Proof JPM Cornered the Commodities Mkts in Q1 2015
OperationButter
Posts: 1,672 ✭✭✭
"JPM cornered the commodity derivative market, with a total derivative exposure of just over of $4 trillion, an increase ot 1,691% from just $226 billion in one quarter!"
Why now?
Why now?
Gold is for savings. Fiat is for transactions.
BST Transactions (as the seller): Collectall, GRANDAM, epcjimi1, wondercoin, jmski52, wheathoarder, jay1187, jdsueu, grote15, airplanenut, bigole
BST Transactions (as the seller): Collectall, GRANDAM, epcjimi1, wondercoin, jmski52, wheathoarder, jay1187, jdsueu, grote15, airplanenut, bigole
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Comments
Lnao. I thought all the times demonstrated proof. By ZH logic, they just admitted that all the other stories about proof were lies. "Why now", has ZH admitted to misinformation?
How can anyone actually take that website seriously?
Knowledge is the enemy of fear
<< <i>"And this time there is proof".
Lnao. I thought all the times demonstrated proof. By ZH logic, they just admitted that all the other stories about proof were lies. "Why now", has ZH admitted to misinformation?
How can anyone actually take that website seriously? >>
Some of our "in house" conspiracy advocates feed of that junk.
Some of our "in house" conspiracy advocates feed of that junk.
Maybe it's best to gather your info from various sources instead of just staring transfixed at CNBC & CNN.
I know that US debt is at $18 trillion and there are $1.4 quadrillion in derivatives and worthless paper that are only accounted for as mark to fantasy.
The rest is pure speculation.
I knew it would happen.
No conspiracy here. The data is quite clear that there has been a massive positioning change. It is what it is. But what exactly is the reasoning behind it?
What the chart above shows is that after fluctuating around the low to mid $200 billion range for the past 5 years, in Q1 the amount of Commodities with a maturity of under 1 year exploded to a record $3.9 trillion!
A 17X increase from the norm for such a widely dispersed derivative's area such as commodities is quite interesting....especially when one Bank (JPM) is responsible for nearly the entire move (shades of 2008?). The only sure thing is that the "otc derivatives are safe" crowd showed up immediately to refute the data solely because it appeared from ZH.....even though it came from the US govt.
With the complete lack of regulatory oversight and at worst the application of miniscule penalties for rigging markets (with no guilt being assigned), I'm not even sure why JPM would report "real" derivatives numbers. It's not like they would ever suffer for it.
<< <i>No conspiracy here. The data is quite clear that there has been a massive positioning change. It is what it is. >>
But it was on the internet.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
And.. therefore.. so what?
Liberty: Parent of Science & Industry
<< <i>Why now >>
JPM is expecting (or directing) a big move in commodities.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>
<< <i>Why now >>
JPM is expecting (or directing) a big move in commodities. >>
Which way?
With all the global events, it feels like it was to stop a rally before it happened.
BST Transactions (as the seller): Collectall, GRANDAM, epcjimi1, wondercoin, jmski52, wheathoarder, jay1187, jdsueu, grote15, airplanenut, bigole
<< <i> Which way?
That could be. Commods were decimated from 2011-2014. Maybe it was their intention to keep a lid on commodities for the time being so as not to affect their primary playthings (stocks, currencies and bonds). Commodities and PMs tend to be the canaries in the coal mine when things aren't right. So as long as they aren't rising....things are great out in the economy.
OOC quarterly report 2015 1st qtr
In looking at all the tables in both the 2014 4th qtr and 2015 1st qtr I don't get the big deal that ZH makes of combing the gold and FX derivative tables. Both are relatively unchanged no matter how you look at them. In 4th quarter FX derivs were $33.2 TRILL and in this last qtr $32.8 TRILL. In gold the numbers were both $1.2 TRILL. But what is very different is the increase in commodity and non-gold PM derivatives. From my understanding that does not include gold since gold is always broken out separately. And that doesn't include the other precious metals as they have their own category. Supposedly, silver derivatives are usually the largest % by far of the PM (non-gold) derivs.
