• Tag Archives JP Morgan
  • Global Markets Spooked By North Korea H-Bomb Threat; Focus Turns To Brexit Speech

    S&P futures retreated along with European and Asian shares with tech, and Apple supplier shares leading the drop while safe havens such as gold and the yen rose, as the war of words between U. S. President Donald Trump and Kim Jong Un escalated and North Korea threatened to launch a hydrogen bomb, leading to a prompt return of geopolitical concerns. Trade focus now turns to a planned speech by Theresa May on Brexit (full preview here).
    As reported last night, the key overnight event was the latest threat by North Korea that its counter-measure may mean testing a hydrogen bomb in the Pacific, according to reports in Yonhap citing North Korea’s Foreign Minister. North Korea’s leader Kim said North Korea will consider “corresponding, highest level of hard-line measure in history” against US, while he also stated that President Trump’s UN speech was rude nonsense and demonstrated insanity and inhumanity which confirmed North Korea’s nuclear and missile advances are on right path and will continue to the end. There was more on the geopolitical front with the Iranian President
    informing armed forces that the nation will bolster its missile
    capabilities, according to local TV.
    As a result, treasury yields pulled back and the dollar slid the most in two weeks following North Korea’s threat it could test a hydrogen bomb in the Pacific Ocean. Europe’s Stoxx 600 Index edged lower as a rout in base metals deepened, weighing on mining shares. WTI crude halted its rally above $50 a barrel as OPEC members gathered in Vienna.
    US stock futures pulled back 0.1% though markets were showing growing signs of fatigue over the belligerent U. S.-North Korea rhetoric. ‘North Korea poses such a binary risk that it’s very hard to price, and at the moment investors just have to look through it,’ said Mike Bell, global market strategist at JP Morgan Asset Management. Despite the latest jitters, MSCI’s world equity index remained on track for another weekly gain, holding near its latest record high hit on Wednesday as investors’ enthusiasm for stocks showed few signs of waning.

    This post was published at Zero Hedge on Sep 22, 2017.


  • The World Is Creeping Toward De-Dollarization

    The issue of when a global reserve currency begins or ends is not an exact science. There are no press releases announcing it, and neither are there big international conferences that end with the signing of treaties and a photo shoot. Nevertheless we can say with confidence that the reign of every world reserve currency has to come to and end at some point in time. During a changeover from one global currency to another, gold (and to a lesser extent silver) has always played a decisive role. Central banks and governments have long been aware that the dollar has a sell-by date as a reserve currency. But it has taken until now for the subject to be discussed openly. The fact that the issue has been on the radar of a powerful bank like JP Morgan for at least five years, should give one pause. Questions regarding the global reserve currency are not exactly discussed on CNBC every day. Most mainstream economists avoid the topic like the plague. The issue is too politically charged. However, that doesn’t make it any less important for investors to look for answers. On the contrary. The following questions need to be asked: What indications are there that the world is turning its back on the US dollar? And what are the clues that gold’s role could be strengthened in a new system?
    The mechanism underlying today’s ‘dollar standard’ is widely known and the term ‘petrodollar’ describes it well. This system is based on an informal agreement the US and Saudi Arabia arrived at in the mid-1970s. The result of this deal: Oil, and consequently all other important commodities, is traded in US dollars – and only in US dollars. Oil producers then ‘recycle’ these ‘petrodollars’ into US treasuries. This circular flow of dollars has enabled the US to pile up a towering mountain of debt of nearly $20 trillion – without having to worry about its own financial stability. At least, until now.

    This post was published at Ludwig von Mises Institute on September 20, 2017.


  • Why Is The BIS Flooding The System With Gold?

