Monday, August 26, 2013

The Real Risk at JPMorgan Isn’t Its Legal Mess

Thanks to Les! -Bill
The Real Risk at JPMorgan Isn’t Its Legal Mess
By SUZANNE MCGEE, The Fiscal Times
August 20, 2013
Remember that scene in Casablanca when Claude Rains, playing Captain Renault in the World War II-era city of the title, closing down Rick’s casino with the immortal words, “I’m shocked, shocked to find that gambling is going on in here,” even as he gratefully pockets his own winnings?

Well, welcome to the Wall Street circa 2013. JPMorgan Chase (NYSE: JPM) seems to be mired in a perfect regulatory storm, with some of its European traders facing criminal charges in connection with the London Whale losses, its commodities operations still faced with uncertainty as its aluminum warehouse storage “scandal” continues, and now the “revelation” that the bank hired the children of top Chinese officials in hopes that this would help it win more business. (It may even have worked – surprise, surprise. Odds are, though, that the nepotism scandal will prove to be a non-starter on the regulatory front: Once that can of worms is opened, it’s hard to imagine where it will ever end.)


In all, The Wall Street Journal notes, the bank faces as least seven investigations by various regulators. Yet while the bank says its legal woes might – in the worst case scenario – add $6.8 billion in losses above its existing reserves, this isn’t in and of itself a reason to flee the stock.
Set those possible losses against the bank’s earnings performance, its valuation (only 8.6 times trailing earnings), its lavish 2.93 percent dividend yield (almost enough to put it into the Dogs of the Dow category). Then factor in that short positions by traders hoping to profit from a fall in the bank’s share price have declined by nearly 5 percent lately, and still account for only about 1 percent of all shares outstanding, and you have a recipe for a rapid rebound.

What will trigger that? Who knows. But the odds certainly favor it, once the headline risks abate.

The one real risk here? The bank doesn’t just need to persuade investors that it takes compliance and risk management seriously, but to really, truly take compliance and risk management seriously.

In his letter to shareholders earlier this year, CEO Jamie Dimon wrote that the bank “must and will do a better job at compliance.”

“Let me be perfectly clear,” Dimon wrote. “These problems were our fault, and it is our job to fix them. In fact, I feel terrible that we let our regulators down. We are devoted to ensuring that our systems, practices, controls, technology and, above all, culture meet the highest standards. We want to be considered one of the best banks – across all measures – by our shareholders, our customers and our regulators.”

Any further revelations of questionable losses or trading activity and the context in which investors view JPMorgan Chase will turn much darker – and rightfully so. Once is a bad error of judgment; twice is unforgivable.

But most of the risks that we know the bank will face – rising interest rates, a decline in mortgage refinancing, the need to satisfy regulators on both capital plans and an emergency liquidation strategy – are common to all banks. What all banks don’t share is JPMorgan Chase’s dominant market position and the intense focus of its management team.

If you want to stay away from this stock, do so because it is mismanaging its business, failing to maximize returns or dropping the ball on risk management – not because of headlines about litigation. Unless JPMorgan Chase has been manipulating global markets on a massive scale (of the kind I’ve only encountered in crime fiction), then the ongoing litigation might leave a slight but not lasting tarnish on its name that time will rapidly remove.

Deutsche Boerse says Eurex trading again after outage

Thanks to Phil for pointing this one out! It wasn't on the US media that I saw... -Bill

Deutsche Boerse says Eurex trading again after outage

FRANKFURT | Mon Aug 26, 2013 10:43am BST

(Reuters) - Exchange operator Deutsche Boerse  said trading on its derivatives platform Eurex had been halted for over an hour on Monday, without giving an immediate explanation for the failure.

Deutsche Boerse said in a statement on its website that trading resumed at 0922 Central European Time, with a company spokesman declining to comment further.

The market impact of the trading glitch appeared to have been limited. A public holiday in London meant most traders in Europe's largest equity market were not at their desks, and trading volumes remained well below their daily average.

Global markets have faced technological glitches recently. Last week the Nasdaq (NDAQ.O) stock exchange halted trading for three hours citing a "connectivity issue".

Earlier this year, the Chicago Board Options Exchange delayed the start of trading there for half a day.

Deutsche Boerse last week said its cash and derivatives markets were available for 99.99 percent of the time in 2012.

(Reporting by Edward Taylor and Blaise Robinson; editing by Ludwig Burger and Keiron Henderson)

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You Inner Bad Ass

Embrace your inner bad ass. Forget the inner child.  That was when you needed taking care of.  You can take care of yourself.  Twenty or seventy, your age has nothing to do with this.  Midwife or firefighter, your occupation doesn’t matter.  This is about that fearless you that sings in the shower, grins at strangers and does whatever the hell she wants, anything he wants.

You are needed.  Those that have been in control until now don’t know how to say goodbye.

They need you to help them.  It is way past over.

Bees have shown me the way.  Several weeks ago our son discovered a parade of them burrowing along the perimeter of the garage.  Turns out they’ve been there for much longer than we realized.  A huge hive was under the door, destroying property and growing. 

First, we energetically/psychically messaged them, asking them to move on.  No response.  Then we hired a “green” exterminator to gently encourage their departure.  He returned three times and they did not budge. 

As a last resort we plugged up every entrance to the hive with cement.  It was an epic battle in the final stages.  There were casualties on both sides.  DH was stung once; the house was splattered with cement as he bravely waved his spatula at them, sealing off their last entrance.  A few bees were squashed.

That was a week ago.  Today we have a newly patched and paved driveway.  In our backyard those same bees have re-built a hive.  We are okay with this location and they are content, busily going about their business.  Everyone won.  DH did what had to be done.  Somebody had to.

What’s running through your veins right now is YOU.  This power is ready to be used.  It’s humming with anticipation.  Our fellow creators, (the ones who don’t know how to say goodbye), will only go when there are no other options. 

This relationship will end when we activate what has been our truth all along.  As D (from Removing the Shackles) put it: “Fuck Off!  I AM a Beacon of Light!” 

We cannot sit silently by. Not if we want to get to the next part.

You’ll have to do what has to be done.  There are no controllers on a bad ass planet.  When all is said and done, the question will come – “Who made the deciding move?  Did they stop or did we seal up all their access points?”

We may never know.  We humans like things seamless, with a happy ending.  It won’t really matter anyway.  What matters is the experiment is over and we did it.  We stepped up to the plate and took a swing, with that uniquely bad ass style of ours.  We did not disappoint. 

We were the Ones we were waiting for.


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