Page 22 of 36 shows a 3.4X increase in what are probably mostly silver derivatives ($22 BILL last quarter to $75 BILL this quarter). The bankster boyz are bulking up for something. The previous-all time high listed was back in 2012 with $33 BILL. This is 2.27X that amount. If they wanted silver in check in 2012-2013, they apparently want it much more in check right now. The record Open Interest on the silver futures at 200K is in line with that. Note that I've mentioned in the past that in July 2008 the silver derivatives were up to $200 BILL. That is correct. After Nov 2008 the BIS did an overhaul on how to list derivatives such that the $1.14 Quad took an "accounting" haircut immediately down to $690 BILL. So that 2008 $200 BILL is roughly equivalent to a number of $120 BILL today. So here we are at $75 BILL. If you factor in the $19/oz silver price of July 2008 vs. today's $15.75, then the $75 BILL rises up to $90 BILL equivalent....getting closer to that mega $120 BILL (revised) number from 2008.
Page 23 of 36 shows the commodity derivatives. From last quarter to this quarter shows an approximate 17X increase ($250 BILL to $4.2 TRILL). The typical values for the past 9 years were in the $200-$250 BILL range. So this is a number from left field. Even the huge number from 2005 was "only" around $1 TRILL.....only 25% of the new number. What's going on here?
Liberty: Parent of Science & Industry
<< <i>Back to back bumper crops in midwest corn and soybeans had a lot more to do with the pricing of those commodities than any options strategies. Ditto fracking with oil prices. >>
Mother nature is the biggest manipulator in the commodity markets, I can't believe she continues to get away with such blatant behavior.
I'm flabbergasted.
<< <i>Back to back bumper crops in midwest corn and soybeans had a lot more to do with the pricing of those commodities than any options strategies. Ditto fracking with oil prices. >>
So what you're saying is that the 17X increase in all commodity derivatives reported to OCC is from bumper crops across the board? For those items that aren't 17X greater, there must be others much larger than 17X (mega-bumper crops). So "mother nature" applied some factor to ALL commodities to require the need for 1 bank to increase their total commodity exposure (leverage) by 29X?...and that 29X increase resulted in a total market increase of 17X. Mother nature may apply some freak occurrences around the globe from time to time that could show isolated 17X increases (or decreases)....but across the board of all commodities, all around the world? Flunks the common sense test. If those bumper crops were in "back to back" years, why no 17X increase last year? The numbers don't "prove" anything on their own. When the numbers got too big in 2008, the BIS told the banks to report only 60% of them (new marked to maturity model vs. marked to actual current market value).
JPM's commodity derivatives book increased from $131 BILL to $3.8 TRILL (29X) in one quarter. Commodities make up approx 2% of all derivatives. So this 17X increase in that area, would be similar to raising all credit swaps, or all Forex swaps, or all interest rate swaps by 17X. Not even remotely possible in just one quarter. Imagine the US bank interest rate swaps increasing from $155 TRILL to $2.6 QUAD in one quarter?
Nothing to see here folks, just some good old boys drumming up some new clients. I agree with ZH that even a CFTC regulator couldn't miss this stuff, not that they will do anything more than call up JPM's Compliance Officer and arrange a lunch. The big bank CEO's are in Washington this week. If we have another one of those "bank CEO/Obama meetings" like in early April 2013....all heck could break loose. While it's possible JPM is getting ready to play the long side of commods and PMs....I'm not holding my breath....just my wallet.
Liberty: Parent of Science & Industry
Liberty: Parent of Science & Industry
Conspiracies Rock!!!
Knowledge is the enemy of fear
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>Let's just watch the prices of commodities and see what happens, and whether any of this "matters." >>
What if keeping commodity prices in check after 4 years of beat down is the goal? There's really no way to explain a 17x increase in one quarter other than an OOC accounting error or that JPM & Co. are toying with the market. Considering they've paid fines for rigging most other markets over the past 10 years.... I know where I'd put my betting money. Moves due to derivatives take time. When the USTreasury/FED came calling to Morgan Stanley in late 2010/early 2011 to alter their interest rate derivatives market, those boyz added around $10 TRILL in fresh interest rate derivatives in one reporting period. By the time you saw the position change, the effect was already well in play. That move made Bill Gross and Pimco look amateurish as they were on the opposite side of that trade. Don't fight the FED....or the TBTF bank otc derivatives.
