by Maureen Farrell, Money.CNN.com:
One thing seems clear about JPMorgan Chase’s $2 billion loss. It’s no longer $2 billion. It’s likely much higher.
The number being bandied about now is closer to a range of $6 billion to $7 billion, according to several people working on trading desks that specialize in the derivatives JPMorgan Chase used to make its trades and from two sources with knowledge of the bank’s positions.
JPMorgan Chase declined to comment on its trading activities.
Read More @ Money.CNN.com
Something
different today. A dip was bought and kept a little momentum - aided
and abetted by some late-afternoon desperation EUR buying
correlation-help which dragged the Dow back over the magical 12,500
level. Stocks and high-yield credit bounced nicely
today - with the latter dragging the former higher from what we could
tell (on the back of reversion to fair-value in the ETF and credit
market) - as the rest of risk-assets were generally stable. AAPL
rotation (making yet another one of its 9-plus % drops-and-pops) helped
drag NASDAQ up while FB dragged the entire social media segment down.
Financials, while up as a sector, were ugly in the majors with JPM joining Citi and MS in the red YTD
now and BAC back to 4 month lows. Gold was unch and silver down as Oil
and Copper jumped (with the former testing $93 at the close).
Treasuries were practically unchanged from Friday's close but the
long-end rallied the most from its opening levels last night and the 2s10s30s curve was a significant risk-on driver. Stocks were on their own though when we look at Treasuries, the USD, and gold as it appears the credit compression arbs were enough to pull stocks up and AUD and EUR strength
into the close was interestingly aggressive - short-squeeze or does
someone know something? Heavy and large size volume into the close
suggests it was another ramp to provide exits - and credit indices needed to shed some 'cheapness'
- though we remember that Europe is due to open in 10 hours. VIX
tumbled over 3 vols but remains above 22% with the term-structure fo vol
still steep.
One thing seems clear about JPMorgan Chase’s $2 billion loss. It’s no longer $2 billion. It’s likely much higher.The number being bandied about now is closer to a range of $6 billion to $7 billion, according to several people working on trading desks that specialize in the derivatives JPMorgan Chase used to make its trades and from two sources with knowledge of the bank’s positions.
JPMorgan Chase declined to comment on its trading activities.
Read More @ Money.CNN.com
Stocks Bounced As Financials, Socials Trounced
Something
different today. A dip was bought and kept a little momentum - aided
and abetted by some late-afternoon desperation EUR buying
correlation-help which dragged the Dow back over the magical 12,500
level. Stocks and high-yield credit bounced nicely
today - with the latter dragging the former higher from what we could
tell (on the back of reversion to fair-value in the ETF and credit
market) - as the rest of risk-assets were generally stable. AAPL
rotation (making yet another one of its 9-plus % drops-and-pops) helped
drag NASDAQ up while FB dragged the entire social media segment down.
Financials, while up as a sector, were ugly in the majors with JPM joining Citi and MS in the red YTD
now and BAC back to 4 month lows. Gold was unch and silver down as Oil
and Copper jumped (with the former testing $93 at the close).
Treasuries were practically unchanged from Friday's close but the
long-end rallied the most from its opening levels last night and the 2s10s30s curve was a significant risk-on driver. Stocks were on their own though when we look at Treasuries, the USD, and gold as it appears the credit compression arbs were enough to pull stocks up and AUD and EUR strength
into the close was interestingly aggressive - short-squeeze or does
someone know something? Heavy and large size volume into the close
suggests it was another ramp to provide exits - and credit indices needed to shed some 'cheapness'
- though we remember that Europe is due to open in 10 hours. VIX
tumbled over 3 vols but remains above 22% with the term-structure fo vol
still steep. China flips the Finger to Wall Street
Trader Dan at Trader Dan's Market Views - 15 minutes ago
The following article appeared today on Reuters which is well worth your
read. In a move that illustrates the growing clout of China, approval was
granted by the US Government for it to bid DIRECTLY through the auction
system of the US Treasury, completely bypassing the PRIMARY DEALER BANKS.
