold the short and gone long. All good. Like a Boss. Masters of the Universe.

Sounds like Iksil got caught owning too much of that particular credit market and the bottom fell out. Since it is now very public that the major player is being forced out, a race to true value begins. Was Dimon making a not-so-veiled plea to Bennie to start buying tomorrow? Who else followed JPM in that trade and is equally effed but doesn't have the size to survive it and will sell everything to try?

Most likely result: the Fed will own that whole market soon.

more info:
http://www.zerohedge.com/news/jpm-starin....

Think like a pigman.

This could be a pretense to take the market down. Get the sell-off started with the news and then the unwinding of the mysterious JPM positions is the backdrop for the ensuing weakness that follows. Pump and dump. Lather, rinse, repeat.

Timmay says an unlmited government backstop.

heheheh!

Someone took a bite out of JPM.
Will the rest of the pack smell the blood and start a free for all attack?

"Nothingburger"
Pavlovian response, and one the 100th day the bell rung, the dog drooled but the bowl was empty, thus the experiment was concluded, the dog was shot and Pavlov went home.

Quote:

The only nicer bunch it could happen to is Blankfein and co. Might have to make some popcorn and watch the show.

Blankfein and the boys at Goldy are small potatoes. They only make money cause Jamie lets them. JPM is the real problem. I would bet that Jamie speaks to the Rothschilds to get his orders.

I think I'll take my tinfoil helmet off and go to bed now.

This is NOT a nothingburger. This is actual -2B of PnL. It's one thing for the swing to be on paper, it's a completely different matter when we're talking about cash.

The whole thing stinks to high heaven. Jimmy said the strategy has been making money for some time but they lost the $2B literally in the last two weeks. Which makes me believe instead of hedging like they were supposed to, they were actually going the other way - I.e. they were speculating. This strategy worked great for the last year and a half as spreads tightened, but in the past two weeks not so much. Question is did they break any laws by speculating out of a "hedging" portfolio and more importantly, now that the whole world knows they need to go long protection, how much more do they lose to unwind their net long position.

I was amazed how inept these "analysts" we're on the call. No one actually asked the important questions.

I'm hoping this is huge and these banks get stomped.
I'm just skeptical. Seen this play too many times since 2008/9: OMG my hair's on fire the world is ending defcon 5 sell sell sell, followed by another rip your face off rally.
By the dip, mother****er.

You have to wonder about this. These guys have the top information in the world, the top analysts and probably inside information and they still screw up.

It sounds like they got snookered by another whale: Trader X "leaks" some inside information that is actually false to Trader Z who acts on it, while Trader X was actually betting against Trader Z.

Live by the sword, die by the sword.

There is sure a lot of talk about JPM profits here. You guys really believe they haven't been cooking the books? It takes a 10 story basement to hide all the **** they aren't telling us.

What you guys are missing is JPM is like AIG. They are the market on one side of something. These idiots blew a sizable amount of their capital liquidating it to buy stock. Banks should never be able to liquidate their capital in this fashion. I think Karl and I both said this was a top call, buying back their stock. The TBTF banks were buying their own stock hands over feet in 2006 and 2007. Bought at 60, then sold at 3.

What if the hedge reverses and stays reversed, meaning they did it totally backwards? JPM can't get off this ****. They are too big and London knows it. If I am long something and short something else and the long goes down and the short goes up, the whole mess goes up in smoke. Maybe Corzine was holding the bag for them?

What is $2 billion? Probably backing for $40 billion in cash. This position, whatever it is, also allowed many billion to continue to exist. The entire game is supported on phony money, not QE money, but derivative money. JPM is on $100 trillion from some reports. 10 BP is $100 billion. Can you spell bank run?

Zerohedge has a piece with some more detail on the JPM trade in question:

http://www.zerohedge.com/news/jpm-starin....

Nanna wrote..

If clients that are substantially cash equivalents start b'ching about underperformance YTD, that would make one take action or not depending on POV.

IOW incentives to play Dippy may still be in place...

Darles_chickens wrote..

This is NOT a nothingburger.

If it were a nothingburger, why call an unscheduled CYA type of meeting?

Jstanley wrote..

. . . why call an unscheduled CYA type of meeting?

If you know exactly what you will disclose at such a meeting, and if you know that the SEC will do nothing about insider trading, the opportunity to front-run the news is a guarantee of enormous profit.

I'm surprised this game isn't played more frequently by everyone.

Here's Max Keiser's program from yesterday, taped prior to the revelations at JPM:



Keiser's criticism of Jamie Dimon is relentless in the first segment. Nevertheless, the crux of the program is his interview with Chris Whalen. They cover a lot of ground, and Whalen nails Wells Fargo ("a poster child for accounting fraud") and MF Global.

Ha! I swear, Keiser and Herbert are a better straight-man/comic act than Abbot and Costello. And they're "real jounalists" too!

As we might expect, there's coverage at Jesse's Cafe Americain. "Sharkboy Hits Dock - JPM Takes 'Significant Loss' in Derivatives Book - 'Could Get Worse'":

http://jessescrossroadscafe.blogspot.com....

Simon Johnson's "JP Morgan Debacle Reveals Fatal Flaw In Federal Reserve Thinking":

http://baselinescenario.com/2012/05/11/j....

David Rohde's "The Lesson of JP Morgan's $2 Billion Loss: Break Up the Big Banks":

http://www.theatlantic.com/business/prin....

Peter Morici's "JPMorgan Mess: Bust Up the Big Banks":

http://www.thestreet.com/story/11531405/....