Thursday, May 10, 2012

HOT: JPMorgan Reportedly Suffered $2 Billion Gross Trading Loss on Synthetic Positions


Update 1: Jamie Dimon says exposure may result in more losses in future months.

Update 2: Dimon calls trade: "flawed, complex, poorly reviewed."

Update 3: Dimon says volatility will be high, will be risky for a couple of quarters

Update 4: JPMorgan shares down 6.38% in after hours trading at 5:27 ET

Update 5: JPMorgan's official announcement is that it lost $2 billion in a trading portfolio designed to hedge against risks the company takes with its own money. As a result, that segment of its business is expected to record a second-quarter loss of at least $800 million.


  1. JPMorgan Says Losses at CIO Unit Were Greater Than Projected

    By Dawn Kopecki

    May 10 (Bloomberg) -- JPMorgan Chase & Co. said losses tied
    to the chief investment office are bigger than the company
    “Since March 31, 2012, CIO has had significant mark-to-
    market losses in its synthetic credit portfolio, and this
    portfolio has proven to be riskier, more volatile and less
    effective as an economic hedge than the firm previously
    believed,” the New York-based company said today in a quarterly
    securities filing.


    People knew about this trade. So it is not new

  3. You can be sure they'll find a way to be made whole by the taxpayers.

  4. Couldn't happen to a nicer group of arrogant and thieving parasites.

    1 down 3 to go.

    Bring on wells fargo, citbank, and b of a !!!

  5. "Don't put your money in privately held gold and silver. Instead, leave it to the professional companies and much wiser investors like JP Morgan." - Almost all of Wall Street and the MSM

  6. Bad timing for PEU Bob Geldof. His 8 Miles Africa PE fund just selected egregious J.P. Morgan.

  7. Let us try, for we can only try, to make sense of this because in the final analysis it is truly insane. Understand that JP Morgan Chase has a derivative exposure of $70.151 Trillion dollars - roughly the size of the entire world's economy. A Two billion loss is the equivalent of "here's a quarter kid, buy yourself a newspaper..." So why is this a big deal?

    Let's attempt to put it in perspective. A Trillion is just a word, and it is difficult to most of us to get our minds around the enormous numerical reality it represents. I found this analogy helpful.

    Think of it in terms of something we are all familiar with, and use every day of our lives, when we look at our watches - time. Let's let one second equal one dollar. Using this ruler, we can then say one million dollars in seconds represents roughly 11 days. Likewise a billion seconds (dollars) is equivalent to 37.5 years. How about a Trillion seconds (dollars)? The answer is... wait for it... thirty seven thousand five hundred years. Now we have some understanding of the scale of the problem. So with 70 Trillion in exposure why is 2 billion a problem?

    Because, if a 2 billion dollar loss shakes this bank to its foundation, and causes markets world wide to hiccup, it is a clear indicator of how over-leveraged and fragile the system has become. Only history will be able to tell if this was the inevitable "black swan" event that signaled the beginning of the end game we all know is rapidly approaching.

    Stay tuned campers, and fasten your seat belts, it's gonna be one hell-of-a-ride...

    I, am Spartacus