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JPMorgan's (JPM) trading loss could reach $9B, say people briefed on the situation, with red ink...

JPMorgan's (JPM) trading loss could reach $9B, say people briefed on the situation, with red ink piling up as JPM moves faster than expected to exit its money-losing positions. Jamie Dimon was way off when he warned in May that the initial $2B loss could double in coming quarters. JPM will disclose more details in its July 13 earnings report.
Comments (28)
  • Pinocchio1
    , contributor
    Comments (206) | Send Message
     
    He looked so smooooothe in front of congress
    Soooo smart

     

    All cons are, aren't they
    28 Jun 2012, 04:38 AM Reply Like
  • shakazoid
    , contributor
    Comments (148) | Send Message
     
    Thought they said these banks were "too big to fail oops, sorry FALL" . The bigger they are, the harder and lower they fall. Looks like someone gambled away Jamie Dimon's diamond treasure @ the casino .
    28 Jun 2012, 04:47 AM Reply Like
  • WMARKW
    , contributor
    Comments (10275) | Send Message
     
    Hey, where in the world is Jon Corzine. I wonder if they were betting on the same bets. Dang those derivatives.....

     

    Frankly, I hope they crucify JPM.

     

    Now, let's find out who was on the winning side of the transactions
    ????
    28 Jun 2012, 05:06 AM Reply Like
  • WMARKW
    , contributor
    Comments (10275) | Send Message
     
    Hmmmmmm, just thinking....there's no way Corzine or Dimon could construct something like this to.....ahhh personally benefit from the other side of the transaction...is there?
    28 Jun 2012, 05:20 AM Reply Like
  • Articuno
    , contributor
    Comments (99) | Send Message
     
    The thing that Dimon had was respect...now we all know that it was indeserved
    29 Jun 2012, 01:58 AM Reply Like
  • Articuno
    , contributor
    Comments (99) | Send Message
     
    "Frankly, I hope they crucify JPM"

     

    I agree, after all that has happened to our nation, the economy, all the lost jobs, the cuts in pay, IRAs getting smashed, the lost years, global recession...and JPM and Dimon show that they have learned nothing...still willing to make enormous bets where if they lose, the rest of society pays...
    29 Jun 2012, 01:58 AM Reply Like
  • bbro
    , contributor
    Comments (9447) | Send Message
     
    "Some expect that the red ink will not exceed $6 billion to $7 billion."

     

    Why go with that headline when can you print the 9 billion figure....

     

    Page 113 1st qtr 10q....6.5 billion in profits in mortgage backed securities....1.5 billion in profits in municipal securites
    28 Jun 2012, 04:58 AM Reply Like
  • Pinocchio1
    , contributor
    Comments (206) | Send Message
     
    Take even your numbers and subtract the optimistic view on the losses and you are still left with a devastated P/E, if there are any profits left. I doubt it.
    Why try to defend someone who had just knowingly witheld information in a Congressional hearing. The law says - up to 10 years. And, rightfully so.
    Why are YOU choosing 1 opinion over another.
    The nature of falling knives is that it WILL be worst that the pessimistic numbers of that range.
    28 Jun 2012, 05:15 AM Reply Like
  • Jan Von Braun
    , contributor
    Comments (69) | Send Message
     
    This is earnings for ONE quarter. Future EPS is fine, the loss has already been priced in. It just affects trust in the bank, which is a separate but important issue.
    28 Jun 2012, 10:30 AM Reply Like
  • sr1977
    , contributor
    Comments (320) | Send Message
     
    “Essentially, JPMorgan has been operating a hedge fund with federal insured deposits within a bank,” said Mark Williams, a professor of finance at Boston University, who also served as a Federal Reserve bank examiner.
    28 Jun 2012, 05:45 AM Reply Like
  • Kaspar Arnault
    , contributor
    Comments (48) | Send Message
     
