JP Morgan Share Discussion Threads

[moonblue] 15/8/2002 10:34

JP Morgan : Crooked American Financier (JPM)

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hirojan - 24 Jul'02 - 12:10





In line with previous expectations :-)

Would it surprise anyone to know he owned the Titanic.










deltablues - 24 Jul'02 - 20:08 - 11 of 13


Looks like Old Man Morgan has persuaded Jesse to stop shorting once again.

Banking panic this time next week?!

hirojan - 14 Aug'02 - 15:50 - 12 of 13




The article's a few weeks old, but a good read

poppa wobbler - 14 Aug'02 - 22:28 - 13 of 13


A nice read indeed thanks hiro ;-)

The JPM chart shows the recent rebound taking the shape of a "rising wedge" pattern, which is usually a bearish continuation pattern. The volume bars along the bottom also show light volume on the rebound. The On balance volume line has also remained flat ... and diverged from the rising price line. JPM traded under its month-long up trendline this morning.

The Phily Bank Index ($BKX) is nearing its 50-day moving average, and February resistance at 780 (ish).

... $1 by Xmas, aye ;-)

[poppa wobbler] 14/8/2002 22:28

A nice read indeed thanks hiro ;-)

The JPM chart shows the recent rebound taking the shape of a "rising wedge" pattern, which is usually a bearish continuation pattern. The volume bars along the bottom also show light volume on the rebound. The On balance volume line has also remained flat ... and diverged from the rising price line. JPM traded under its month-long up trendline this morning.

The Phily Bank Index ($BKX) is nearing its 50-day moving average, and February resistance at 780 (ish).

... $1 by Xmas, aye ;-)

[hirojan] 14/8/2002 15:50

The article's a few weeks old, but a good read

[blackstone] 26/7/2002 23:09

extract from the latest report by Adam Hamilton


The derivatives world is a funny place. Most of the big derivatives deals are private over-the-counter transactions that are not exchange traded like the common options we buy and sell on individual stocks. These OTC contracts are made between a mega-bank like JPM and an individual company that either seeks to offload its risk by hedging or assume additional risk by speculating. Because the OTC contracts are private, customized, and unregulated, the reputation and honor of the bank writing the contract are of paramount importance.

Companies come to JPM to hedge their risks through private derivatives contracts because the bank has an incredibly sterling reputation going back over a century. The House of Morgan name has been above reproach for a long time due to the hard work of JPM's employees over many decades. Unfortunately though, reputation is a fragile thing. Even a single major headline breach of trust can quickly destroy the fruits of decades of hard work in building a name and brand.

As Arthur Andersen proved, decades of goodwill can be obliterated overnight by one high-profile fraudulent action in a small portion of an entire firm. The elite Big Five public accounting firm was considered blue chip and invincible a few years ago. Today it is thrashing in grisly death throes like an Ebola Zaire victim. If JPM is tarred and feathered and its derivatives clients lose confidence in its integrity, it too can certainly see decades of goodwill vaporize as if trapped at ground zero of a thermonuclear explosion.


JPM's unprecedented $23.5t inverted derivatives pyramid is hyper-leveraged and carefully built upon the irreplaceable trust of every entity that signs derivatives contracts with it. With the US Congress now investigating JPM for explicitly designing financial smoke-and-mirrors for corporate crooks like the Enron rogues trying to materially mislead and defraud their shareholders, I can't help but suspect that some of the companies on the other side of those $23.5t notional value derivatives contracts may grow a little nervous.


After all, companies pay mega-bucks to offload their risk to JPM via OTC derivatives contracts. These companies have to believe, have to have complete faith and confidence, that no matter what happens JPM will be able to make good on its side of the contracts.


This is called "counterparty risk" in the derivatives world. A private OTC derivatives contract made with a counterparty that doesn't have the financial strength to back the contract even in the worst-case scenario is worthless. In addition, a private OTC derivatives contract made with a counterparty that doesn't have the honor to be trusted in even the worst-case scenario is worthless. Trust and confidence is everything in the private OTC derivatives world!

[tomj] 25/7/2002 00:58

looks like an iceberg on the RSI...;-)

[cat man] 25/7/2002 00:51

Any potential fallout for JAM?



:-)

CM

[hirojan] 25/7/2002 00:10

In line with previous expectations :-)

Would it surprise anyone to know he owned the Titanic.

[deltablues] 24/7/2002 20:08

Looks like Old Man Morgan has persuaded Jesse to stop shorting once again.

Banking panic this time next week?!

