Daily Digest

Daily Digest 5/16 - JP Morgan's Loss Explained, The Financial World's Worst Nightmare, Marc Faber Fears Stock Market Crash

Tuesday, May 15, 2012, 9:36 AM
  • JP Morgan's Loss: The Explainer
  • Montco Mortgage Giant Bankrupt
  • More And More Recessionary Market Signs
  • The Financial World's Worst Nightmare
  • Obama: JPMorgan Is ‘One of the Best-Managed Banks’
  • Marc Faber Fears Stock Market Crash
  • Greece Faces Big Debt Payment Tuesday: Now What?

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Economy

JP Morgan's Loss: The Explainer (jdargis)

For the rest of us: You heard that Iksil was bullish, or enthusiastic, about corporate bonds that were "investment grade," or strong. The corporate bonds were probably already owned by JP Morgan as part of its trade with corporate clients. JP Morgan also owns a lot of "high-yield," or junk bonds. Those are low-rated bonds from companies that are close to default. If JP Morgan owns a lot of high-yield bonds, the best way to balance that risk is to bet on investment-grade corporate bonds.

Montco Mortgage Giant Bankrupt (Thomas C.)

"We do not anticipate any headcount changes here and we expect to remain in this office location," Fitzgerald told me this morning. "The Fort Washington facility is vital to the company going forward. Employees here serve in roles such as loan servicing and direct lending."

More And More Recessionary Market Signs (David B.)

As with Japan, giant deficits are bipartisan policy. Massive wealth transfers to the undeserving corporate losers are also bipartisan and Fed policy. This is the zombification of America just as much as Japan did with its big banks in the 1990s. It is worse here and now for at least two reasons. One reason is that at least Japan could point to its culture and find a reason to support the zombie companies. Our zeitgeist was supposed to be ‘agin that. The second reason is that we lectured Japan contemporaneously not to create zombies, and we were probably correct: but how hard it is for the doctor to diagnose and treat himself!

The Financial World's Worst Nightmare (Thomas C.)

Jamie Dimon is either completely ignorant of what is going on in JPM's speculation-ridden proprietary trading operation or he's lying. Or a lot of both. If he's clueless, then he should be terminated by the board immediately. If he's lying, he should be investigated by the Obama Justice Department. But we know the latter has no chance of happening, as Eric Holder's Justice Dept has taken financial fraud prosecutions to a 20 year low. Not surprising since JP Morgan and other Wall Street banks are the heart of the client list of Eric Holder's pre-Justice Dept law firm.

Obama: JPMorgan Is ‘One of the Best-Managed Banks’ (Thomas C.)

“JPMorgan is one of the best-managed banks there is. Jamie Dimon, the head of it, is one of the smartest bankers we got and they still lost $2 billion and counting,” the president said. “We don’t know all the details. It’s going to be investigated, but this is why we passed Wall Street reform.”

Marc Faber Fears Stock Market Crash (David B.)

Collective market wisdom says that stocks have risen due to a natural rebound from oversold conditions in March 2009, relatively high dividend yields compared with Treasuries, and massive liquidity provided by the Fed. But Faber feels that earnings expectations are too high and could disappoint, and that many companies paying out dividends from earnings could level off, be cut, or eliminated by some companies all together.

Greece Faces Big Debt Payment Tuesday: Now What? (Thomas C.)

Here’s what happened. In debt contracts there is a section titled: Events of Default. In a typical Greek bond it says “If the Republic defaults in the payment of principal…and such default is not cured by payment within 7 days from the due date for such payment.” However, that paragraph is missing from tomorrow’s debt payment.

Instead, if Greece chooses not to pay, it will likely fall under a different paragraph: “the Republic is in default in the performance of any other covenant, condition or provision set out in the Notes and continues in default for 30 days after written notice thereof.” If Greece doesn’t pay, it will mean the country officially enters into default.

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7 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4061
saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4061
Watching Italian and Spanish bond yields

 

ES 10Y Govt Bond Benchmark (Currently 6.33%)

IT 10Y Govt Bond Benchmark (Currently 6.05%)
 

h2oBoy's picture
h2oBoy
Status: Bronze Member (Offline)
Joined: Jun 18 2009
Posts: 52
A whale in the waters of negative yields

 http://www.ft.com/intl/cms/s/0/6686b916-9381-11e1-8c6f-00144feab49a.html#axzz1uxWBk94o


There is the potential for both public and private market creditors to effect a change in how credit is funded and dispersed – our global monetary system. What that will look like is a conjecture, but it is likely to be more hard money as opposed to fiat-based, or if still fiat centric, less oriented to a dollar-based reserve currency.

        Bill Gross is founder and co-chief investment officer of Pimco

 

yoshhash's picture
yoshhash
Status: Martenson Brigade Member (Offline)
Joined: Sep 20 2008
Posts: 271
Time2help's picture
Time2help
Status: Diamond Member (Offline)
Joined: Jun 9 2011
Posts: 2766
Eurozone Redux

"Challenger, you are go for throttle up."

Poet's picture
Poet
Status: Diamond Member (Offline)
Joined: Jan 21 2009
Posts: 1891
This Should Be May 15, Not 16

I am going to flag myself in this thread so someone can change the date of this forum topic as this is news for Monday, May 15.

Poet

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
The Limits to Growth Report

The Limits to Growth Report said we would have to divert capital from industry to agriculture. By design or by default

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