    A consultant to GATA (Gold Anti-Trust Action Committee) brought to our attention the fact that gold swaps at the BIS have soared from zero in March 2016 to almost 500 tonnes by August 2017 (GATA – BIS Gold Swaps). The outstanding balance is now higher than it was in 2011, leading up to the violent systematically manipulated take-down of the gold price starting in September 2011 (silver was attacked starting in April 2011).
    The report stimulated my curiosity because most bloggers reference the BIS or articles about the BIS gold market activity without actually perusing through BIS financial statements and the accompanying footnotes. Gold swaps work similarly to Fed report transactions. When banks need cash liquidity, the Fed extends short term loans to the banks and receives Treasuries as collateral. QE can be seen as a multi-trillion dollar Permanent Repo operation that involved outright money printing.
    Similarly, if the bullion banks (HSBC, JP Morgan, Citigroup, Barclays, etc) need access to a supply of gold, the BIS will ‘swap’ gold for cash. This would involve BIS or BIS Central Bank member gold which is loaned out to the banks and the banks deposit cash as collateral to against the gold ‘loan.’ This operation is benignly called a ‘gold swap.’ The purpose would be to alleviate a short term scarcity of gold in London and put gold into the hands of the bullion banks that can be delivered into the eastern hemisphere countries who are importing large quantities of gold (gold swaps outstanding are referenced beginning in 2010).

    This post was published at Investment Research Dynamics on September 18, 2017.


  • Former JPMorgan Quant On Evading Chinese Capital Controls Via Bitcoin

    Mainland Chinese buyers have become a dominant force in real estate markets across the world. The Chinese government crackdown on outflows earlier this year severely throttled that money.
    While this money has been throttled, it’s still appearing in certain markets, most notably the United States.
    We wanted to know how exactly this is still happens, so we connected with Dr. Joseph Wang – a Bitcoin and Chinese capital outflow expert.
    Hong Kong-based Dr. Joseph Wang is an OG of monitoring China’s capital flows and Bitcoin. He currently serves as Chief Science Officer at BitQuant, a fintech that specializes in technologies for the upcoming China yuan renminbi equities option market, as well as options and futures for digital currencies. He previously served as Vice President of Quantitative Research for JP Morgan, the sixth largest bank in the world – whose CEO is now an outspoken critic of the cryptocurrency. He’s got a ton of street cred, but even more important – he monitors China’s capital outflows to seek business opportunities.

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


  • Jamie Dimon Knows a Fraud When He Sees It – Outside of His Bank

    Jamie Dimon became Chief Executive Officer of JPMorgan Chase on December 31, 2005. An inordinate amount of frauds have been perpetrated inside his bank since that time, none of which the eagle-eyed Dimon spotted. But Dimon says he knows a fraud when he sees one outside of his bank. Yesterday, he took on the cryptocurrency known as Bitcoin, calling it a fraud. At a banking conference on Tuesday, Dimon said that ‘Bitcoin will eventually blow up. It’s a fraud. It’s worse than tulip bulbs and won’t end well.’
    We’re not saying Dimon is wrong about Bitcoin. In fact, more than three years ago Wall Street On Parade compared Bitcoin to the tulip bulb bubble and explained in crystal clear terms how it differs from a real currency, such as the U. S. dollar. But we are saying that Dimon’s super sleuth nose for fraud has the uncanny knack of serially failing him when it comes to Ponzi schemes and mortgage frauds and rogue derivative and commodity traders operating inside his own bank – a taxpayer subsidized institution that has richly rewarded Dimon despite the fact that his sniffer can only catch the scent of fraud outside the doors of JPMorgan Chase. (As of June 30, 2017, according to the Federal Deposit Insurance Corporation, JPMorgan Chase held more than $1.5 trillion in deposits, the majority of which are insured by the Federal government and backstopped by the U. S. taxpayer.)
    On March 22, 2016, the Government Accountability Office (GAO) released a reportthat noted that the U. S. Justice Department had earlier assigned a $1.7 billion forfeiture against JPMorgan Chase ‘for its failure to detect and report the suspicious activities of Bernard Madoff,’ the largest fraud ever perpetrated against the investing public. The GAO stunningly found that because the bank ‘failed to maintain an effective anti-money-laundering program and report suspicious transactions in 2008, it contributed to its own bank customers ‘losing about $5.4 billion in Bernard Madoff’s Ponzi scheme.’

