Did One Of Jamie Dimon's Closest Traders Betray Him And Cost The Firm Billions In Losses?
As we predicted some time ago, it would be only a matter of time before the story of how one failed prop desk trader, in this case Boaz Weinstein who blew up DB Prop only to be resurrected as the successful head of Saba Capital, took down the London whale Bruno Iksil. Sure enough over the weekend, the NYT penned a largely one-sided if entertaining read: "The Hunch, the Pounce and the Kill" which begins as follows 'It was last November, and Mr. Weinstein, a wunderkind of the New York hedge fund world, had spied something strange across the Atlantic. In an obscure corner of the financial markets, prices seemed out of whack. It didn’t make sense. Mr. Weinstein pounced." The trade of course was the IG 9 -10 year which we have dissected infinitely in the past two days. And while the NYT story makes for great copy, and has a great narrative it is missing one crucial feature, namely what happened in those two crucial months before Boaz was pitching the IG9 trade, and thus during which he was establishing the position (because only those "hedge fund managers" who appear on CNBC discuss their positions if they haven't already built up their max positions). What happened is the following: "Saba Capital Management LP... hired Toby Maitland Hudson from JPMorgan Chase & Co. as the firm’s assets reach $4.1 billion, according to people familiar with the hire. Maitland Hudson, who started at Saba in New York last month, ran JPMorgan’s proprietary trading of derivatives tied to commercial-mortgage bonds and will focus on relative value trades."European Currency Plunge Continues
EURUSD just broke below 1.2400 - back to July 2010 levelsEinhorn Eviscerates Buffet: "If You Wrap Up All $100 Bills In Circulation, It Would Form A Cube 74 Feet Per Side"
In Greenlight's latest letter we learn that "At quarter end, the largest disclosed long positions in the Partnerships were Apple, Arkema, General Motors, gold and Seagate Technology. The Partnerships had an average exposure of 98% long and 62% short." Also, we find a spirited defense of AAPL (if one which breaks no real new ground with the ever louder recent criticisms of the company), some thoughts on STX, a discussion on the Yen, some of the firm's profitable shorts, including DMND, GMCR, and JOE, but most delightful is this scathing attack on old crony capitalist, TBTF money bags himself...Investors Are Focusing On The Wrong Things
Admin at Marc Faber Blog - 8 minutes ago
As an observer of markets – whenever everyone focuses on one thing – like
Greece and Europe – maybe they miss issues that are far more important –
such as a meaningful slowdown in India and China. - *in CNBC *
*
*
*Related: SPDR S&P 500 Index ETF (SPY)*
*Marc Faber is an international investor known for his uncanny predictions
of the stock market and futures markets around the world.*
The Dealer's Feet Are Getting Fidgety In Three Card Monte Shill
Eric De Groot at Eric De Groot - 26 minutes ago
The invisible hand is extremely good dealer in the three-card monte con
called paper control. Shill (smart money) pretends to conspire with the
mark (retail money) to cheat the dealer (controllers), while in fact
conspiring with the dealer to cheat the mark. While the headlines paint a
dismal picture for Europe, thus, herding money into the dollar, the world's
only safe haven according to the...
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content, and more! ]]
Investment Philosophy: Persistence And Skepticism
Admin at Jim Rogers Blog - 31 minutes ago
Persistence and skepticism. Always assume that what you’re being told or
what you’re reading is incorrect or inaccurate, so take your time and
double check everything. Be very careful. - *in Bull Market Thinking*
*Jim Rogers is an author, financial commentator and successful
international investor. He has been frequently featured in Time, The New
York Times, Barron’s, Forbes, Fortune, The Wall Street Journal, The
Financial Times and is a regular guest on Bloomberg and CNBC.*
Rush into Treasuries Continues to Depress Rates
Trader Dan at Trader Dan's Market Views - 45 minutes ago
There is what feels like near-panic buying of US Treasuries at the moment,
due to the implosion that we are witnessing in much of the European
Sovereign Debt markets. Investors/traders are scared to death to own bonds
from these problem nations and are rushing into both US Treasuries and
German Bunds as safe havens.
The result has been to collapse US interest rates on the Ten Year firmly
below not only the 1.8% level, but also below the intra-month spike lows
near the 1.7% level. We have one more day left in the month of May but it
certainly appears we are on track to set a new mont... more »
Persistence Is Key To Build A Successful Career
Admin at Jim Rogers Blog - 2 hours ago
The thing that comes to mind is persistence, not ever giving up or
quitting. Many of my friends and peers didn’t seem to work as long or as
hard as I would. So I guess if there’s one word, it would be persistence,
or perseverance if anything else. Just keep doing it until you succeed. - *in
The Financial Survival Network*
*Jim Rogers is an author, financial commentator and successful
international investor. He has been frequently featured in Time, The New
York Times, Barron’s, Forbes, Fortune, The Wall Street Journal, The
Financial Times and is a regular guest on Bloomberg and CNBC.*
Consumer Sentiment in U.S. Climbs to Highest Since 2007
Eric De Groot at Eric De Groot - 3 hours ago
The US economy is all about spending and confidence to spend. Gold will likely remain under pressure until the current power up trend (PUT) established in 2011 fails to the downside (see chart). The break will be unexpected as consumer expectation have reached levels not seen since 2007. This surge will fuel gold's advance in 2012-2013. Chart: University of Michigan Consumer... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]
Spanish Bonds, Meet Satan
We expect Spanish scapegoating for today's latest bond debacle to focus on the devil in 5...4...3...Spot The Odd One Out
From
last Wednesday's ECB rumor that ramped stocks higher and financials
more than anything else, Goldman and JPMorgan have retraced it all and
the rest are reverting rapidly on the total refutation of any rumors.
