9 Biggest Banks’ Derivative Exposure – $228.72 Trillion.
And no, it is not perfectly hedged.
Full infograhics at Demonocracy.
Experienced Wall Street executives and traders concede, in private, that Bank of America is not well run and that Citigroup has long been a recipe for disaster. But they always insist that attempts to re-regulate Wall Street are misguided because risk-management has become more sophisticated – everyone, in this view, has become more like Jamie Dimon, head of JP Morgan Chase, with his legendary attention to detail and concern about quantifying the downside.
In the light of JP Morgan’s stunning losses on derivatives, announced yesterday but with the full scope of total potential losses still not yet clear (and not yet determined), Jamie Dimon and his company do not look like any kind of appealing role model. But the real losers in this turn of events are the Board of Governors of the Federal Reserve System and the New York Fed, whose approach to bank capital is now demonstrated to be deeply flawed.
Peter Tchir’s thoughts on the JPM news. Whatever happened or not, the whale has accumulated some rather big positions.
Well for once we don’t have to talk about Spain or Greece.
This is the end of synthetic CDO’s and may well be the end of CDS as an OTC product, but we have time to look at that later. There will be a lot of information and misinformation out there. For now, the key is what is this going to do for the markets. As best as I can tell, they were generally short High Yield risk. They were mostly short tranches, mostly in off the run, and had some curve trades on. Against that, they were generally long IG, mostly tranches, mostly IG9, and had some curve trades on. The positions, if we ever find out exactly what they were, are complex. At some level this disclosure has something to do with mark to model. Gp
The Gold bugs have been feeling the heat lately. Gold as a safe heaven trade seems rather dead. The big almost parabolic move has attracted many clueless investors, all waiting for Gold to print 2k, minimum. Well, it sure looked so, but with the 1600 level broken to the downside, many are sweating again. The Trader wrote about the big formation in the charts a few weeks ago. Gold is at cross roads here, let’s see if people start puking, or if we will get the last bounce up? Special thanks to one of our readers, Erik, for reminding us about this update.
Gold and Silver charts update below.
JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said the firm suffered a $2 billion trading loss after an “egregious” failure in a unit managing risks, jeopardizing Wall Street banks’ efforts to loosen a federal ban on bets with their own money.
Good luck closing those positions out, especially when all competitors know your positions. This is a big blow to all OTC dealing, and a huge boost to the Volcker rule. Expect the OTC business to slowly dry up going forward. Video below.