New York Times, 5/10/2012, "JPMorgan Discloses $2 Billion in Trading Losses", By JESSICA SILVER-GREENBERG and PETER EAVIS
如果最後真的只有 $2 billion 的話，JPMorgan 不會倒， 甚至還有可能收復部份的損失，在年底之前雖然獲利無法達成目標，也不至於會賠到 $2 billion 這麼多。
這個事件的影響主要是 Volcker Rule，還有兩個月不到要上路的管制措施。JPMorgan 的 Jamie Dimon 一向不怕說出自己的看法，對於新的管制措施他一直站在反對的立場。如果本來還期望能有一線轉機，管制不要來的那麼快那麼兇猛的話，現在可以放棄希望了。JPMorgan 是金融風暴中幾乎唯一一家屹立不倒，甚至不太需要政府援助的銀行。2008 金融風暴以後， JPMorgan Chase 也成為美國最大的銀行。這個事件一出來，剛好證明沒有銀行可以不需要管制。
另外一部份是要看出事的英國交易部門到底持有些什麼部位。在相同或類似資產持相同方向部位的要小心了。出這麼大件事又已經被報導出來，JPMorgan 會試圖把這些部位 rewind 掉是合理的想法。市場如果沒有辦法提供足夠的流動性，接下來損失只會更慘重。還是回到 Volcker Rule 這邊，JPMorgan 也需要 rewind 這些部位才能符合 Volcker Rule 的要求。市場接下來還是會有相當可觀的波動。
"Iksil may have amassed a $100 billion position in contracts on Series 9 of the Markit CDX North America Investment Grade Index, counterparts at hedge funds and rival banks said in April."
I honestly don't know anything about this particular index.
Bruno Iksil, a French JPMorgan trader based in London, was the subject of the Bloomberg coverage below back in April.
I don't all the details, but it seems an index on CDS after a quick Google search.
2% of $100 billion doesn't seem much. There are two settlement dates each year for the products of Markit, which are March and September. I assume JPMorgan will try to unwind its position this summer.
I still don't know the details of the direction of their bets, but it won't surprise me if their losses turn out to be much higher than $2 bn.
I have been trying to think through all the future repercussions of this news the last couple of days. No tangible conclusions, just more questions:
- There is never just one cockroach. Chances of it being an isolated incident is low.
- The loses, so far, are mainly booked to market. Will other banks/HFs attack JPM and force it to liquidate its book?
- I doubt that JPM is the only bank using this strategy to generate incremental return on excess capital. Will there be a rush to the door by the weaker banks using the same strategy?
- What will the regulators/government do? This is an election year after all.
- Jamie, on the conference call, stated that JPM will ride out the storm, instead of taking the hit now. Is he throwing good money after bad?
As I mentioned, more questions than answers:(( It is a good thing that I am going on a long-overdue vacation, which will give me plenty of time to think things over.
Any thoughts and insights on this issue are highly appreciated.
1. It's usually the case that an incident like this is only the tip of the iceberg, but we can argue differently this time. As earlier reports suggested that this trader actually "moved the market", which implies that he just took a big position in an otherwise thin-trading market. We need more information about this.
2. I doubt there will be many banks/HFs lining up against JPMorgan. If you are running for your life, you don't care if it's JPMorgan or GS in your way, you just push them aside. Taking advantage of the biggest bank in the U.S. is another matter. Unless you can sink this ship, you have to think long term. There will be some people jumping the gun, but I believe the majority will think twice before making a killing. JPMorgan becomes the biggest bank in the U.S. for a reason. If it shows vulnerability now, that's another story. Look at how fast Citi falls, JPMorgan has to steer away from that path.
3. Like point 1, we still can hope that this is an exception, not a norm in the banking industry. The truth is I don't really know.
4. Volcker rules and a point to Barack Obama.
5. Jamie Dimon seems too smart to do such a foolish thing. He's bold in action sometimes (and in talking always), but he's also very careful and he knows what he's doing better than most CEOs in the industry. I don't have enough information to guess what he will do, but I hope he cuts the losses right here right now. Then again, we don't fully understand the position they are taking, so you have to keep thinking this on your vacation.:p
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