My guess is that the Chinese were sick and tired of being front-run by
these unscrupulous banks and issued a stern but quiet demand to either
allow them to go this route, OR ELSE!
This further underscores the fact of the growing economic clout of China
and just how utterly dependent our nation h... more »
The
Treasury, apparently dissatisfied with the speed of indirect bank
and/or Fed-inspired monetization of its exponentially rising debt-load
at ever-cheaper costs of funds, decided in June 2011 to allow the
Chinese, with their equally large bucket of USDs to bid directly for US
Treasuries. As Reuters reports, China can now bypass Wall Street when buying U.S. government debt and go straight to the U.S. Treasury, in what is the Treasury's first-ever direct relationship with a foreign government.
The documents, viewed by Reuters, indicate that the US Treasury has
given the PBOC a direct computer link to its auction system - which was
first used in the 2Y auction of June 2011. Perhaps this helps explain
the massive spikes in direct bidders July and August 10Y auctions
(around the US downgrade). Interestingly, Primary dealers are not
allowed to charge customers money to bid on their behalf at Treasury
auctions, so China isn't saving money by cutting out commission fees;
instead, China is preserving the value of specific information about its bidding habits.
By bidding directly, China prevents Wall Street banks from trying to
exploit its huge presence in a given auction by driving up the price.
This, after the 2009 discovery (and relaxing of other reporting
requirements to cover this) that China was using special deals to hide
its bond purchases, seems like more pandering to the
large-holder-of-Treasuries as "direct bidder status may be controversial
because some government officials are concerned that China has gained
too much leverage".
Frequent
readers know that Citi's Matt King is our favorite analyst from the
bailed out firm. Which is why we read his latest just released piece
with great interest. And unfortunately for our European readers, if
King is right, things in Europe are going to get far worse, before they
get better, if at all. Because while one may speculate about political
jawboning, the intricacies of summit backstabbing, and other generic
nonsense, the one most important topic as discussed lately, is that
terminal event that any financial system suffers just before it
implodes or is bailed out: full scale bank runs. It is here where King's
observations, himself a member of a TBTF bank which would likely be
dragged down in any cash outflow avalanche, are most disturbing: "In
Greece, Ireland, and Portugal, foreign deposits have fallen by an
average of 52%, and foreign government bond holdings by an average of
33%, from their peaks. The same move in Spain and Italy, taking into
account the fall that has taken place already, would imply a
further €215bn and €214bn in capital flight respectively, skewed towards
deposits in the case of Spain and towards government bonds in the case
of Italy....Economic deterioration, ratings downgrades and
especially a Greek exit would almost certainly significantly accelerate
the timescale and increase the amounts of these outflows." That's
right: according to Citi there is a distinct likelihood that, all else
equal, the domestic bank sector in Spain will see another €215 billion
in deposit outflows.
China Can Now Monetize US Debt Directly
The
Treasury, apparently dissatisfied with the speed of indirect bank
and/or Fed-inspired monetization of its exponentially rising debt-load
at ever-cheaper costs of funds, decided in June 2011 to allow the
Chinese, with their equally large bucket of USDs to bid directly for US
Treasuries. As Reuters reports, China can now bypass Wall Street when buying U.S. government debt and go straight to the U.S. Treasury, in what is the Treasury's first-ever direct relationship with a foreign government.
The documents, viewed by Reuters, indicate that the US Treasury has
given the PBOC a direct computer link to its auction system - which was
first used in the 2Y auction of June 2011. Perhaps this helps explain
the massive spikes in direct bidders July and August 10Y auctions
(around the US downgrade). Interestingly, Primary dealers are not
allowed to charge customers money to bid on their behalf at Treasury
auctions, so China isn't saving money by cutting out commission fees;
instead, China is preserving the value of specific information about its bidding habits.
By bidding directly, China prevents Wall Street banks from trying to
exploit its huge presence in a given auction by driving up the price.