There is one financial however that is still up 6%...Europe's Got 99 Problems And A Deposit Guarantee Scheme Is One
We
have explained in the recent past just why the rotation from a
professional European bond-run to a retail bank-run is critical to the
euro-zone banking system - with deposit losses creating even more
encumbered asset levels among European banks, which would then
exaggerate contagion problems as funding pressures mount. The problem is
existing deposit guarantee schemes are implemented at the
national level and are not currently funded to handle a systemic crisis
- this is why there has been so much chatter of a pan-Europe guarantee
scheme. However, not only does a euro-wide guarantee rely on credible
commitments from core European governments but it misses the redenomination risk
- as unlike the US FDIC, it would need to explicitly guarantee the
euro-value of deposits. Barclays shares our doubts on the
implementation (short- and long-term) of such a solution, noting that Eurozone deposits are greater than eurozone GDP (as opposed to US deposits at ~68% of US GDP). Between operational difficulties, the size of redenomination losses, moral hazard, and the massive (deposit/GDP) contingent liability dependent on actual exit of a member state,
we would urge any exuberance over 'talk' of a guarantee to be stymied
once again by the dismal reality of implementation and agreement.Spain Sees €31 Billion Deposit Outflow In April
Just when talks of Accelerated Kinetic Action In Close Proximity To Cash Dispensing MachinesTM
in Spain were quieting down, here comes Goldman to reminds us that
nothing is fixed. "The ECB released April deposit data today. Italian
deposits in April were stable, with a moderate increase in retail (+€7
bn) more than offsetting a small reduction in corporate deposits. In Spain, April saw €31 bn (or 1.9%) deposit outflow from banks. Within
this only half is attributable to corporate (down €7 bn or -3.4%) and
retail balances (down €8 bn, or -1.1%). The residual outflow is
attributable to deposit reductions by others (financial institutions /
pension funds / etc)."As Draghi Fiddles And Madrid Burns, China Buys
At this point it is no longer interesting to recap the ever-growing list of problems facing Spain - we all know the country needs billions and billions in aid to merely contain its implosion, let alone grow. And while as of as of minutes ago we just got another rumor of "Accelerated Kinetic Action In Close Proximity To Cash Dispensing Machines" which is the proper nomenclature, as the B-R word is not in good form these days it appears, the real news is that as the ECB fiddles, and Madrid burns guess who is buying? Why China of course.Cashin On Rumor Versus Reality
The avuncular Art Cashin opines on the roller-coaster of unreality
that has been the equity markets for the last few days as outcomes
become increasingly binary and investors increasingly herded from one
direction to another. His sage advice - as if spoken by the
most-interesting-person-in-the-world - "Stay nimble", my friends.Is The End Nigh: Rockefellers And Rothschilds Merge
You know its bad when... two of the largest and best-known 'familia' in Europe and the US come together. As the FT reports, The Rockefellers and The Rothschilds are uniting under a common group
as Rothschild Investment Trust and Rockefeller Financial Services
become one. The patriarchs (David Rockefeller 96, and Lord Rothschild
76) have been 'connected' for five decades. Between the
Rothschild's 'sprawling' multi-century banking empire across Europe
and the Rockefeller's roots in 1882 Oil-money, we can only imagine the
Illuminati, Freemasons, Templars, and Central Bankers of the world are
quaking in their boots at this new global force for change - The Rothsellers or is it The Rockchilds. What next? It seems only Soros is left to complete the holy trinity...10 Year Treasury Yield Breaks To New All-Time Low
10Y
Treasury yields just broke to new all-time record low yields
(marginally lower than the 9/23 1.6714% previous lows) and while the
'rates-can't-go-any-lower' crowd perhaps have not looked at JGBs
recently (as in the last decade) in price terms, 10Y Treasury Futures have gained 4.6% since 3/20 swing lows while the S&P 500 has lost 6.0%. On the bright side, at least the front-end isn't inverted yet...yet.Germany Shoots Down European Union "Envisagings" Of Bureaucrat Utopia
And to think it was not even 2 hours ago that a regurgitated and largely impotent news story hit the WSJ (following up on an identical Reuters story yesterday, as ZH noted), sending the EURUSD higher by 50 pips. As we said, expect Germany to come out with a prompt refutation in minutes. The minutes in question were 90. The official denial to Gollum's lie panderings has arrived courtesy of Market News: "Government spokesman Steffen Seibert said at a regular press conference here that the German rejection of the idea of any direct recapitalisation of banks by the ESM "is well known." Summary: B+ for effort, C for execution, C- for market reaction halflife, and F for content, as usual.National Acronym Day In Europe
So the EC wants the ECB to bypass the EFSF and use the ESM to recap EU
banks? That was the rumor that shifted global stock markets by 1% in a
matter of minutes? It has been awhile see we looked at the EFSF Flowchart or had a detailed look at the EFSF Guidelines but it looks like it is time to dig a bit deeper into what is possible and what is not. The ESM is not yet up and running.
