• Tag Archives JP Morgan
  • Ted Butler Quote of the Day 06-21-17

    But I still sense this thing is headed for a climax. One way or another, there will come a time when JP Morgan won’t add to short positions on a coming silver rally and that rally will be like no other. I just can’t know if it will be McDonald taking the high road and ordering JP Morgan to no longer add manipulative silver shorts…or if the most crooked bank in the U.S. will do so on its own.

    A small excerpt from Ted Butler’s subscription letter on 17 June 2017.

    More precious metals news & information available at
    Ed Steer’s Gold & Silver Digest.

  • Deutsche Bank: The Market’s Current “Metastability” Will Lead To “Cataclysmic Events”

    With the VIX slammed at the close of trading on “quad-witch” Friday, sending it just shy of single-digits once again and pushing stocks back in the green in the last seconds of trading, the much discussed topic of (near) record low volatility simply refuses to go away, which means even more attempts to i) explain it, ii) predict what ends the current regime of “endemic complacency” and iii) forecast the “catastrophic” damage to markets when it does finally end as JPM’s Kolanovic did earlier this week, when he set the bogey on a modest increase in the VIX from 10 to just 15.
    Overnight, applying his typical James Joycean, stream-of-consciousness approach to capital markets, Deutche Bank’s derivatives analyst Aleksandar Kocic penned his latest metaphysical essay on this topic, which covered most of the above bases, and which postulates that far from “stable” the current market equilibrium is one which can be described as “metastable”, the result of widespread complacency, and which he compares to an avalanche:”a totally innocuous event can trigger a cataclysmic event (e.g. a skier’s scream, or simply continued snowfall until the snow cover is so massive that its own weight triggers an avalanche.”
    He also inverts the conventionally accepted paradigm that lack of volatility means lack of uncertainty, and writes that to the contrary, it is the ubiquitous prevalence of uncertainty that has allowed vol to plunge to its recent all time lows, keeping markets “metastable.”
    How does the regime change from the current “metastable” regime to an “unstable” one? To Kocic the transition will take place when uncertainty, for whatever reason, is eliminated: “Big changes threaten to explode not when uncertainty begins to rise, but when it is withdrawn.” He also points out that while there is punishment for those who seek to defect from a “complacent regime”…

    This post was published at Zero Hedge on Jun 17, 2017.

  • Ted Butler Quote of the Day 06-16-17

    As I see it, this is the defining moment for James McDonald, the new enforcement director for the CFTC. Either he will do something about the continuing silver manipulation or he won’t. In the event he doesn’t do anything to interrupt the big commercials like JP Morgan from continuing to snooker the managed money technical funds into and out of COMEX futures positions by illegal spoofing and other dirty market tricks, it will fall to something and someone else. I’m not worried that the silver manipulation won’t end dramatically and soon, but it is not written in stone that it will be the defining moment that McDonald will look back on with satisfaction many years from now. Defining moments can be either good or bad and by definition last forever.

    But it would be a mistake to underestimate the pressure he is under not to do the right thing. Essentially, for him to dismantle the crooked price discovery mechanism on the COMEX for silver (and gold) and on other futures exchanges for other commodities, he must repudiate more than 30 years of prior agency thinking, as well as overcome the secret and illegal agreement made between the U.S. Government and JP Morgan, on the occasion of JPM taking over Bear Stearns in 2008. Admittedly, that’s a very tall order. But the taller the order, the greater the defining moment.

    Certainly, the inability to overcome the standard line from the CFTC for decades, namely, that no manipulation was possible in silver, has plagued others who set out to do so. Gary Gensler comes to mind because he started off in hitting the road running to establish legitimate position limits in 2009 and seemed to be on the right path to doing so. Even Bart Chilton, the former and very outspoken commissioner who talked openly of the silver manipulation, eventually lost his public voice for the same reason as Gensler failed – neither could overcome the illegal agreement with JPM.

    A small excerpt from Ted Butler’s subscription letter on 14 June 2017.

    More precious metals news & information available at
    Ed Steer’s Gold & Silver Digest.