    This post was published at Wall Street On Parade on September 13, 2017.


  • 2,000 Years Of Economic History (In One Chart)

    Long before the invention of modern day maps or gunpowder, the planet’s major powers were already duking it out for economic and geopolitical supremacy.
    Today’s chart tells that story in the simplest terms possible. As Visual Capitalist’s Jeff Desjardins notes, by showing the changing share of the global economy for each country from 1 AD until now, it compares economic productivity over a mind-boggling time period.
    Originally published in a research letter by Michael Cembalest of JP Morgan, we’ve updated it based on the most recent data and projections from the IMF. If you like, you can still find the original chart (which goes to 2008) at The Atlantic. It’s also worth noting that the original source for all the data up until 2008 is from the late Angus Maddison, a famous economic historian that published estimates on population, GDP, and other figures going back to Roman times.

    This post was published at Zero Hedge on Sep 11, 2017.


  • How Harvey And Irma Will Slam The US Economy: A Complete Walk Thru From BofA

    Last week, before the full devastation from Hurricane Harvey was unveiled, Goldman and JPM were the first banks to suggest that the storm’s impact on US GDP would be modest: a slight decline in Q3 growth, offset by a similary modest rebound in Q4 and further as emergency funds “trickled down” through the economy. Now, with more clarity on just how destructive the storm has been, other banks are coming out and they are not nearly as confident that the damage from Harvey will be “modest” – in fact, according to a just released analysis from Bank of America, Harvey will result in at least a 0.4% hit to Q3 GDP, which has reduced BofA’s Q3 GDP estimate to 2.5%…. and that excludes Irma.
    Here’s Michelle Meyer explaining why in just a few weeks, all the economic misses will be blamed on, you guessed it, hurricanes.
    First came Harvey, next comes Irma Hurricane Harvey crashed down on the shores of Texas, leaving behind record flooding and destruction. According to early estimates, Harvey may end up being the most expensive natural disaster in the US since 1980, costing $70-108bn (Table of the day). Thousands of people have been impacted. We are now actively monitoring Hurricane Irma, which threatens to hit the coast of Florida over the weekend.

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


  • Quant Fund Run By Three 20-Somethings Trades $1 Billion A Day

    Financial markets are increasingly being dominated by quantitative and passive traders (even as quant forms have underperformed this year).
    We highlighted this dichotomy earlier this year in a post titled ‘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 year is shaping up to be a dismal one for so-called quant funds. Still, even as quants have failed to capture record-setting equity gains, they’ve held on to their status of Wall Street darlings, attracting the lion’s share of inflows, not to mention flattering press coverage, like this profile of one quantitative fund published by Forbes.

    This post was published at Zero Hedge on Sep 7, 2017.


  • What “Coordinated Recovery”? Global Negative Yielding Debt Hits One Year High Of $7.4 Trillion

    Two weeks ago, we were surprised to find that despite the recent “growth promise” of what has been called a coordinated global recovery, the market value of bonds yielding less than 0% had quietly jumped by a quarter in just one month to the highest since October 2016.
    Since then, the paradoxical divergence between the reported “strong” state of the “reflating” global economy and the amount of negative yielding debt, has only grown, and as JPM reports as of Friday, Sept. 1, the global market value of government bonds trading with negative yield within the JPM GBI Broad index rose to $7.4 trillion, up 60% from its low of $4.6 trillion at the beginning of the year.

    This post was published at Zero Hedge on Sep 3, 2017.