The silver (other PM's) derivatives positions increased as follows: JP Morgan $10.7B to $13.4B, and Citibank $3.9 Bill to $53.02 Bill. These 2 boyz have added a huge amount of silver derivatives to their exposure...not likely it was either Plat or Pall. Citigroup was bailed out by the US Taxpayers. Why are we letting them play with this kind of leverage in silver derivatives? That's 4 yrs worth of world silver production added in one quarter. Anyone think that's a hedge against a bumper crop? JPM was under heat (and investigation) for their silver derivatives the past 5 years. Nothing was "found" by the CFTC. But in the process JPM scaled down their operation, shipped off their former Chief Commodity/Derivatives Trading Officer, and have supposedly been keeping a lower profile. Good thing that Citigroup was up to the challenge to pick up the slack when needed(pg 33-34 of 36). Note that this past week the Commitment of Trader's report (COT at CFTC) showed even hedge funds (Managed Money) net short silver futures for the first time since the Nov 4th 2014 report.
Table 9 4th qtr 2014
Table 9 - 1st quarter 2015
COT historical viewables
Maybe they're making huge bets that the metals will stay in a certain trading range, for example selling silver $18 calls for 2017, and simultaneously selling $14 puts for 2017.
Collect premium both directions, both will expire worthless as the time expires at the end of the term if silver stays near $16. None of this is illegal or even morally questionable.
Someone always has the other side of these scary "derivatives" bets. If the underlying moves enough, there will be a winner and a loser for each derivative, but most just.. expire
Liberty: Parent of Science & Industry
It's simply a speculative bet. The underlying could have moved in the opposite direction and they would have lost 100% of their value. Nothing conspiracy or evil about it. Just a bet.
Liberty: Parent of Science & Industry
<< <i>Oh, guess what, Baley had NO "derivatives" exposure at the start of 2015, and now he has some "derivatives" which he bought 1st quarter and still holds. (they've tripled in value).
It's simply a speculative bet. The underlying could have moved in the opposite direction and they would have lost 100% of their value. Nothing conspiracy or evil about it. Just a bet. >>
Big difference between Baley's positions and the entire world's commodity markets. JPM on their own just increased the US bank's commodity derivatives from a long standing $200-$250 BILL to $4 TRILL. If JPM tripled that position I wouldn't have blinked as it would have been less than the 2005 US bank positioning. But this is 4X greater than the previous world record, 17X greater for the market, and 29X greater for JPM's overall positioning. How many times does Baley increase a current long standing position (must be >$0) by 29X....and in doing so increases the US market position by 17X? (ie Baley IS the world market). You do realize that these "bets" on derivatives do swing the financial markets all over the place and can break normal market supply and demand functions for months at a time. It's more than just a bet as MBS and CDS failures in 2007-2008 amply proved. How soon we forget that period and now rewrite history to say it was no different than betting on a horse race...."just a bet." That's a bet that is linked back to every investor and customer of the bank who are now on the hook for those trades should their netting or "insurance" not cover the loss (think Lehman, BSC, WaMu, AIG, Enron, Country Wide, and a dozen others). AIG, Citi, GE, and others were lucky that the govt (ie taxpayers) covered the losses.
I agree, it's "simply" a speculative bet. It would be no different than if the next Super Bowl's overall betting receipts increased by 17X......or if all the money bet on US state lotteries increased by 17X. It happens every day.
As OperationButter said earlier, "why now?" Based on the number of things lining up, the boyz might be lining things up for a final July-August summer smack down of large proportions. What doesn't line up well is that the huge increase in the commodity and silver derivatives isn't reflected in the futures market, where they normally would be. Something is amiss.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>As OperationButter said earlier, "why now?" Based on the number of things lining up, the boyz might be lining things up for a final July-August summer smack down of large proportions. >>
The end of the Shimitah year is coming, be ready.
Too many positive BST transactions with too many members to list.
