The Tide Is Going Out and JPMorgan, Deutsche Bank and AIG Appear to Be Swimming (Read Trading) Naked

 

Closing Price of the S&P Index on Friday, March 27, 2020, Versus Bank of America [BAC], Citigroup[C], Deutsche Bank [DB], Goldman Sachs [GS], JPMorgan Chase [JPM], Morgan Stanley [MS], AIG, and Ameriprise Financial [AMP].
Closing Price of the S&P 500 Index on Friday, March 27, 2020, Versus Bank of America [BAC], Citigroup[C], Deutsche Bank [DB], Goldman Sachs [GS], JPMorgan Chase [JPM], Morgan Stanley [MS], AIG, and Ameriprise Financial [AMP]. (Source: BigCharts.com)

Something is clearly happening under the surface on Wall Street that is just too repugnant to be reported to the American people.

By Pam Martens and Russ Martens of Wall Street on Parade.

Warren Buffet is credited with the quote: “Only when the tide goes out do you discover who’s been swimming naked.”

Friday’s closing prices among some of the heavily interconnected mega Wall Street banks and insurance companies known to be counterparties to Wall Street’s derivatives appeared to show who’s swimming naked in the realm of derivatives – naked meaning who has sold derivative protection (gone short the risk) on something that is blowing up.

As the chart above shows, the S&P 500 stock index (SPX) closed with a loss of 3.37 percent while the following three stocks closed with more than double that percentage of loss: Deutsche Bank was down by 7.44 percent; JPMorgan shed 7.12 percent while AIG was off by 7.27 percent.

When the Federal Reserve needs to create a hodgepodge of  secretive Special Purpose Vehicles (SPVs) and run bailouts of $4 trillion; and the Fed gets language in the newly passed stimulus bill that it can hold its meetings in secret with no minutes provided to the public; and the President of the United States signs the stimulus bill with a signing statement announcing only he will determine what Congress gets to know about where the bailout funds go, you know that something is happening under the surface on Wall Street that is just too repugnant to be reported to the American people.

And when you see three firms like JPMorgan Chase, Deutsche Bank and AIG trading as outliers to their peers, only a fool wouldn’t see them as a potential connection to this need for super secrecy.

Here are some key points to remember at this point in time.

JPMorgan Chase’s Chairman and CEO, Jamie Dimon, has serially bragged for years in his annual letter to shareholders about how the bank has a “fortress balance sheet.” But when your stock is losing twice the amount of the S&P 500 and eclipsing the losses of its peer banks on a Friday, there’s something seriously wrong with that balance sheet.

And, unfortunately, this would not be the first time that JPMorgan Chase got on the wrong side of a derivatives trade. In 2012, Jamie Dimon allowed a woman with no trading licenses, Ina Drew, to supervise traders in London who gambled with hundreds of billions in depositors’ money and lost at least $6.2 billion making bets on exotic derivatives. It became known as the London Whale scandal because the trades were so big that they rocked the market and a hedge fund tipped off the media. The trades were made using deposits from within the federally-insured bank at JPMorgan Chase and resulted in an FBI and Senate investigation along with $1 billion in fines and settlements

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