  • Quiet Start To Quad Witching: Stocks Rebound Around The Globe, BOJ Hits Yen

    Today is quad-witching opex Friday, and according to JPM, some $1.3 trillion in S&P future will expire. Traditionally quad days are associated with a rise in volatility and a surge in volumes although in light of recent vol trends and overnight markets, today may be the most boring quad-witching in recent history: global stocks have again rebounded from yesterday’s tech-driven losses as European shares rose 0.6%, wiping out the week’s losses.
    USD/JPY climbed to two-week high, pushing the Nikkei higher as the BOJ maintained its stimulus and raised its assessment of private consumption without making a reference to tapering plans, all as expected. Asian stocks were mixed with the Shanghai Composite slightly softer despite the PBOC injecting a monster net 250 billion yuan with reverse repos to alleviate seasonal liquidity squeeze, and bringing the net weekly liquidity injection to CNY 410 billion, the highest in 5 months, while weakening the CNY fixing most since May. WTI crude is up fractionally near $44.66; Dalian iron ore rises one percent. Oil rose with metals. Treasuries held losses as traders focused on Yellen hawkish tone.
    The MSCI All Country World Index was up 0.2%, and after the latest global rebound, the value of global stocks is almost equal to that of the world’s GDP, the highest such ratio since th great financial crisis, BBG reported.

    This post was published at Zero Hedge on Jun 16, 2017.

  • JPMorgan’s Kolanovic: “$1.3 Trillion In S&P 500 Options Expire On Quad-Friday”

    With Nasdaq ‘VIX’ reaching 15-year highs relative to S&P ‘VIX’ in the last week, we suspect Friday’s quad-witching will be a little more noisy than normal as traders scramble to cope with $1.3 trillion of expiring S&P options…
    JPMorgan’s Marko Kolanovic lays out the details…
    In our view, it will be difficult for the market to go much higher from these levels (~2,450) unless there is meaningful progress on US fiscal reform (i.e. tax cut).
    Current positioning of various investors is already quite high and that poses additional risk going into weak seasonals.

    This post was published at Zero Hedge on Jun 16, 2017.

  • Quants Dominate The Market; Unexpectedly They Are Also Badly Underperforming It

    Two days ago, JPM’s head quant made a striking observation: “Passive and Quantitative investors now account for ~60% of equity assets (vs. less than 30% a decade ago). We estimate that only ~10% of trading volumes originates from fundamental discretionary traders.” In short, markets are now “a quant’s world“, with carbon-based traders looking like a slow anachronism from a bygone era.
    Bloomberg confirmed as much today, when looking at another divergence between quant funds and traditional, discretionary managers: “systematic strategies have barely budged from near-record participation in U. S. stocks. Meanwhile, fundamental equity long-short managers can’t afford to be anything but picky, considering the market’s narrow leadership. The result: the largest gap on record between humans’ and computers’ gross exposure to U. S. equities, data compiled by Credit Suisse Group AG show.”

    This post was published at Zero Hedge on Jun 15, 2017.

  • Gundlach: “You Should Be Raising Cash Literally Today”

    While there was nothing markedly new from Jeff Gundlach in his latest monthly webcast, it appeared that the DoubleLine CEO either had just read or otherwise agreed completely with JPM’s Marko Kolanovic, who as we noted earlier, warned that even a modest spike in vol coupled with a plunge in liquidity, could lead to “catastrophic losses” for the year’s best performing strategy: short convexity, or otherwise selling volatility. Recall what JPM said.
    May 17th and similar events bring substantial risk for short volatility strategies. Given the low starting point of the VIX, these strategies are at risk of catastrophic losses. For some strategies, this would happen if the VIX increases from ~10 to only ~20 (not far from the historical average level for VIX). While historically such an increase never happened, we think that this time may be different and sudden increases of that magnitude are possible. One scenario would be of e.g. VIX increasing from ~10 to ~15, followed by a collapse in liquidity given the market’s knowledge that certain structures need to cover short positions.

    This post was published at Zero Hedge on Jun 14, 2017.

  • Ted Butler Quote of the Day 06-14-17

    A couple of weeks back, a subscriber asked me to explain what I meant by JPMorgan ‘skimming’ off silver from the near frantic and highly unprecedented physical turnover in COMEX silver warehouse movement. I answered him privately, but I’m not so sure I did an adequate job in explaining my premise, so please let me have another crack at it here.

    I’ve always thought that the incredibly large physical ‘churn’ in the COMEX silver warehouses created the opportunity for someone to dip into the turnover and extract metal without it being widely noticed. I mean, if there was hardly any physical turnover in publicly trackable exchange warehouses, as is the case in just about every commodity except for COMEX silver, then there wouldn’t be any real opportunity to dip into a movement that didn’t exist.

    Try to think of it this way. We’ve all seen footage of the bears lining up and positioning themselves for a salmon run in Alaska. There are so many fish running, that no matter how many the bears may catch and gorge on, it hardly reduces the run. When the salmon aren’t running, the bears must eat something else. There have been no big salmon runs in other commodities, just in COMEX silver. This consistent six year salmon run in physical silver between the COMEX warehouses has allowed just one big grizzly to gorge on physical silver nearly undetected and unchallenged by other bears. I think JPMorgan may have secured as many as 150 million oz of its 600 million oz hoard in this manner.

