A JP Morgan trader, Bruno Iksil, has been accumulating a giant bet on U.S. corporate bonds. He used derivatives to do it, and he messed up the bet and lost $2 billion for the bank. He could end up losing $1 billion more if the market doesn't cooperate.From Dimon's perspective, and for all the harm it's gonna cause him, that is true.
- How did no one know about this?
Oh, they did. Everyone knew. Thousands of people. Iksil's bets have been well known ever since Bloomberg's Stephanie Ruhle broke the news in early April. A trader at rival bank Bank of America Merrill Lynch wrote to clients back then, saying that Iksil's huge bet was attracting attention and hedge funds believed him to be too optimistic and were betting against him, waiting for Iksil to crash. The Wall Street Journal reported that the Merrill Lynch trader wrote, "Fast money has smelt blood."
When the media, analysts and other traders raised concerns on JP Morgan's earnings conference call last month, JP Morgan CEO Jamie Dimon dismissed their worries as "a tempest in a teapot."
Friday, May 11, 2012
Posted by Substance McGravitas at 8:28 AM