This, after the 2009 discovery (and relaxing of other reporting
requirements to cover this) that China was using special deals to hide
its bond purchases, seems like more pandering to the
large-holder-of-Treasuries as "direct bidder status may be controversial
because some government officials are concerned that China has gained
too much leverage".The Elephant In The Room: European Capital (Out)flows And Another €215 Billion In Spanish Deposit Flight
Frequent
readers know that Citi's Matt King is our favorite analyst from the
bailed out firm. Which is why we read his latest just released piece
with great interest. And unfortunately for our European readers, if
King is right, things in Europe are going to get far worse, before they
get better, if at all. Because while one may speculate about political
jawboning, the intricacies of summit backstabbing, and other generic
nonsense, the one most important topic as discussed lately, is that
terminal event that any financial system suffers just before it
implodes or is bailed out: full scale bank runs. It is here where King's
observations, himself a member of a TBTF bank which would likely be
dragged down in any cash outflow avalanche, are most disturbing: "In
Greece, Ireland, and Portugal, foreign deposits have fallen by an
average of 52%, and foreign government bond holdings by an average of
33%, from their peaks. The same move in Spain and Italy, taking into
account the fall that has taken place already, would imply a
further €215bn and €214bn in capital flight respectively, skewed towards
deposits in the case of Spain and towards government bonds in the case
of Italy....Economic deterioration, ratings downgrades and
especially a Greek exit would almost certainly significantly accelerate
the timescale and increase the amounts of these outflows." That's
right: according to Citi there is a distinct likelihood that, all else
equal, the domestic bank sector in Spain will see another €215 billion
in deposit outflows. Poverty Increasing Among Retirees
Eric De Groot at Eric De Groot - 35 minutes ago
A consequence of QE to infinity is increasing poverty rates for anyone
without rising inflation-adjusted incomes. Retirees dependent on fixed
incomes and government subsidies to maintain current standard of livings
are particularly vulnerable. Headline: Poverty Increasing Among Retirees
Growing numbers of older Americans are spending their retirement years in
poverty, according to a...
[[ This is a content summary only. Visit my website for full links, other
content, and more! ]]
The standard Keynesian narrative that "Households
and countries are not spending because they can’t borrow the funds to
do so, and the best way to revive growth, the argument goes, is to find
ways to get the money flowing again." is not working. In fact, former IMF Director Raghuram Rajan points out, today’s economic troubles are not simply the result of inadequate demand but the result, equally, of a distorted supply side
as technology and foreign competition means that "advanced economies
were losing their ability to grow by making useful things." Detailing
his view of the mistakes of the Keynesian dream, Rajan notes "The growth that these countries engineered, with its dependence on borrowing, proved unsustainable.", and
critically his conclusion that the industrial countries have a choice.
They can act as if all is well except that their consumers are in a
funk and so what John Maynard Keynes called “animal spirits” must be
revived through stimulus measures. Or they can treat the crisis as a wake-up call and
move to fix all that has been papered over in the last few decades and
thus put themselves in a better position to take advantage of coming
opportunities.
The Keynesian Emperor, Undressed
The standard Keynesian narrative that "Households
and countries are not spending because they can’t borrow the funds to
do so, and the best way to revive growth, the argument goes, is to find
ways to get the money flowing again." is not working. In fact, former IMF Director Raghuram Rajan points out, today’s economic troubles are not simply the result of inadequate demand but the result, equally, of a distorted supply side
as technology and foreign competition means that "advanced economies
were losing their ability to grow by making useful things." Detailing
his view of the mistakes of the Keynesian dream, Rajan notes "The growth that these countries engineered, with its dependence on borrowing, proved unsustainable.", and
critically his conclusion that the industrial countries have a choice.
They can act as if all is well except that their consumers are in a
funk and so what John Maynard Keynes called “animal spirits” must be
revived through stimulus measures. Or they can treat the crisis as a wake-up call and
move to fix all that has been papered over in the last few decades and
thus put themselves in a better position to take advantage of coming
opportunities. SP 500 and NDX Futures Daily Charts - The Wages of Greed
How Can You Have Any Pudding If You Don’t Eat Your Meat?