    JP Morgan has been hoodwinking the US government since the Civil War and probably before. Called the "Hall Carbine Affair," JPM bought at that time defective Carbine rifles from the government @ 3.50 each and later resold to the government as "new" rifles for $22 each. It takes a certain personality and ethos to do this, and apparently this core principle has survived intact over the decades at JPM. Bankers will be Bankers. Jamie Dimon could have managed (with his ability to manipulate a situation) to feign at least some faux-humility at those Congressional hearings. The hubris, I guess, just could not be fully contained. Read the "OCC's Quarterly Report On Bank Trading and Derivatives Activities" to get a feel for the overall derivative exposure in US banks and see why there is so much anxiety at the moment. They don't tell you this stuff on CNBC!
    28 Jun 2012, 07:00 AM Reply Like
  • WMARKW
    , contributor
    Comments (10275) | Send Message
     
    JP Morgan has been "running" the US government ......
    28 Jun 2012, 07:57 AM Reply Like
  • Tao Jaxx
    , contributor
    Comments (1274) | Send Message
     
    Funny, funny.
    Hate to play the Told'ya game but this is what I was saying on May 12th, as the thing was supposed to be $2Bn (my SA comment of the time):

     

    "the company says that it will "not do something stupid" (like selling its positions below intrinsic value)". That's the scariest part: I used to run a trading desk. That was the typical argument used by traders to plead in favor of keeping the crappy trade on the books and not unwind it. That's usually a recipe for disaster: the "intrinsic value" is in the eye of the beholder, it can be anything.
    These guys got caught with their pants down and try to talk themselves out of the mess. It will be interesting to find out the "intrinsic value" at which they sell their position. Good luck with that, JPM stockholders.
    28 Jun 2012, 08:56 AM Reply Like
  • Thomas Lott
    , contributor
    Comments (592) | Send Message
     
    JPM stock has lost over 30BB of market cap since early May over a 9BB loss. I think its fair to say its oversold at these levels. Not to mention the company has lost 41BB of market cap since the peak in April.
    28 Jun 2012, 09:04 AM Reply Like
  • ggggg
    , contributor
    Comments (22) | Send Message
     
    So what you're really saying is: "I can't believe I didn't sell my JPM earlier."
    28 Jun 2012, 09:39 AM Reply Like
  • pandapopolis
    , contributor
    Comment (1) | Send Message
     
    that's not what he's saying
    1 Jul 2012, 10:46 PM Reply Like
  • David R. (Canada)
    , contributor
    Comments (26) | Send Message
     
    What's happened to all of the silver shorts we heard about a few months ago?
    Can we still expect a huge manipulated drop in the price of silver?

     

    http://bit.ly/M8j4rk

     

    Or can we really stick it to them by buying physical silver and holding it?
    28 Jun 2012, 09:08 AM Reply Like
  • kmi
    , contributor
    Comments (3992) | Send Message
     
    Pretty obvious now that the folks saying '$2b is nothing to JPM's book' they were flat out wrong.

     

    Cause it isn't $2b, is it.
    28 Jun 2012, 09:20 AM Reply Like
  • TomasViewPoint
    , contributor
    Comments (4845) | Send Message
     
    We don't know much yet about these trades which means we are uhm......Speculating. Which is what everyone thinks is so bad. Ironic isn't it?

     

    JPM could take on $8 Billion of losses and that is only 2 quarters of income loss. Jamie is also known for writing off bad loans and other investments early and then bringing back gains on the books later. We don't know from this article if the losses are being offset by gains on the offsetting positions but why bother with balance when one has a chance to write about incendiary topics.

     

    Every bank has a lot of risk right now because rates are very low. When they go up all banks are going to have losses unless they find ways to offset those positions. And the smallest will likely have the biggest losses. Banking is not risk free at any size.
    28 Jun 2012, 09:27 AM Reply Like
  • kmi
    , contributor
    Comments (3992) | Send Message
     
    So now we shrug off $8b?

     

    What happens when its more? Or if JPM loses money in another part of its business? How about if the next loss conincides with another major market event?

     

    Amazing you are ok with this. Especially considering it's all being done with an implicit government guarantee and backstopped by the taxpayer.

     

    Let's encourage it, shall we?

     

    I'll tell you this. If I went home and told my wife I took some risky trades and lost half a year's income due to mismanaging them, and told her 'don't worry, I'll make it up later' that wouldn't fly very well.
    28 Jun 2012, 09:47 AM Reply Like
  • TomasViewPoint
    , contributor
    Comments (4845) | Send Message
     
    Stockholders are taking the loss. Since they are the owners then they should take the loss. JPM is well capitalized and has been taking losses every decade for some debacle in case anyone bothers to look.

