mojobo Posted October 14, 2011 Share Posted October 14, 2011 J.P. Morgan Chase & Co. became the latest too-big-to-fail bank to take advantage of an interesting trade: the bank hedges the spread on its own debt. When investors bid up the yield — an indicator that they think the bank won’t pay — J.P. Morgan makes money. Read full story on J.P. Morgan earnings .Hey, it doesn’t have to make sense, it’s Wall Street. The end result was slightly better-than-expected but lackluster profit of $4.26 billion, for the nation’s second-biggest bank by assets. The bank reported $1.9 billion in revenue from the bets against itself — the net income from the move wasn’t immediately available. http://www.marke****ch.com/story/jp-morgans-bet-against-jp-morgan-2011-10-13 The article made it a little difficult to understand what they were doing, but basically what is being alleged is that J.P. Morgan issued/shorted its own debt, had analysts say that the financial industry was struggling causing the bond prices to go down and when they did they covered their position giving them a huge profit off of their own supposed debt problems. Link to comment Share on other sites More sharing options...
SWFLSkins Posted October 14, 2011 Share Posted October 14, 2011 We should save whatever money we are spending by closing the FTC, just a bang for the buck move. Link to comment Share on other sites More sharing options...
Rocky21 Posted October 14, 2011 Share Posted October 14, 2011 Firms shouldn't be allowed to short their own stock but whatever. Link to comment Share on other sites More sharing options...
AsburySkinsFan Posted October 14, 2011 Share Posted October 14, 2011 What?! The game is rigged!? Link to comment Share on other sites More sharing options...
Ellis Posted October 14, 2011 Share Posted October 14, 2011 Those pesky 99%-ers... trying to bring this crooked system down. How dare they!?!?!?!?! Link to comment Share on other sites More sharing options...
ABQCOWBOY Posted October 14, 2011 Share Posted October 14, 2011 Those pesky 99%-ers... trying to bring this crooked system down. How dare they!?!?!?!?! Would be very interesting indeed to see just how many of those pesky 99%-ers actually know of this or might understand this if explained. Standing or sleeping in a park doesn't solve this problem. Tell me how you intend to fix the problem. Otherwise, you are just created more of a problem. Link to comment Share on other sites More sharing options...
DCSaints_fan Posted October 14, 2011 Share Posted October 14, 2011 Would be very interesting indeed to see just how many of those pesky 99%-ers actually know of this or might understand this if explained. Standing or sleeping in a park doesn't solve this problem. Tell me how you intend to fix the problem. Otherwise, you are just created more of a problem. Pretty much everything on Wall Street can be understood in terms of what a sports bookie does... they just use more complicated terminology. I had a friend recently who bet the 49ers-Eagles game ... he had a bet with another "friend" for the 49ers to win ... I asked him what was the point spread ... he said there wasn't any, just win-loss. I asked him how much he won, and how much he bet, he said he won $50 on a $50 bet (even-money). I told him he was stupid, because the line in Vegas was Eagles by 6 (if I remember right), and his "friend" could have just taken his bet, then bet the 49ers, creating a "wedge" in which he pretty much couldn't lose ... if the 49ers won the game, he would get his money back. If the Eagles won the game, he would also get his money back. But if the Eagles only won by 6 or less, he would make money... (he would win the bet with his friend AND the bet with Vegas ) Seems like sort of the same thing. Link to comment Share on other sites More sharing options...
mojobo Posted October 14, 2011 Author Share Posted October 14, 2011 Firms shouldn't be allowed to short their own stock but whatever. It's a little different than shorting their stock. Since most of the people who run the company are heavily invested in their companies stock they would probably never do that since it doesn't really help them increase their share price. What they did was short their own bond while the market was relatively safe, put out a report that bonds in the financial sector had an increased risk, and when the bond price came down they bought back their own debt and then reported that as profit in time for their earnings report. No idea if this will be pursued by any regulatory commission but it is pretty much an open and shut case of insider trading. Link to comment Share on other sites More sharing options...
FanboyOf91 Posted October 14, 2011 Share Posted October 14, 2011 The game is the game. Link to comment Share on other sites More sharing options...
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