[hirojan] 24/7/2002 14:22

Well not soaring today yet , but the general trend since february has/had them in a wrangle...the linked article was dated then.

[moonblue] 24/7/2002 14:09

will jp being going to the msft post today

[hirojan] 24/7/2002 14:03

Apparently the gold price soaring has them in a squeeze as well.



Jp Morgan being squeezed , reckon Jesse would drink to that.

[big vern] 24/7/2002 13:43

If they drop below $20 they've gotta sell their divi's to stay afloat

[zzaxx99] 24/7/2002 13:21

Oops, wrong thread - {blush}

[cat man] 24/7/2002 13:04

Tomj

Yip and if that price dives any steeper, I swear it's gonna come off the bottom of the chart and hit the iceberg.

:-)

CM

[pat o hat] 23/7/2002 07:20

The noose tightens on JPM and Citibank?

From an AFX today



"Citigroup Inc and JP Morgan Chase & Co, already facing scrutiny for devising allegedly deceptive transactions for Enron Corp, marketed similarly structured deals to other companies, the Wall Street Journal reported, citing findings by a senior congressional investigator.

"The names of the other companies were not disclosed.

"The investigator is to present the findings today as testimony at hearings forming part of a Senate investigation into the role banks played in Enron's financial collapse.

"The deals under congressional scrutiny include arrangements known as
Yosemite, devised by Citigroup, and Mahonia, devised by JP Morgan, both of which
were designed to make Enron's public disclosures more appealing to investors,
according to the testimony.

"The Journal reported that an official familiar with the investigation will
testify that Yosemite, Mahonia and other deals allowed Enron to understate its
debt by 40 pct while overstating cash flow by as much as 50 pct, according to a
draft of his statement. (etc, etc, sludge, sleaze)...

"JP Morgan, in fact, had a "pitch book" to sell other companies on similar
financing vehicles, according to a copy of the testimony cited by the newspaper.

"JP Morgan entered into similar transactions with seven other companies,
while Citigroup shopped such deals around to as many as 14, with at least three
entering into such relationships, the testimony says.

"The hearings will focus on a commodity-trading vehicle known as a prepay, in
which a financier gives money in exchange for future delivery of a commodity
such as gas, gold or oil..."

Merrill Lynch and NatWest/RBOS also mentioned

[mr ashley james] 30/3/2002 14:49

Greenspan reaps the whirlwind
The Federal Reserve faces a tricky task in curbing excessive growth in US domestic demand without causing a recession
Published: May 23 2000 19:54 | Last Updated: May 23 2000 20:09



One overwhelming question confronts the observer of the global economic scene: whether the US economic party can end without tears. The odds against a happy outcome are rising. Alan Greenspan's reputation is to be tested as never before.

The current expansion is, as the new economic survey from the Organisation for Economic Co-operation and Development remarks, "now the longest since records began to be kept around 1850." Growth has not only continued, but accelerated. The expansion of potential output has, argues the OECD, risen to 3.6 per cent a year from a low of 2.5 per cent in the early 1990s.

Alas, success breeds euphoria - and that breeds failure. This happened to Japan in the 1980s and much of east Asia in the 1990s. The US is similarly endangered. Already worries about inflationary pressures have hit the Federal Reserve. Last week's 50 basis-point rise in its target federal funds rate suggests that gradualism is at an end. Yet this action is probably too little, too late. The Fed almost admitted as much with its statement that "risks are weighted mainly towards conditions that may generate inflationary pressures in the foreseeable future".

So indeed they are. Unemployment is below 4 per cent; industrial production has been growing at a 9 per cent annualised rate in the second quarter; labour cost inflation is drifting upwards; and core inflation has picked up to a three-month annualised rate of more than 3 per cent.

The OECD estimates that last year the economy was operating at close to 2 per cent above the level consistent with stable inflation. Moreover, demand remains spectacularly strong. Over the past four years real domestic demand has grown at a compound rate of 5.3 per cent, faster than any plausible estimate of potential growth in supply. It has not slowed. In the year to the first quarter it rose by 5.6 per cent.

Three special factors have muted the inflationary impact of the excessive growth in demand: the strong dollar; a current account deficit that has reached a record level of 4.2 per cent of gross domestic product; and weak commodity prices. Behind this combination has lain the sluggish performance of the rest of the world. But J.P. Morgan now forecasts euro-zone growth at 3.8 per cent, emerging Asia's growth at 7 per cent, and global growth at 4.2 per cent this year, with only Japan at a feeble 1.8 per cent.