I've often pondered the debt question. The debt has been a problem for many years, and isn't it all relative anyway? Can't they just keep increasing the numbers and re-adjusting the numbers as they go, pretty much ad infinitum, as long as the Fed can buy the debt with derivatives?
I knew it would happen.
Neither. You should move.
But a home is not a country, just like a country is not a solar system, and a solar system is not an atom, nor a galaxy.
Silly comparisons using quantum particle physics, or large scale gravity and electromagnetic physics, might be hilarious, but will not be useful.
Liberty: Parent of Science & Industry
Liberty: Parent of Science & Industry
Wouldn't it be easier to just buy a "sh1t" otc derivative to "protect" me in the event of an overflow? Maybe I should buy one for my neighbor's system as well while I'm at it. I'll bet that his overflows so I should be "netted" out. Of course, when either of our systems go airborne, the neighbors won't be netted out.
If the household assets were worth $2 million, we might assume that if the whole amount was invested in a "safe" bond fund yielding about 1%, the family income might actually be $21,700.
That being the case, would it be at all unreasonable for the family to be spending $38,200 per year and making up the difference by putting the shortfall on a credit card (having a credit limit of $159,000 on the card) in the amount of $16,500 annually?
If the family assets are something over $2 million, I'd be tempted to say "no", running up the debt at that rate isn't much of a big deal.
But that wasn't stated in the example, so it's not reasonable to make the assumption that the family has assets in the neighborhood of $2 million.
If you're trying to make an analogy that the US could simply sell off some assets to clear the debt, the analogy itself is rife with problems because it assumes that a ready buyer could be found to buy the assets and it doesn't insure that the deal wouldn't be offered to political cronies in a sweetheart deal that screws the public and benefits a very small group of cronies. This happens when a municipality or a city decides to sell a building or property and then it's discovered that the buyer flipped the property a year later for 6X the purchase price and nets a cool few $million.
On the other hand, if the family only owns assets commensurate with a $21,700 income then lesson #1 becomes quite relevant and the impossibility of digging out of the hole becomes problematic. A country can get away with running into heavy debt for awhile, but a family really can't for very long and still hope to recover without pain. In the end, somebody wants their money. Politicians and bankers can weasel their way out of the problem; a family can't weasel out.
I knew it would happen.
Liberty: Parent of Science & Industry
Significant transactional delays. Physical shortage?
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>From bullion direct.com:
Significant transactional delays. Physical shortage? >>
Another bullion dealer going belly up?
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Knowledge is the enemy of fear
<< <i>Where's the link showing "proof" that Citi has cornered the precious metals markets? >>
Here you go
BST Transactions (as the seller): Collectall, GRANDAM, epcjimi1, wondercoin, jmski52, wheathoarder, jay1187, jdsueu, grote15, airplanenut, bigole
<< <i>
<< <i>Where's the link showing "proof" that Citi has cornered the precious metals markets? >>
Here you go >>
I believe he's wanting a deposition from a Citi official.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>
<< <i>Where's the link showing "proof" that Citi has cornered the precious metals markets? >>
Here you go >>
Oh wow....zerohedge posted it...now I know it must be true and accurate.
<< <i>Im sure we will revisit this thread in 6 months and see that nothing happened.
Conspiracies Rock!!! >>
Yup
+1
Agree
<< <i>...Oh wow....zerohedge posted it...now I know it must be true and accurate.
You missed the BIG picture. The United State Office of the Comptroller of the Currency posted those charts.....Zero Hedge just copied and pasted them. All inquiries of WTH is going on should be directed to the US Treasury/OCC. Let us know what you find. Either they are incompetent at posting/creating charts or there is a conspiracy in commdoities and/or PMs......or all of the above. There is no "none of the above" possibility.
Ohh....the the UST/OCC posted it?.....Which is it? ZH and OCC are either both wrong....or both right................
At some point in the future we will revisit this all.....and find out that something very big did indeed happen because of it. These days, TBTF bank wrong-doings take about 5 years to identify and apply the "harsh" 1% fine.
USTreasury - OCC -derivatives page
OCC quarterly derivative's reports
I knew it would happen.
