JPM desperate to defend losing position on CDIs

http://www.bloomberg.com/news/2012-...s-heft-is-said-to-distort-credit-indexes.html

Short the shares.

 

1) If the trade "works", that guy will be a "hero".
2) Otherwise, a bailout will be in order. :eek:

 

This thing is pretty big - the index positions (overall across the market) grew like 45% since January (about 145 yards in notional now). I would guess 20-25 of the long are in the hands of JPM. This does smell a bit like the great MS "short housing" trade, with the whole "direct link to the CEO" thing.

My only concern would be that they might be marking it on the accrual basis so there would be no reason for a squeeze. Or that they have some sort of loan structure on the other side that will actually make money when the index widens.

PS. no, this would not really be a cause for a bailout, but certainly enough to make for a nice little dip in the stock price.

 

News just hit bloomberg that the Chief Investment Office to lose more than $800MM for the quarter.

 

The SPY was just sitting there when the news broke, for about 5 minutes actually 30-40 cents above the close. Made you think it wasn't a big deal.

Now -1.30 lower

 

What is going on? I don't know. Just short the shares till ....

 

Now I am hearing $2B.

 

"This violated our principles. This trading violates the Dimon principle."

Referring to himself in the third-person. This clown is gone.

 

Could this explain all the buy orders on ES and SPY options

...probably not...

 

How nice it must be to 'play around' with billions and if you lose, oh well, it was fun!