What the Fed has done so far is to fire a pea shot at a charging elephant. True, at 6.5 per cent the rate of interest on federal funds is higher than since early 1991. But it is still only a percentage point higher than before the turmoil of late 1998, and fractionally above the yield on long-term government bonds. The market expects significant further increases in short-term interest rates. It must be right to do so, given the forces driving demand. Even after the recent correction, the increase in the real value of US stocks since 1994 is more than $10,000bn.

Accept that underlying growth in the US economy is about 3.5 per cent a year. Accept also that the economy is now running at some 1 to 2 per cent above sustainable levels of output. Then growth of real demand of 2.5 to 3 per cent a year, for two years, would bring the economy back into balance. But this would leave the current account deficit and consequent rise in US net external indebtedness unchecked. Suppose that the deficit was also to shrink at a rate of one per cent of GDP a year. Then real domestic demand should grow at 1.5 to 2 per cent a year.

The Fed could not fine-tune demand in this way. But it is a rough indication of what needs to happen. Real domestic demand should be growing at between a quarter and a third of its recent rate.

Yet Bill Dudley, US economist at the generally bullish Goldman Sachs, notes that since the second world war the Fed has never been able to raise the unemployment rate by more than 0.2 percentage points without triggering a recession. That has been the outcome on no fewer than nine previous occasions.

Today's position is still more worrying because initial imbalances are far bigger. Just consider a few of them: the most highly valued stock market in US history; the biggest private sector financial deficit since the second world war; a record current account deficit; net external liabilities at 20 per cent of GDP and rising; and a ratio of debt to net worth in non-financial corporations double that in 1980.

This background presents the Fed with the huge challenge of curbing demand growth without overdoing it.

First, people who are vastly richer than they expected, and companies that are valued by the stock market at, on average, twice the cost of replacing their assets will not stop spending readily. It would take a big shock to halt the momentum - not such modest interest rate increases.

Second, that momentum could go into reverse. Soaring demand has been generated by the increase in the private sector's net financial deficit, itself largely explained by the wealth effect of the stock market. A big shock could reverse this, as has happened in many other countries. Bill Martin of London-based Phillips & Drew notes that there would be a direct impact on aggregate domestic demand of 6.5 per cent of GDP if the private sector financial deficit were to revert to its historic average. This could then generate a vicious feedback impact on profits and the stock market and, in consequence, a brutal recession.

The question is how easily the monetary and fiscal authorities could offset any such contraction. The Fed would presumably wish to cut interest rates sharply. But it might be constrained by the combination of a weakening dollar and rising inflation. The budget could be allowed to shift into deficit, since the fiscal position is healthy. But there is little chance of aggressive fiscal action, at least in the short term.

In practice, a big part of the offset to the weakening of US domestic demand would have to come via an improvement in the current account deficit. This is arithmetically almost inevitable: if the US private sector deficit shrinks, the two counterparts - the fiscal surplus and the current account deficit - must move in the opposite direction. An improvement of, say, 3 per cent of GDP in the US external deficit would translate into a 1 per cent decline in net external demand for the rest of the world. The latter could cope, in theory. The question remains how well it would do so in practice.

The Fed is going to have to use heavier shot. But it still only wants to slow the elephant, not kill it. It will need fine shooting and great luck if it is to succeed.

[e-mail]

[mr ashley james] 25/2/2002 19:40

FRONT PAGE - COMPANIES & MARKETS: Fears rise on JP Morgan lending exposure: Investment bank backs nearly a half of all US commercial paper, says study
Financial Times; Feb 25, 2002
By GARY SILVERMAN



JP Morgan Chase arranges nearly half the credit lines that support the giant US commercial paper market, says a new study that highlights the bank's sensitivity to credit market turbulence.

The report is being released as investors are questioning JP Morgan's strategy of using its dominant position in the lending business to win more lucrative investment banking mandates.

JP Morgan's stock price on Friday fell 95 cents, or 3.3 per cent, to Dollars 28.19, its lowest close since Chase Manhattan's acquisition of JP Morgan in late 2000. The company, the second biggest US bank, has lost more than 46 per cent of its value since last year.

JP Morgan has also come under pressure in the debt markets. Bond investors have been signalling that they expect JP Morgan's credit rating will be cut. The derivatives markets now view JP Morgan as riskier than less well capitalised investment banks, such as Goldman Sachs.

JP Morgan, led by William Harrison, chairman and chief executive, has been engaged in an intensive effort to make its case to Wall Street in recent weeks, holding dozens of high-level meetings with investors and analysts.

But the Loan Pricing Corporation study, the first to look only at back-up credit lines for commercial paper issuers, illustrates the difficult position in which JP Morgan finds itself.