I had the privilege of seeing Roger Waters perform ‘The Wall’ to a
live crowd of over 40,000 fans at the LA Coliseum on Saturday night–
the second time I’ve seen the show on this tour. It was an amazing
production– I wholeheartedly recommend the experience as it’s something
that no DVD or album recording could possibly reproduce. At one
point, Waters paused his set and began telling the audience about Jean
Charles de Menezes, a 27-year old Brazilian national who was shot
*8-times* by British police several years ago at a south London tube
station after being mistakenly identified as a terrorist. The police,
adhering to the ‘shoot first, ask questions later’ model of peace
enforcement, have never been held accountable for taking the life of
an innocent man at point blank range. “If we stand at the top of the
slope and give our governments, and particularly our police, too much
power, it’s a very long and dangerous slippery slope to the bottom,”
Waters said. The crowd went berserk, roaring with approval.
by Ron Paul, Paul.house.gov:
The bad news from last week’s passage of the 2013 National Defense
Authorization Act is that Americans can still be arrested on US soil and
detained indefinitely without trial. Some of my colleagues would like
us to believe that they fixed last year’s infamous Sections 1021 and
1022 of the NDAA, which codified into law the unconstitutional notion
that some Americans are not subject to the protections of the
Constitution.However, nothing in this year’s bill or amendments to the bill restored those constitutional rights.
Supporters of the one amendment that passed on this matter were hoping no one would notice that it did absolutely nothing. The amendment essentially stated that those entitled to habeas corpus protections are hereby granted habeas corpus protections. Thanks for nothing!
As Steve Vladeck, of American University’s law school, wrote of this amendment:
“[T]he Gohmert Amendment does nothing whatsoever to address the central objections…. [I]t merely provides by statute a remedy that is already available to individuals detained within the United States; and says nothing about the circumstances in which individuals might actually be subject to military detention when arrested within the territory of United States…. Anyone within the United States who was subject to military detention before the FY2013 NDAA would be subject to it afterwards, as well…”
Read More @ Paul.house.gov
I decided to test this hypothesis, because if correct, it has investment implications, starting with the fact that at some point you run out of sellers; and if and when buyers return, the ensuing rise could be spectacular.
I also wanted to compare volume now to the waterfall decline in 2008.
Read More @ CaseyResearch.com
by Bill Murphy of GATA, via Gold Seek:
The reason for this rare, extra commentary over a weekend is to focus
on a couple of points which really stand out in their particular
significance and are worth pondering in terms of what is coming down the
road for financial markets.
The first is what we jumped all over on PLANET GATA from the get-go about the JP Morgan hedge trade flap gone wrong. It made NO sense from the very beginning to any of us that such a commotion was made over a $2 billion loss on a trade, for whatever reason, when they had just reported yearly gains of $18 billion. Clearly, Mr. Dimon’s public pronouncement, that caught the attention of the entire investment world, was only paving the way for future announcements that will be much more dramatic.
Read More @ GoldSeek.com
The reason for this rare, extra commentary over a weekend is to focus
on a couple of points which really stand out in their particular
significance and are worth pondering in terms of what is coming down the
road for financial markets.The first is what we jumped all over on PLANET GATA from the get-go about the JP Morgan hedge trade flap gone wrong. It made NO sense from the very beginning to any of us that such a commotion was made over a $2 billion loss on a trade, for whatever reason, when they had just reported yearly gains of $18 billion. Clearly, Mr. Dimon’s public pronouncement, that caught the attention of the entire investment world, was only paving the way for future announcements that will be much more dramatic.
Read More @ GoldSeek.com
The Facebook Belly Flop + Is JP Morgan Technically Insolvent?
Dave in Denver at The Golden Truth - 1 hour ago
*JP Morgan will ultimately hit the wall on its enormous derivatives book
and become technically insolvent. But because JPM is the primary bank
doing the Fed's manipulative bidding, the Fed will monetize it behind the
scenes because otherwise JPM's catastrophic, fraudulent predicament will
bring down the entire system.*
That is pretty much a verbatim accounting of a discussion regarding JPM's
off-balance-sheet, hidden-from-sight-debt and derivatives exposure between
myself and a long-time colleague back in 2002, before 99% of those who now
understand what is going on had any clue... more »
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