    A small excerpt from Ted Butler’s subscription letter on 10 June 2017.

      More precious metals news & information available at
    Ed Steer’s Gold & Silver Digest.

  • JPM Head Quant Warns Of “Catastrophic Losses” For Short Vol Strategies

    It has been a while since we heard from JPM’s quant guru, Marko Kolanovic, who following the recent FANG crash and quant rotations and ahead of this Friday’s massive S&P op-ex, has published his latest latter, covering everything from the aforementioned market moves, to the ongoing drastic changes in the market structure, to the prevailing low levels of volatility despite the sharp market selloff on May 17 (with no follow through), and finally concludes with his latest near-term market outlook.
    First, when it comes to overall market topology, it should come as no surprise that in a world increasingly dominated by passive strategies, quants and algos, Marko first highlights the significant changes in market structure, of which he writes that “stocks are increasingly caught in powerful cross-currents of passive and quantitative investors.”
    First, some striking facts: to understand this market transformation, note that Passive and Quantitative investors now account for ~60% of equity assets (vs. less than 30% a decade ago). We estimate that only ~10% of trading volumes originates from fundamental discretionary traders. This means that while fundamental narratives explaining the price action abound, the majority of equity investors today don’t buy or sell stocks based on stock-specific fundamentals.
    The next, and perhaps just as important driver is, of course, central banks: “With ~$2T asset inflows per year central bank liquidity creates strong interest rate and policy sensitivity for sectors and styles. Low rates also invite investors to sell volatility.”
    Discussing the recent shift in market correlations, which have become increasingly volatile, Kolanovic notes that their “interpretation has changed.” According to the JPM quant, historically, low correlation meant that stocks were driven by company-specific fundamentals – an environment in which fundamental investors thrive. Now, however, while correlations are low, it is for different reasons – large sector and style rotation driven by quant flows, monetary policy and political developments (e.g. growth-value, low volatility-high volatility, ‘Trump trade’ and its unwind), something we have repeatedly demonstrated over the past month courtesy of the work of RBC’s Charlie McElligott.

    This post was published at Zero Hedge on Jun 13, 2017.

  • SocGen: “This Is What Happens When The Algos All Head For The Exit At The Same Time”

    After Goldman, JPM and even Dennis Gartman all opined on Friday’s “tech wreck”, in which the Nasdaq tumbled 2% as the Dow Jones hit new all time highs (the only previous time it has done that was in 1999 just as the tech bubble was ramping up), and when the Philly semiconductor index fell 4.2%, SocGen’s Andrew Lapthorne could not resist, and in a note released on Monday morning, explains that what happened on Friday was merely an episode of “systematic momentum selling“, or said otherwise, a teaser of what happens when the algos all “head for the door all at the same time.”

    This post was published at Zero Hedge on Jun 12, 2017.

  • JPM: More “Tech Wreck” Pain Coming As “A Lot Of Lazy Money Was Chasing Momentum”

    Over the weekend, Goldman – whose “FAAMG” report was one of the catalysts to the Friday “tech wreck” rotation out of tech/growth/momentum and into value/energy – warned that the pain may not be over, simply because the outperformance of strong balance sheet companies – usually tech-linked names that have little or no debt and substantial cash flow – in a 10%+ equity market rally is rare; occurring in only 5% of six-month stretches in the last 30 years, and warning that “the last such notable episode was in 2000, at the Tech Bubble peak.”
    This morning it was JPM’s turn to opine on Friday’s events, only not on the cause of the mauling, but why we got to where we are. As JPM’s macro strategist Adam Crisafuli writes, “tech will remain under pressure – the space has become overcrowded w/a lot of lazy/complacent money chasing momentum and these weak hands can be quick to exit – that departure process usually takes longer than just a few days.”
    Here is his full note.
    What’s happening this morning? Stocks fell pretty much throughout Asia and prices are weak in Europe too. The US futures are down ~6 points. US TSY yields are flattish while 10yr yields are down in France and Italy following weekend political developments (the UK political situation remains very fluid although this really isn’t impacting anything beyond the shores of that country). Crude has a small bid following some encouraging news out of Qatar (Qatar remains committed to the production agreement and Kuwait is hopeful on a resolution to the current regional friction).

    This post was published at Zero Hedge on Jun 12, 2017.

