So many questions still dangle over JPMorgan Chase’s disastrous credit bet. Here is one more: Why is it so hard to find answers in the bank’s public financial filings?Since JPMorgan announced more than $2 billion of losses on the trade earlier this month, the bank has largely relied on its chief executive, Jamie Dimon, to talk about the bet.He has not provided meaningful specifics when analysts have asked for them. And JPMorgan has neither released new filings with details about the mechanics of the trade nor used existing disclosures to help outsiders get to the bottom of what is going on.This is par for the course on Wall Street. Bank filings rarely contain data that could give warning of a trading blowup. And when a ... Continue reading →
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The search for him, once hopeful, was turning desperate. Weather stoked the fear. The missing man was wearing only shorts, a T-shirt and running shoes. It was late March. Daytimes were warm, but the cold scythed through the spruce forest in the depth of night, the temperatures cutting into the 20s. For three days, rescue teams had fanned out for 50 yards on each side of the marked trails. Riders on horseback ventured through the gnarly brush, pushing past the felled branches of pinyon-juniper and ponderosa pine. An airplane and a helicopter circled in the sky, their pilots squinting above the ridges, woodlands, river canyons and meadows. “We’re in the middle of nowhere, and this guy could be anywhere,” Tom Bemis, the rescue coordinator appointed ... Continue reading →
We have talking about what may or may not have happened at JPM for the past week, and by “we” I mean the entire market. We do not know the exact nature of their trades, but as far as we can tell from what we read and the rumor mill, JPM had a series of complex trades, though the overall ideas seemed to be “short high yield” and cover the costs by being “long investment grade” with a particular emphasis of jump to default risk over pure spread risk (though spread risk played a big part). They were short various XOVER and HY indices, both outright and in tranche form. They were long various IG indices, both outright and in tranche form, though with a ... Continue reading →
Mark Lennihan/Associated Press JPMorgan Chase’s trading loss is now said to equal at least $3 billion, and could rise further. Ever since JPMorgan Chase disclosed a multibillion-dollar trading loss this month, the central mystery has been how a bank known for its skill at risk management could err so badly. As early as 2010, the senior banker who has been blamed for the debacle, Ina Drew, began to lose her grip on the bank’s chief investment office, according to current and former traders. She had guided the bank through some of the most rugged moments of the 2008 financial crisis, earning the trust of Jamie Dimon, JPMorgan’s chief executive, in the process. But after contracting Lyme disease in 2010, she was frequently out of the ... Continue reading →
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Alice LeeAswath Damodaran, professor of finance at New York University.Facebook now has some proving to do.On the first day of trading as a public company, Facebook shares did not deliver the pop that many investors have come to expect from Internet companies. The lackluster first-day performance may be an early sign that the market is not fully comfortable valuing Facebook at $105 billion, a number that assumes the company is capable of producing enormous profits.At its current market value, investors are not just friending Facebook — they expect it to be their best friend for a very long time. Yet stock market history shows this ardor evaporates when a highly valued company disappoints.“At $100 billion, everything has to go according to plan,” said Aswath Damodaran, ... Continue reading →