The study confirms JP Morgan as the clear market leader, having arranged 46 per cent of the credit lines that were extended last year to companies issuing commercial paper in the US. The Dollars 1,400bn-plus US commercial paper market dwarfs those in Europe and elsewhere.

These lines are promises of credit intended to be used if companies are unable to sell commercial paper. Because all commercial paper issuers are highly rated, the risks were thought to be small. As a result, banks such as JP Morgan extend credit lines for low fees, in the hope of winning lucrative work later on, such as advising on deals or underwriting securities.

But the wisdom of this strategy has come under fire as a series of once well-regarded companies - Xerox, Enron and Tyco, among them - have been shut out of the commercial paper market and forced to tap their credit lines.

Arranging a credit line does not mean a bank takes all the risk itself. Companies such as JP Morgan typically syndicate most of a given back-up credit line to other banks. Banks can also buy protection against default in the derivatives markets.

However, finding banks to join syndicates as subsidiary members is getting more difficult. Other banks want to be compensated with more lucrative mandates, and there is only so much of that kind of work.

That could increase the pressure on credit-line arrangers to retain larger exposures in what remains a tense time for the credit markets. www.ft.com/banking

Copyright: The Financial Times Limited 1995-2002





Fears rise over JP Morgan's exposure to credit market
By Gary Silverman in New York
Published: February 24 2002 20:33 | Last Updated: February 25 2002 11:21



JP Morgan Chase arranges nearly half the credit lines that support the giant US commercial paper market, says a new study that highlights the bank's sensitivity to credit-market turbulence.

The report is being released as investors are questioning JP Morgan's strategy of using its dominant position in the lending business to win more lucrative investment banking mandates.

JP Morgan's stock price on Friday fell 95 cents, or 3.3 per cent, to $28.19, its lowest close since Chase Manhattan's acquisition of JP Morgan in late 2000. The company, the second biggest US bank, has lost more than 46 per cent of its value since last year.

JP Morgan has also come under pressure in the debt markets. Bond investors have been signalling that they expect JP Morgan's credit rating will be cut. The derivatives markets now view JP Morgan as riskier than less well capitalised investment banks, such as Goldman Sachs.

JP Morgan, led by William Harrison, chairman and chief executive, has been engaged in an intensive effort to make its case to Wall Street in recent weeks.

But the Loan Pricing Corporation study, the first to look only at back-up credit lines for commercial paper issuers, illustrates the difficult position in which JP Morgan finds itself.

The study confirms JP Morgan as the clear market leader, having arranged 46 per cent of the credit lines that were extended last year to companies issuing commercial paper in the US.

These lines are promises of credit intended to be used if companies are unable to sell commercial paper. Because all commercial paper issuers are highly rated, the risks were thought to be small. As a result, banks such as JP Morgan extend credit lines for low fees, in the hope of winning lucrative work later.

But the wisdom of this has come under fire as a series of once well-regarded companies - Xerox, Enron and Tyco, among them - have been shut out of the commercial paper market.

Arranging a credit line does not mean a bank takes all the risk itself. Companies such as JP Morgan typically syndicate most of a given back-up credit line to other banks. Banks can also can buy protection against default in the derivatives markets.

[glmorris] 23/2/2002 20:21

About time they were shown for what they are, I got June 25 put options at the begining of January at 25c looks like the profits will be rather nice, not that they are too bad at the moment!

[mr ashley james] 23/2/2002 16:31

Tim?,

Now down another -3.26%, I see US$10 by May, and perhaps well ENRON style possibly by August!

Not looking good for JPM, USA, DJIA or indeed financial services sector stocks is it?

Dangerous game shorting commodities, especially countercyclical's like gold in a bear market/recession IMHO.

Best regards

Ashley

[mr ashley james] 20/2/2002 12:24

JPM Closed down 3.39% or US$1.02 at US$29.03, breaching critical US$30, looks good for a fall to below US$25, possibly US$20 on chart.

Dow fell 1.90% or 157.90 points!

This could be the death of JPM Chase IMHO refer

Cheers

Ashley

[alsfar] 15/2/2002 14:12

Today's Daily Telegraph business news - 'Tyco fears rock Morgan bosses'



You may has to register (free) to read article. The gist is...

"...JP Morgan seems the most vulnerable of all the Wall Street banks to Tyco, with analysts suggesting an exposure of between $700m and some $1 billion in unsecured credit...Wall Street is increasingly nervous about JP Morgan's exposure to Enron and the financial crisis in Argentina. It has already written off $350m for Argentine loans..."