There was talk that it would be done by June or July of this year, but
in typical EU fashion I don’t think much progress has been made
towards that promise. So right now the EU is stuck with EFSF and the
potential to set up the ESM. The market got carried away with the promise of LTRO as a sovereign debt savior,
instead it created a potential death spiral. Spanish and Italian bonds
are definitely getting crushed today, but with Spanish 10 years above
6.5% and Italian 10 year bonds nearing 6%, the potential for
intervention rises. The secondary market is affecting the primary market,
which is driving up the cost of funds, creating more pressure on the
budget deficits. The countries are painfully aware of that, as is the ECB. And Back To The Inferno
You know the something is really, really wrong when the best rapper is a white guy, the best golfer is a black guy, the tallest guy in the NBA is Chinese, the Swiss hold the America's Cup, the Pope is German, Europe's central banker is Italian, France is accusing the U.S. of arrogance and Germany doesn't want to go to war.Daily US Opening News And Market Re-Cap: May 30
Risk-averse sentiment dominated the session yet again as market participants continued to focus on Spain and speculated whether the country will soon be forced to seek some sort of monetary assistance. As a result, credit markets continued to deteriorate, with the EURUSD cross-currency basis-swaps under pressure, while the spread between Spanish and German benchmark bonds widened to a fresh Euro-era wide level. Less than impressive demand for the latest Italian debt issuance where 2017 was underbid by EUR 0.20, while the 2022 issue was underbid by EUR 0.30 also resulted in aggressive bond yield spread widening. However, as we head into the North American open, reports that the EU is willing to envisage direct ESM bank recapitalizations saw Bunds spike lower by around 33ticks and EUR/USD by 44pips to the upside. EU stocks made an impressive recovery, but remain in negative territory. Going forward, the second half of the session will see the release of latest housing data (pending home sales), as well as the weekly API report.ECB's Refusal To Play Ball Means Spain Has To Foot A €350 Billion Bailout Bill Alone
Moving away from baseless (or is that faceless?) European bailout rumors, and moving into cold hard math territory, we hear from JPM's David Mackie that "If a Spanish EU/IMF bailout package covered the government’s gross funding needs through the end of 2014, and included €75bn for bank recapitalisation, then it would amount to around €350bn." This may be a problem since as pointed out on Tuesday, the Spanish Fund for Orderly Bank Restructuring (FROB) is down to... €5.3 billion.European Commission Says It Is Willing To Envisage Direct ESM Bank Recapitalizations
Update: sure enough "EU says accommodative ECB has little scope for more stimulus"In a headline that is far less than meets the eye, we read the following:
- EU WILLING TO `ENVISAGE' DIRECT ESM BANK RECAPITALIZATIONS
- EURO ZONE SHOULD MOVE TOWARDS BANKING UNION
Overnight Sentiment: Now, It's Italy's Turn (As Spain Continues To Break All Records)
... Which is not to say that the other usual suspects are fine, they aren't: Spain's 10 year just hit a record 6.72%, a spike of nearly 30 bps on the day, and just shy of the apocalyptic 7.00%, at which point everyone will quietly move to the bomb shelter (and JPM is not helping things, saying the total Spanish bank bailout may hit €350 billion even as the Spanish bailout fund has just €4 billion left in it...), even as the 2 Year rises above 5% for the first time since December 2011 on some rapid curve inversion moves. No: today the market simply had one of those epiphanies where it sat in front of a map, and finally remembered that last year as part of the continental contagion spread that forced the November 30 coordinated global central bank intervention, Italy was at the forefront. Sure enough, 2011 is once again becoming 2012. Today's catalyst was an Italian sale of €5.73 billion in 5 and 10 year bonds, less than the maximum €6.25, where €3.391 billion of the 5 Year was sold at a 5.66% yield, compared to 4.86% on April 27, and the BTC of 1.35 vs 1.34. But the optical killer was the €2.341 billion in 10 Years which priced above 6% for the first time in a long while, coming at 6.03% compared to 5.84% in April, and a dropping BTC of 1.40 compared to 1.48 before. The result is a blow out in the entire Italian curve, with the 10 Year point widening by 28 bps, and sending Italian CDS wider by 21 bps to 543 bps. In other words: welcome to the party Italy. You have been missed.3 Years...2,284 posts... to help keep YOU informed...and only 7 Donations (Thank You Donors) Total raised $165.00...
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