  • Ted Butler Quote of the Day 06-09-17

    I’m convinced that because the ink was still relatively wet on the agreement between JPMorgan and the U.S. government when Gensler came on board — and because he was unaware of that until he was way down the road to instituting position limits and overall reform, all his efforts were for naught. Anything that would have inconvenienced JP Morgan at that time was not going to fly; neither the Treasury Department nor the Federal Reserve would allow it. As Gensler slowly came to this realization, he recognized his efforts would not come to fruition and he beat a retreat.

    But that was then — and this is now. The secret and illegal agreement between JP Morgan and the Fed and Treasury is now nine years old — and long of tooth. None of the original U.S. Government arrangers appear to be in office and JP Morgan’s manipulative actions over this time are starting to ripen and smell. For cripes sake, JP Morgan hasn’t taken a single loss when shorting COMEX silver over the past nine years and has amassed 600 million ounces of physical silver at artificially depressed prices over the past six years. No way, no how was that ever intended by the U.S. Government at the outset (JPM’s intentions excluded).

    Now JP Morgan’s actions appear inexcusable and not to be tolerated for much longer. Enter the appointment of an apparently honest man to a position that matters at the CFTC and the whole dynamic appears to have changed. Who at the Fed or Treasury will demand that JP Morgan continue to be treated with kid gloves in silver because of a secret agreement made under duress nine years ago, particularly with more

    than ever openly recognizing the scummy and duplicitous actions of the country’s most important bank?

    A small excerpt from Ted Butler’s subscription letter on 07 June 2017.

      More precious metals news & information available at
    Ed Steer’s Gold & Silver Digest.

  • JPMorgan COO Matt Zames Is Leaving The Bank, Takes $48 Million Exit Package

    In what is the biggest financial news of the day, with “Triple Threat Thursday” now downgraded to Single, outlook negative, moments ago Bloomberg reported that JPM COO, and former chair of perhaps the most important advisory committee at the US Treasury, the TBAC, or Treasury Borrowing Advisory Committee, Matt Zames who was viewed as a potential successor to CEO Jamie Dimon, is leaving after 13 years at the bank.
    ‘Matt has worked tirelessly across many disciplines to help make us a better company,’ Dimon, 61, said Thursday in a memo to staff.
    Zames, 46, will remain at the New York-based bank to help with the transition. Zames’ TBAC farewell letter can be found here.
    Furthermore, as Reuters adds, Zames will effectively be paid over $9 million for a one year “garden leave.”

    This post was published at Zero Hedge on Jun 8, 2017.

  • Ted Butler Quote of the Day 06-07-17

    “There are a few unusual developments in the current COMEX June deliveries for gold and silver, but the standout feature to me is still the complete absence of JPMorgan in either making or taking delivery in either commodity in its own proprietary trading account. Silver, in particular, is showing fairly large numbers of new contracts being created and immediately delivered against (for a non-traditional delivery month), but the issuers and stoppers are so mixed and cross-related that I can’t draw any concrete conclusions – aside from it suggesting tight wholesale conditions.”

    A small excerpt from Ted Butler’s subscription letter on 03 June 2017.

      More precious metals news & information available at
    Ed Steer’s Gold & Silver Digest.

  • Russian Bank Chairman Met With Kushner, Citigroup and JPMorgan Chase

    Headline writers at the New York Times need to sharpen their pencils. Yesterday’s New York edition carried a front page article that links two of the biggest Wall Street banks, Citigroup and JPMorgan Chase, to the Jared Kushner affair with the Russian banker, Sergey Gorkov, Chairman of the state-owned Russian bank Vnesheconombank (VEB) which has been under U. S. sanctions since 2014. But readers would have missed that completely if they only read the softball headline, which failed to mention either bank.
    Everyone on Wall Street has been waiting for the next shoe to drop in the Jared Kushner episode. Kushner is under FBI and Congressional probes over allegations that he met in December with Gorkov while simultaneously attempting to set up a secret channel to communicate with Russia using its equipment inside its own embassy – ostensibly to thwart U. S. intelligence snooping. Kushner then failed to list that meeting, as well as one or more meetings with the Russian Ambassador, Sergey Kislyak, on his form for security clearance until the meetings became public knowledge.
    That shoe has now dropped. Wall Street On Parade reported on May 30 that some of the biggest names on Wall Street are sitting with hundreds of millions of dollars of that sanctioned Russian bank’s bonds and notes in their mutual fund portfolios. (See related article below.) Yesterday, the New York Times reported that when Gorkov came to Manhattan to meet with Kushner in December, he also ‘met with bankers at JPMorgan Chase, Citigroup and another, unidentified American financial institution.’ The article notes that ‘Goldman Sachs bankers also tried to arrange a meeting but ultimately had a scheduling conflict.’

