China’s plan seems to be to acquire a total of 6,000 tonnes of gold to put its holdings on a par with developed countries and to elevate the international appeal of the renminbi. Meanwhile in the futures market, the basic problem is that there are many more transactions that could put a claim on gold than there is gold registered for delivery in the COMEX warehouses. There are 107 times more open-interest positions than there is registered gold.
As always, I have a lot of links on Monday. Three or four stories have dominated the news in each market for the past week. In the US, it is about either JPMorgan Chase’s escalating losses, Facebook’s IPO or the general aimlessness of the market. In Europe, the dual stories are Greece and Spain. In Greece, the talk is of an imminent exit from the eurozone, while in Spain the question revolves around Spanish bank insolvency. Other news outside of the G8 has been pushed to the side.
I spoke to Paul Waldie and Brian Milner of the Globe & Mail on BNN’s headline on Monday. The big story was JPMorgan Chase and the London Whale trades. JPMorgan Chase’s CEO Jamie Dimon, as the leading lobbyists for the hands-off regulatory approach for US banks, has become a lightning rod for criticism of too big to fail banks in the US. Even so, I think it’s unlikely that Dimon will be forced out of his position. We also talked about Yahoo and the oversubscribed Facebook IPO. They are going to have to execute really, really well to justify the IPO valuation.
The big headline today is still JPMorgan Chase and it’s huge trading losses. Clearly this is a black eye for JPM but the question goes to what longer term consequences the incident will have.
The FHFA complaints lose explanatory power and persuasiveness because they ignore compensation and accounting. It pays to understand accounting control fraud.
On July 13, 2011 Chairman Bernanke explained: “The reason people hold gold is protection against tail risk, really, really, bad outcomes. To the extent that the last few years have made people more worried about the potential of a major crisis, then they hold gold as a protection.”
Here’s the question: Can sovereignty and effective international supervision be reconciled when it comes to complex large financial institutions? Simon Johnson lays out a compelling case that they cannot. As he has said time and again, there is no meaningful resolution authority capable of dealing with large complex cross-border institutions like Lehman Brothers. We either let them fail like Lehman or bail them out.
Meanwhile people like Tim Geithner are arguing that financial institutions should be allowed to get even bigger.
This is from the testimony in the video below: Soldier’s wife: I’m dealing with Chase, getting their phone calls, getting their harassment around the clock. My husband Jonathan missed two hours of our daughter’s birthday party, because Chase simply would not hang up the phone until he made a payment in which we have already paid our mortgage. Chase representative: […]
Jamie Dimon’s 17-minute interview by Maria Bartiromo below was done earlier in the week before JPMorgan Chase released their numbers. The numbers were good, showing quarterly profits of $4.8 billion or $1.12 a share. Dimon expects to resume a dividend of 75 cents a share when his firm gets the green light to do so. Dimon speaks in very positive […]
The FDIC is out with its Quarterly Banking Profile for Q1 2010. And despite a rise in the FDIC’s ‘Problem List of Banks’ to 775 in Q1 from 702 at the end of 2009 and 552 in Q3 2009, banks earned a ton of money – more than $18 billion in the quarter. Big banks made out like bandits as […]
We know that JPMorgan is not substantially increasing lending anytime soon. And we also know that banks are recapitalizing courtesy of a steep yield curve and near zero rates, what I would call free money. What I didn’t know is how free these funds truly were. An investor friend pointed out something curious buried deep in JPMorgan Chase’s financial report […]
JPMorgan Chase had a blowout quarter for earnings. We’re talking earnings of $3.3 billion for the quarter here. That’s up over 50% from last year’s already high $2.1 billion. Does that signal an increase in lending? No. If you read between the lines of a comment Dimon made on the quarterly conference call about paying a dividend again, you understand […]