JPMorgan’s trading loss is said to rise at least 50% to surpass $2 billion

May 16, 2012 by · Leave a Comment
Filed under: Credit News 

I didn’t want to jump all over this story because it seemed to be really hyped up.   First I saw headlines that were talking about “a fresh look at banking regulations because of loss”, like we didn’t need to strengthen them after the 2007-08 crisis.  As if  we all just forget about the trillions of dollars that were sucked out of the market, declining housing prices and major government support to almost any companies that could call themselves a “financial institution”.

I hope our attention span is longer than that.

Now I am reading on CNBC that the $2 billion was just an initial estimate and these positions are not “unwound” and could still materially affect the bottom-line of JP Morgan.   At the same time I am hearing of a possible default and exit of Greece in Europe.  From what I have read, it looks like these bets are connected to Europe and if they are taking a bath like this, it would be safe to assume they have some exposure to this developing situation.   Many experts were stating on the record that the European debt crisis was not over and that all the stop-gap measures the ECB was implementing were not permanent fixes.   Could this be the straw that breaks the camels back and starts unforeseen events down the road?

The Federal Reserve did meet today and it seemed to be warming to the possibility of more stimulus to support our “recovery”.  Emphasis was added because it still feels like we are still in the same muck as before with gas and food prices becoming more elevated.   Gold prices have been soft as of late but it is May so we will need to sit back and see what transpires.

CNBC – The trading losses suffered by JPMorgan Chase have surged in recent days, surpassing the bank’s initial $2 billion estimate by at least $1 billion, according to people with knowledge of the losses.  When Jamie Dimon, JPMorgan’s chief executive, announced the losses last Thursday, he indicated they could double within the next few quarters. But that process has been compressed into four trading days as hedge funds and other investors take advantage of JPMorgan’s distress, fueling faster deterioration in the underlying credit market positions held by the bank.

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Behind Market Selloff: Fed ‘Taking Punch Bowl Away’

April 4, 2012 by · Leave a Comment
Filed under: Stock Market News 

You have to appreciate the honesty in headlines like this.   It highlights that this current rally or recovery in the markets are in most part due, to the massive stimulus our central bank as provided through bond purchases and historically low interest rates.

Correspondingly, it makes sense that without that assistance that markets prices would drop lower with the potential reality of that not being available.  I believe without the unprecedented support the Federal Reserve and U.S. Treasury has provided, we will resume natural deflation to bring asset prices across multiple classes back to a level that can be sustainable with the available credit & money to support them.   This will be look down upon from most mainstream economist and commentators but in the end it will be the most sustainable path forward and as such, it should be looked to as positive development.

CNBC – Stocks were headed for their worst day in a month Wednesday after the Federal Reserve signaled that it may be less willing to provide more stimulus to the U.S. economy.

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