    This post was published at Wall Street On Parade on June 6, 2017.

  • JPMorgan Lists Five “Red Flags” That Point To A 10% Downside Correction

    The first time JPMorgan warned of market downside was in early March when the bank’s US equity strategist Dubravko Lakos-Bujas wrote that while the fundamental backdrop remains supporting, the “short-term downside risk” in the S&P is increasing. Less than two months later, JPM presented six “red flags” why it is starting to sell stocks. Then, just a few weeks later, JPM turned on the flashing red light again in late May, when the bank “sounded the alarm on the size of US debt, and warned of a financial crisis” while in the interim, JPM’s quant Marko Kolanovic on several occasions warned that stocks are poised for a sharp drop due to purely technical and systemic factors. Of course, throughout this period stocks only kept going higher, closing at all time highs last Friday.
    So has JPM thrown in the towel on being tactically bearish for months, and re-embraced the “Icarus” meltup in the same way that BofA’ Michael Harnett (who realizes a crash is coming but not before the market’s last hurrah all the way to 2,550-2,600) has? Nope.

    This post was published at Zero Hedge on Jun 5, 2017.

  • Ted Butler Quote of the Day 06-02-17

    The biggest question remains that when silver does decisively penetrate its key moving averages, will the near-certain rush by technical funds to buy cause the price to move in the manner I have suggested recently, namely, explosively? That, of course, depends on how aggressive the commercials and, particularly, JP Morgan respond to the technical fund buying. I don’t mean to repeat myself, but somethings must be repeated.

    This is a process as mechanical as any motor engine. If JP Morgan and the other big commercials add aggressively to short positions on the next moving average upside penetration, they would appear to be quite capable of eventually snuffing out any silver rally caused by technical fund buying; and the exact same thing that has occurred on countless occasions over the years – snuffed out silver rallies – will occur again. And I completely empathize with those (in the majority) who hold that to expect otherwise would be on the insane side of the ledger, you know, expecting different results from the same circumstances.

    I would stipulate further that if JPM and the other big commercials short aggressively, then silver prices would likely fall eventually and we go back to the very beginning of the wash, spin, repeat cycle. But there’s not much to be gained for assuming JP Morgan will load up on the short side again, until it does load up. That’s because as long as JP Morgan is not heavily short COMEX silver futures, there is little reason to expect significantly lower silver prices. A large concentrated short position in COMEX silver futures is always the prime (sole) reason to expect lower silver prices. The lack thereof should not be feared.

    If it does turn out that the market crooks at JP Morgan again short silver futures aggressively, that will only come on higher prices and with generally fair warning. Specifically, if JP Morgan adds back much of the 16,000 short contracts it bought back over the past five reporting weeks (including last week’s increase), then my ‘big one’ premise goes out the window. Look, I’m just the analyst/piano player, not a principle participant in the ongoing COMEX silver scam. If JP Morgan does end up adding aggressively to its price-controlling silver short position, that’s beyond my control in any event.

    A small excerpt from Ted Butler’s subscription letter on 31 May 2017.

      More precious metals news & information available at
    Ed Steer’s Gold & Silver Digest.

  • European shares fall on political worries over Greece and Italy, as JP Morgan says hung parliament could be positive for pound

    A hung parliament could be positive for the pound, strategists at U.S. investment bank JP Morgan argued, as investors braced for a volatile run in to the general election next week.
    The pound has risen by almost 4pc since Prime Minister Theresa May called a snap election on the assumption a landslide victory for the Conservatives would strengthen the party’s hand in Brexit negotiations.
    But opinion polls showed that the Conservatives’ lead over the Labour opposition narrowed to just 5 percentage points on Friday, prompting the pound steepest daily fall since January.
    However, the U.S. bank, the world’s second biggest trader of currencies, thinks these last-minute political jitters are misplaced. Strategists at the bank believe the prospect of a ‘less disruptive Brexit’ under a Labour-led government might see the pound react positively to a defeat for the Conservatives.

    This post was published at The Telegraph

  • Banks Tumble After BofA, JPM Warn Revenue Will Be Down As Much As 15%

    The collapse in volatility is finally trickling up to the big banks.
    Moments ago, JPM CFO Marianne Lake speaking at a Deutsche Bank conference in New York, warned that contrary to expectations for an ongoing rebound in revenue and profits, the bank’s second quarter revenue has been 15% lower from a year ago. And while she said that US economic figures are “solid, not stellar”, she blamed the same thing that has been the nightmare of daytraders everywhere: collapsing volatility.
    From the newswires

    This post was published at Zero Hedge on May 31, 2017.