  • It’s Goldman vs JPMorgan As ISDA’s Noble Indecision Roils CDS Market

    Several years ago, the International Swaps and Derivatives Association, or ISDA, lost much of its credibility when during the peak of the Eurozone debt crisis, it first refused to determine that CDS on Greece had been triggered (i.e., that an event of default had taken place) only to eventually concede – following substantial outside pressure – that Greece had, in fact, defaulted (if only on bonds not held by a certain central bank), but not before penning a “petulant” blog post in which it claimed amusingly that the “credit event/DC process is fair, transparent and well-tested”. The fiasco prompted many, this site included, to dub sovereign Credit Default Swaps as “Schrodinger’s CDS”, contracts which may or may not pay out in case of a default, depending on which way the political winds were blowing at any given time.
    Fast forward to today when not only is ISDA in hot water again, but the entire corporate CDS market has been roiled by another indecision by ISDA, which said “it was unable to determine” if Singapore-listed Noble Group, formerly Asia’s largest independent commodity trader was in default or not, creating a vacuum similar to what happened with Greece 5 years ago, and which, according to the FT, has resulted in mass confusion in the corporate bond and CDS market. What is more striking, however, is that this is “the first time ISDA has dismissed a question of default without making a ruling either way.”
    Specifically, on August 9, ISDA ruled the following:

    This post was published at Zero Hedge on Aug 28, 2017.


  • RISK ON: WAR, ECONOMY, DEBT, DOLLAR – RISK OFF: GOLD

    Totally irresponsible policies by Governments and Central Banks have created the most dangerous situation that the world has ever experienced. Risk doesn’t arise quickly as the result of a single action or event. No, risk of the magnitude that the world is experiencing today is the result of many years or decades of economic mismanagement.
    Cycles are normal in nature and in the world economy. And cycles that are the result of the laws of nature normally play out in an orderly fashion without extreme tops or bottoms. Just take the seasons, they go from summer to autumn, winter and spring with soft transitions that seldom involve drama or catastrophe. Economic cycles would be the same if they were allowed to happen naturally without the interference of governments. But power corrupts and throughout history leaders have always hung on to power by interfering with the normal business cycle. This involves anything from reducing the precious metals content of money from 100% to nothing, printing money, leveraging credit, manipulating interest rates, taking total taxes to 50%+ today from nothing 100 years ago, etc, etc.
    GOVERNMENTS DOING GOD’S WORK
    Governments will always fail when they believe that they are gods. But not only governments believe they perform godly tasks but also hubristic investment bankers like the ex-CEO of Goldman Sachs who proclaimed thahe bank was doing God’s work. It must be remembered that Goldman, like most other banks, would have gone under if they and JP Morgan hadn’t instructed the Fed to save them by printing and guaranteeing $25 trillion in 2008. Or maybe that was God’s hand too?
    We now have unmanageable risks at many levels – politically, geopolitically, economically and financially.

    This post was published at GoldSwitzerland on August 18, 2017.


  • Negative Interest Rates Are Almost Certainly in Our Future

    With interest rates still at extremely low levels, what will central bankers do when the next recession comes along?
    Just take those interest rates negative.
    Iain Stealey serves as Head of global aggregate strategies at JPMorgan Asset Management in London. He raised the specter of negative rates during a recent interview with Bloomberg.
    I don’t think the central bankers would like to go back into negative rates once they get out of it, but the reality is they may well have to during the next recession.’
    Even now, the number of negatively yielding bonds continues to grow. According to Bloomberg, market value of the world’s bonds with negative yields has jumped almost 25% over the past month, rising to $8.6 trillion. This despite the Fed raising rates and talking about reducing its balance sheet.

    This post was published at Schiffgold on AUGUST 15, 2017.


  • JPMorgan Lists Four “Red Flags” Why It Is Starting To Sell Stocks

    While most banks have in recent weeks expressed concerns about the recent, near record high levels in the S&P – which is now 67 points above Goldman’s year end price target of 2,400 – few have been willing to go out on a limb and announce they are short the market, and that the bull market is now over (unlike Gartman who on Friday staked his reputation that the “Bull market has come to an end” only to unleash another rally in the S&P in the next two days).
    Overnight, JPM’s Misla Matejka has done just that, and in his latest equity strategy note writes that JPM “continues to see the risk-reward for equities as unattractive” for 4 main reasons: i) complacency seen in VIX and in HY spreads could unwind further, ii) EPS momentum is deteriorating, iii) valuations are “outright expensive”, and iv) liquidity will be turning.
    If the JPM strategist had left it at that, it would have been notable as it would be one of the very few, unhedged bearish recos on Wall Street. He did not, however, and said that after the early periof of turbulence, markets will continue rising, effectively nullifying his warning because what’s the point of selling just to have to buy again a few weeks or months down the line, or as Matejka put it the “medium-term fundamental view remains that equities are in an upcycle and that the potential consolidation should be used as another good entry point.”

