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Colin Lokey  

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  • Repoed, Part 2: A Deeper Look At Banks' Source Of Dry Powder [View article]
    Right. And JPMorgan didn't use its excess deposits to fund the CIO's bets on IG9. I'm sorry, but the fact here is that you are arguing for a sequestration of depositor funds which just doesn't exist. Dollars are dollars. In ZeroHegde's words:

    "...as was the case with JP Morgan, and any other bank which realizes that when it comes to fungible cash, money is just 1s and 0s in a server somewhere."

    Please explain to readers the following QUOTE from JPMorgan's 10Q last summer:

    "Investment requirements for Treasury and CIO are driven by excess liabilities."

    You realize that what that means is: CIO's mandate is determined by how much we have in excess deposits. CIO was the internal hedge fund that Bruno Iksil worked for.

    As much as we would like to believe this isn't going on with our deposits, it is.
    Jan 16, 2013. 04:36 PM | 3 Likes Like |Link to Comment
  • Repoed, Part 2: A Deeper Look At Banks' Source Of Dry Powder [View article]
    Hey Evan, thanks for following my articles. I appreciate your support very much.
    Jan 16, 2013. 02:13 PM | Likes Like |Link to Comment
  • Repoed, Part 2: A Deeper Look At Banks' Source Of Dry Powder [View article]
    Great comment. Thanks very much.
    Jan 16, 2013. 12:46 PM | Likes Like |Link to Comment
  • Repoed, Part 2: A Deeper Look At Banks' Source Of Dry Powder [View article]
    I think people are appalled at the idea that things could be going on that aren't technically supposed to be going on. This shouldn't surprise you. It was only four years ago that America's retirees were blindsided by the leverage-fueled collapse of the entire system. Now people want to assert that banks with market making lines couldn't possibly be holding any equities for their own benefit... really?!
    Jan 16, 2013. 12:13 PM | 5 Likes Like |Link to Comment
  • Repoed, Part 2: A Deeper Look At Banks' Source Of Dry Powder [View article]
    "If you read the Volcker Rule enforcement by Federal Reserve they are only allowed to do any derivative bets on US Treasuries."

    Care to explain to anyone how JPMorgan's CIO office circumvented this? Oh that's right, it was a "long-term hedge," not a $150 billion notional curve trade on an off-the-run CDS index. Ha.

    "But Colin's assertion that they are buying equities with that cash is absurd."

    I suggest you talk with some prop traders to find out how "absurd" it is.
    Jan 16, 2013. 12:10 PM | 3 Likes Like |Link to Comment
  • Repoed, Part 2: A Deeper Look At Banks' Source Of Dry Powder [View article]
    Good comment George.
    Jan 16, 2013. 11:06 AM | 1 Like Like |Link to Comment
  • Repoed, Part 2: A Deeper Look At Banks' Source Of Dry Powder [View article]
    Charlie, I think you should reevaluate your stance that banks' increased holdings of Treasuries has nothing to do with the Fed's Treasury purchases. It has a lot to do with it. It's part of Financial Repression. Banks are a captive audience by virtue of regulatory requirements. The government needs to spend money and its needs to do it cheaply. The Fed keeps government borrowing costs low by buying deficits of the past (Treasury bonds already on primary dealers' books) and the primary dealers ensure that there are bids for the new debt. This is a win-win for banks and the government. Think about the benefits of being able to buy an instrument (Treasuries) that is guaranteed to rise in value by virtue of a $45 billion purchase by the Fed each month. It's the perfect front-running opportunity. None of this is coincidence or conspiracy theories. All of this is a concerted effort and much of it is right out of a textbook.
    Jan 16, 2013. 11:05 AM | 7 Likes Like |Link to Comment
  • Repoed, Part 2: A Deeper Look At Banks' Source Of Dry Powder [View article]
    I haven't dropped the claim that this has anything to do with QE? It has almost everything to do with QE.
    Jan 16, 2013. 10:56 AM | 5 Likes Like |Link to Comment
  • No Hokum: No Stock Investments With Excess Reserves [View article]
    Additionally, you might try running your piece by former prop traders instead of lawyers. The lawyers aren't the ones doing the trading and as such they really wouldn't have any idea what actually goes on. I wouldn't, for instance, ask a derivatives trader what my chances of beating an insider trading charge were. Lawyers know what is supposed to be going on, but you might get a different answer from those who work in the trenches. But I wouldn't know anyone like that. wink wink
    Jan 15, 2013. 10:48 PM | Likes Like |Link to Comment
  • No Hokum: No Stock Investments With Excess Reserves [View article]
    "I only said it could be done directly, without any flimflam."

    But why would you do it that way when you can send it through the repo market and come back with the same cash plus a balance sheet full of Treasuries. I think you are missing the main advantage of repo funding: you get to keep the Treasuries on the balance sheet plus you get to spend the money.
    Jan 15, 2013. 10:38 PM | 1 Like Like |Link to Comment
  • No Hokum: No Stock Investments With Excess Reserves [View article]
    In regards to carrying it further: I am writing another piece as we speak.
    Jan 15, 2013. 08:07 PM | Likes Like |Link to Comment
  • No Hokum: No Stock Investments With Excess Reserves [View article]
    Also, using the term "hokum" to describe my article reflects a lack of respect for the work of others and is generally unprofessional.
    Jan 15, 2013. 05:36 PM | 1 Like Like |Link to Comment
  • No Hokum: No Stock Investments With Excess Reserves [View article]
    This article paints a very limited picture of what is going on and contradicts itself at nearly every turn. For instance:

    "One dollar of assets is like another dollar of assets. They are fungible."

    This being the case, it would be, in my opinion, rather strange to say that the $50+ billion in deposits Goldman Sachs has, aren't in any way related to the firm's "MSI" or, "Multi-Strategy Investments" unit which, to quote Bloomberg, "wagers about $1 billion of the New York-based firm’s own funds on the stocks and bonds of companies." I'm sorry, but if you know anything about prop trading and the Volker Rule, this article comes across as very, very naive.

    If there is anyone that works at a prop trading desk for a major bank reading this, I can assure you they are shaking their head right now.

    I sincerely mean no offense by this comment at all, I'm just telling it like it is.
    Jan 15, 2013. 04:31 PM | Likes Like |Link to Comment
  • Repoed! How The Fed And Depositors Fund Banks' Big Bets [View article]
    The same figure is in L2.13 under "U.S.-Chartered Depository Institutions."
    Jan 15, 2013. 11:39 AM | 1 Like Like |Link to Comment
  • Repoed! How The Fed And Depositors Fund Banks' Big Bets [View article]
    You need to look at L.110 "U.S.-Chartered Depository Institutions, Excluding Credit Unions." Banks' holdings of corporate equities are at their highest level since 2007 and their holdings of Treasuries and agencies... well... I guess you know what that looks like.
    Jan 15, 2013. 11:37 AM | 1 Like Like |Link to Comment
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