Comments on: Investor group seeks JPMorgan governance changes http://blogs.reuters.com/financial-regulatory-forum/2012/05/18/investor-group-seeks-jpmorgan-governance-changes/ Mon, 31 Oct 2016 15:40:16 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: greedometer http://blogs.reuters.com/financial-regulatory-forum/2012/05/18/investor-group-seeks-jpmorgan-governance-changes/comment-page-1/#comment-8883 Sun, 20 May 2012 11:37:10 +0000 http://blogs.reuters.com/financial-regulatory-forum/?p=9221#comment-8883 Here’s the part that puzzles me. This loss is being spun as a hedge position gone bad. How’s that? Apparently JPM has a $2B trading loss because it bet the economy would improve and turned out to be wrong. Here’s the thing. If you employ derivatives (apparently in a big way) as a hedge and suffer a big loss because the economy doesn’t improve, that’s not hedging. In order for this to be hedging, JPM would have to have a considerably larger position that would rise in price if the economy worsened. Either that or its so-called derivatives hedge position was really not a hedge position at all, but was a speculative unhedged long bet that the economy would improve (more likely). If JPM had a big bet the economy would improve (and it did / and still does), keep that conflict of interest in mind when anyone from the firm is quoted indicating they see the economy improving. If they’ve got a big 1-way bet the economy is going to improve, what else would they say?

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