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


  • How To Prepare For Another Market Face-Pounding

    ‘Markets make opinions,’ goes the old Wall Street adage. Indeed, this sounds like a nifty thing to say. But what does it really mean?
    Perhaps this means that after a long period of rising stocks prices otherwise intelligent people conceive of clever explanations for why the good times will carry on. Moreover, if the market goes up for long enough, the opinions become so engrained they seek to explain why stock prices will go up forever.
    After nine years of near uninterrupted stock market gains, new opinions are being offered to explain why the stock market will be bathed in sunshine indefinitely.
    For example, the late-1990s term Goldilocks is again being used to describe why the slow growth, low unemployment, economy is good for stocks. Apparently, if an economy is not-too-cold, but not-too-hot, stocks can go up lots and lots.
    What’s more, these days everything is so perfect that Goldilocks is no longer a good enough descriptor. This was the conclusion that JPMorgan’s Jan Loeys recently reached, no doubt after peering at a 5-year S&P 500 index chart:

    This post was published at Zero Hedge on Aug 11, 2017.


  • Prepare for Another Market Face Pounding

    ‘Better than Goldilocks’
    ‘Markets make opinions,’ goes the old Wall Street adage. Indeed, this sounds like a nifty thing to say. But what does it really mean?
    Perhaps this means that after a long period of rising stocks prices otherwise intelligent people conceive of clever explanations for why the good times will carry on. Moreover, if the market goes up for long enough, the opinions become so engrained they seek to explain why stock prices will go up forever.
    After nine years of near uninterrupted stock market gains, new opinions are being offered to explain why the stock market will be bathed in sunshine indefinitely. For example, the late-1990s term Goldilocks is again being used to describe why the slow growth, low unemployment, economy is good for stocks. Apparently, if an economy is not-too-cold, but not-too-hot, stocks can go up lots and lots.
    What’s more, these days everything is so perfect that Goldilocks is no longer a good enough descriptor. This was the conclusion that JP Morgan’s Jan Loeys recently reached, no doubt after peering at a 5-year S&P 500 index chart:
    ‘We nicknamed this world ‘Better than Goldilocks’ two weeks ago. With global growth breaking out from its 7-year range and inflation still surprisingly down, we are graduating from a not-too-hot, not-too-cold Goldilocks world to an even better one for risk assets. It will not last forever, but could easily last long enough, given past momentum in growth and inflation forecasts changes, to have a positive impact on all assets with risky ones outperforming.’

    This post was published at Acting-Man on August 11, 2017.


  • What’s Next For The VIX? RBC Explains

    Yesterday, as the VIX was setting up for one of its biggest one day jumps in history, we reminded readers just how massive the short-vol overhang was courtesy of the following chart from JPMorgan showing that the net Vega on VIX-related ETFs was at an all time high, suggesting that the risk of a vol-buying feedback loop was significant, because as VIX rose and markets fell, it would prompt more vol-shorters to cover, selling more risk assets in the process, leading to an even higher VIX, and so on.
    So what happens next to the VIX, and the vol-complex in general? Below we share the latest thoughts from RBC’s head of cross-asset strategy, Charlie McElligott, who notes
    WITH THIS MUCH NEGATIVE CONVEXITY FROM A LOW ABSOLUTE LEVEL… IT SURE DIDN’T TAKE MUCH TO ‘SET IT OFF’: So this is awkward: the hedges pushed last week ‘hit’…but with the ‘wrong’ event-risk catalyst.
    Yesterday was pure ‘comeuppance’ for the ‘short vol’ / ‘negative convexity’ crowd, off of the crescendo-ing cacophony of self-fulfilling expectations for a market ‘volatility event.’ I know this sounds ‘chicken or the egg,’ but I truly believe that it was this volatility positioning which was the core of the issue yesterday, and not wholesale buyside de-risking of underlying core portfolio longs as the catalyst.