     

    Everything else is hyperventilating. The real losses in the banking sector are going to come when rates rise and banks with no hedges get killed. Passive banking is not risk free. And there are banks right now that likely have greater losses than JPM on a % basis of capital. And hedging allows banks to take on loans they might otherwise walk away from if they only can take net long position. That helps drive the economy.
    28 Jun 2012, 10:12 AM Reply Like
  • kmi
    , contributor
    Comments (3992) | Send Message
     
    I'm not suggesting that banks - and their stockholders- should have neither profits nor losses, I'm suggesting that the combination of an implicit bank guarantee coupled with risky allocations of capital are problematic, in particular since the size of the positions it is taking leave no one to backstop them other than the government, and as a systemically important institution, the government cannot let them fail.
    28 Jun 2012, 11:18 AM Reply Like
  • Insurance Bull
    , contributor
    Comments (357) | Send Message
     
    I like to think about what other banks are in this same situation. I am very confident that most banks are likely in this same situation. Although until the losses are realized they don't have to disclose them. To be honest I say this is another big indication that the big banks are are staffed with terrible traders.
    28 Jun 2012, 11:33 AM Reply Like
  • TomasViewPoint
    , contributor
    Comments (4845) | Send Message
     
    kmi

     

    Every loan the bank makes has a risk profile and it changes as the economy changes, the industry changes and as government makes fiscal and monetary changes. The goal of the bank is to maximize returns with reasonable risks. Managing risk is not to just let the loan and deposits sit with no hedging but rather looking at various scenarios that need to be hedged. Overall net risk is key not any one position in isolation. The government has made that more challenging for quite a well by driving interest rates so low the yield curve is a mess and they have artificially compressed returns.

     

    To step back for a moment the risk is really system wide not just JPM. In fact JPM has more tools to deal with risk than do smaller banks. As we seen in the 2008 meltdown it was smaller banks that failed much more than large banks. If all banks could lose just 1/2 of a year's income from balance sheet exposure that would be the sign of an extremely healthy banking sector. People are just crazy about this because they cannot understand numbers in the billions. If I redo the numbers and say that a $2 million asset bank lost $4,000 does anyone care? That is the same ratio as JPM.

     

    The implicit guarantee is not felt by shareholders and they own the company. That is only for deposits. Banks don't own the deposits those are liabilities. The government has shut down a lot of banks in the past 4 years and transferred the deposits. Bad investments go against shareholders and owners equity and then the government looks to sell the rest or recapitalize it and make it an ongoing concern and recoup their investment.

     

    Biggest losses we have thus far on the taxpayer dime is Fannie and Freddie but that gets no press. Hard to figure.
    28 Jun 2012, 11:55 AM Reply Like
  • Greenspanblows
    , contributor
    Comments (148) | Send Message
     
    I am sure Dimon will slither his way through this one as well. He should be crowned the "teflon" CEO. When are these guys going to be held accountable? JPM will donate a few million to the Romney campaign and this will all be forgotten in a few months....until the next time.

     

    Of course Romney will have to repay JPM by not going through with any type of meaningful regulation.
    28 Jun 2012, 09:32 AM Reply Like
  • TangoOscar
    , contributor
    Comments (377) | Send Message
     
    9 Billion is a lot and seems ridiculous to us however, JPM has TRILLIONS in derivatives exposure. The potential is definitely there for these huge banks to have losses that go beyond the US GDP in a day. Theoretically that could tank the system or at the very least the bank depending on how they leverage this kind of crap. I guess when you play with this kind of money though you pretty much make the rules.
    28 Jun 2012, 09:57 AM Reply Like
  • Joe Morgan
    , contributor
    Comments (1500) | Send Message
     
    Heheehe....the pitchfork crowd was thrown a bone.....
    28 Jun 2012, 10:09 AM Reply Like
  • Vuke
    , contributor
    Comments (1645) | Send Message
     
    $9 Billion? Chump change compared to what the Muppets are down.

     

    Barky and Mittens now have something to chew on.
    28 Jun 2012, 01:29 PM Reply Like
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