Use the force!
Posted on 07/23/2002 5:11:52 PM PDT by rumrunner
Larry Kudlow mentioned that the Federal Reserve may be meeting tonight to discuss the exposure of Citibank and JP Morgan Chase to derivatives and the stock market collapse.
Possible that both banks have billions of derivatives that need to be unwound. Would collapse the banking industry.
Use the force!
JP Morgan Chase hit on derivatives, Fed rumors (JPM) 20.48 -4.04: Stock is getting mauled today on a report in the Journal that JPM was involved in numerous Enron-like deals (7:01); however, we are also hearing rumors among traders that if JPM's stock falls or closes below a certain price (we're hearing $20 or $22), the co may be forced to unwind a number of derivative positions; in addition, we're hearing rumors that the Fed may hold an emergency meeting tonight to discuss such banking issues; of course, a degree of skepticism is warranted here (especially with the latter rumor), but chatter such as this is undeniably weighing on JPM and the bank group in general.
That's what I was thinking. If the Clinton collapse causes a neo-New Deal type of extreme socialism in this country, the conservative remnant (us) would have a better chance to save conservatism if the were a voting block in a small country. Israel already has the foundations of conservatism seeing how they are witness to non-conservatism so close to them every day.
But, I will stay in teh USA until things get too bad to take it, thank you very much....:)
Me too. Just running some scenerios. :^)
Oh baby-I stand by you on this statement-BIG TIME!!!!!!!!! Thank You GOD, Thank you President Bush, thank you administration members and thank you Mr O'Neil for using good sense!!!
I believe we can pray for the truth to out for this nation and that it will become clear and understandable to everyone. God loves justice and upright men, of that there is not doubt, this would be a great time to lean on Him.
I'm watching the rerun of Kudlow and Cramer right now...Larry teased with a rumor then went to commercial....I'll post the rumor if he ends the show with it.
Send in the clones...
Not yet. The country can still be saved with ordinary powers. But declaration of an emergency is possible if it gets beyond a certain point. Look at all the actions taken during the Great Depression. None of it worked, some of it was harmful. Ten years into it, war.
Among the day's most noteworthy rumor was that the Federal Reserve was convening an "emergency meeting" to deal with the market's meltdown in general and J.P. Morgan's derivatives exposure specifically.
A spokesman for the Fed did not return phone calls seeking comment (not that I expect it would have commented, anyway). Late Tuesday, Adam Castellani, a J.P. Morgan spokesman, called and said the rumors were "completely untrue and irresponsible."
At the end of 2002's first quarter, the notional value of derivatives contracts involving U.S. commercial banks and trust companies was $45.9 trillion, according to the Office of the Comptroller of the Currency's bank derivatives report.
The OCC noted seven commercial banks accounted for almost 96% of the total notional amount of those derivative contracts, which are complex financial instruments that are used to hedge risk against and/or increase leverage to movements in various financial assets. J.P. Morgan Chase is far and away the most active participant in the derivatives market, with involvement in $23.2 trillion, or 50.5% of the total. ("Notional value" is the total value of the contract, and J.P. Morgan's direct exposure to those derivatives was $51 billion as of Dec. 31, or less than 1% of the notional value, according to the firm. About 80% of the company's exposure was with investment-grade counterparties.)
For some time now, years literally, the hard-core bears have been talking about a "sum of all fears" scenario involving J.P. Morgan's exposure to derivatives in general, and bearish bets on gold in particular.
Today, the price of gold fell 3.4% to $312.60 per ounce, its lowest close since July 8, while the dollar rallied sharply vs. the euro, which fell below parity to 98.62 cents vs. yesterday's close of $1.0080. The dollar also rallied against the yen, and the dollar index rose 1.95 to 107.08.
Given the greenback has recently been moving in the same direction as equities (i.e., down), while gold has been trading inversely (although more sideways-to-down of late), today's movements were somewhat curious.
Indeed, a person given to conspiracy theories might surmise the Fed did convene a meeting today and decided to intervene to boost the dollar and weaken gold in order to help alleviate pressure on money-center banks, such as J.P. Morgan and Citigroup.
From thestreet.com
http://www.thestreet.com/markets/aarontaskfree/%20http://www.occ.treas.gov/ftp/deriv/dq102.pdf
Oh you don't have Real Player?
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