    This post was published at Zero Hedge on Aug 11, 2017.


  • SNAP Stock Just SNAPPED: Down 29% From Its March IPO

    SNAP just reported earnings and plunged after hours after missing everything. It burned through $288 million in cash. The more it spends, the more it loses. An operational Ponzi scheme of sorts.
    The SNAP IPO was led by Morgan Stanley, Goldman Sachs, JP Morgan, Deutsche Bank, Barclays, Credit Suisse and Allen & Company. All the usual criminal cartel banks aside from Allen & Company. Allen & Company is a financial ‘advisor’ – i.e. sleazy stock broker – driven firm based in Florida. I don’t know how Allen & Co. was put on as an underwriting manager other than it’s likely that one of SNAP’s co-founders is buddies with one of the owners at Allen & Co.

    This post was published at Investment Research Dynamics on August 10, 2017.


  • This Hits the Wheezing Commercial Real Estate Bubble at Worst Possible Time

    The last big enthusiastic buyer, China, is leaving the party. Commercial real estate, such as office and apartment towers, in trophy cities in the US and Europe has been among the favorite items on the long and eclectic shopping lists of Chinese companies. At the forefront are the vast, immensely indebted, opaquely structured conglomerates HNA, Dalian Wanda, Anbang Insurance, and Fosun International. In terms of commercial real estate, the party kicked off seriously in 2013. Over the two years in the US alone, according to Morgan Stanley, cited by Bloomberg, Chinese firms have acquired $17 billion worth of commercial properties.
    In the second quarter in Manhattan, Chinese entities accounted for half of the commercial real estate purchases. This includes the $2.2 billion purchase in May of the 45-story office tower at 245 Park Avenue, the sixth largest transaction ever in Manhattan. At $1,282 per square foot, the price was also among the highest ever paid for this type of property.
    Most of HNA’s funding for this deal – one of its 30 major acquisitions since the beginning of 2016 – was borrowed from China’s state-owned banks. But HNA also borrowed $508 million from JPMorgan Chase, Natixis, Deutsche Bank, Barclays, and Societe Generale. This has been the hallmark for all Chinese acquirers: a lot of borrowing from China and some funding from offshore sources.

    This post was published at Wolf Street on Aug 8, 2017.


  • The Volcker Rule & the London Whale

    ‘It is not down in any map; true places never are.’
    ‘Moby Dick’
    Herman Melville
    News reports that prosecutors have dropped their case against Bruno Iksil, the former JPMorgan (NYSE:JPM) trader many know as the ‘London Whale,’ comes as no surprise to readers of The IRA. Iksil, who resurfaced earlier this year, has been living in relative seclusion in France for the past few years.
    In previous comments posted on Zero Hedge, we dispensed with the notion that the investment activities of Iksil and the office of the JPM Chief Investment Officer were either illegal or concealed from the bank’s senior management. The fact is that Iksil and his colleagues at JPM were doing their jobs, namely generating investment gains for the bank.
    The outsized bets made by the ‘whale’ in credit derivatives contracts resulted in a loss in 2012, but the operation generated significant profits for JPM in earlier years. As veteran risk manager Nom de Plumber told us in Zero Hedge in 2012:
    ‘This JPM loss, whether $2BLN or even $5BLN, is modest in both absolute and relative terms, versus its overall profitability and capital base, and especially against the far greater losses at other institutions. In practical current terms, the hit resembles a rounding error, not a stomach punch. As either taxpayers or long-term JPM investors, we should be more grateful than sorry about the JPM CIO Ina Drew. If only other institutions could also do so ‘poorly’………’

    This post was published at Wall Street Examiner on August 7, 2017.