Quarterly Derivatives
Good Morning,
Thank you for your inquiry. Beginning 1Q2015, Banks began reporting combined FX and Gold notionals because of changes to the call report, specifically schedule RC-R that require the two be categorized together. While a large increase in precious metals occurred, at $75.6 billion, it is not material to the overall $203 trillion market (in notional volume). The precious metals notional do not include gold.
Thank you, let us know if you have further questions.
Quarterly Derivatives Group
Office of the Comptroller of the Currency - U.S. Department of Treasury
So, in other words, there was a huge 17X increase in the commodities as reported ($250 BILL to $4 TRILL) as well as one in non-gold PM's (from $22 BILL to $75 BILL). In realistic terms, the gold derivatives are now buried in the 300X larger Forex derivatives charts with no way to figure out what they are. They are effectively gone....unaccountable. Might as well just removed them from the report entirely. It's possible that this RC-R call report change stated by the OCC is a fallout from Basel ll and/or Dodd-Frank reporting that could require gold to be included in Tier 1 assets....hence combined with "high quality" Forex derivatives. What? Gold is money? Who wouldathunkit? The TBTF banks must have loved this provision to hide a needle in the proverbial haystack. For all we know they lobbied for it. I'm still digging for answers. The OCC has suggested that it will probably include a foot note in the PMs charts (table 9) to state that they do not include gold derivatives. The Perth Mint blog has been following this pretty closely so they might be able to get some answers in the near future.
The huge increase in non-gold PM derivatives was nearly entirely taken on by Citibank ($3.9 BILL to $53 BILL)....much the same way JPM took on 96% of the massive increase in commodity derivatives. That's a team! The huge increases in PM derivatives coincide with other reports listed earlier in this thread. I don't know about conspiracies or anything, only that this derivative's report looks like a duck, walks like a duck, and is now flying like a duck. Do we need to wait for it to quack like a duck? One would suspect the gold derivatives got a big boost this quarter just like other PMs and commodities....but they are no longer visible. These charts belong to the OCC and they have stated they are correct. If you want to know why the commodities jumped 17X from last quarter (or 4X the previous all time record) you'll have to pose your own questions to either OCC or JPMorgan.
While the OCC is correct in that the PM derivatives are not of material consequence to the $203 TRILL overall derivatives being reported, they certainly have great consequence to the 1000X smaller PM markets. And if you are trying to maneuver much bigger Forex and Interest Rate markets with minimal capital expended, the 10,000 to 50,000X leverage provided by opaque gold derivatives is a pretty efficient way....and no one cares, especially regulators.
From ZH: How is it legal that JPM is solely accountable for 96% of all commodity derivatives while Citigroup is singlehandedly responsible for over 70% of all "precious metals" derivatives? Surely even by the most lax standards this is illegal, but what makes the farce even greater is that all of this taking place out of FDIC-insured entities! ........q---u---a---c---k------ Looks like Citigroup is the new and improved version of the Bear Stearns silver short.
Sufferin' succotash!
Quack! Quack Quack Quack Quack Quack Quack Quack Quack Quack Quack Quack Quack
Quack Quack Quack Quack Quack Quack Quack Quack Quack Quack Quack Quack Quack Quack Quack Quack Quack Quack Quack Quack Quack Quack Quack Quack Quack Quack Quack Quack Quack Quack Quack Quack Quack Quack Quack Quack !
I knew it would happen.
Knowledge is the enemy of fear
I understand, cohodk. You may suffer from a rare form of banker-specific empathic financial dyslexia.
Dyslexia, also known as reading disorder or alexia, is a learning disability characterized by trouble reading despite a normal intelligence. Different people are affected to different degrees.
This rare form of banker-specific empathic financial dyslexia involves a cluster of responses to stimuli concerning precious metals, precious metals markets, commodity trading, hair-trigger financial gratification, diversionary tactics employed by tbtf banks, and failure to recognize pending hazardous financial tail events caused by chronic financial public malinvestments and social policies.
I don't know if it's treatable but I'm trying to offer occasional guidance.
I knew it would happen.