Please make your own conclusion from the excerpt below. JPM is “selling protection”… Isn’t that what AIG did with mortgage- selling protection???
If the market tanked due to European nightmare, what do you think will happen to the corporate credit?
I added more SKF today. It “may” just be a runner if our economy doesn’t show any improvement going forward. Of course, stops are in place for my own protection.
Below is an excerpt from the article: Understanding J.P. Morgan’s Loss, And Why More Might Be Coming
“The passage below comes from the WSJ article:
In recent weeks, hedge funds and other investors have been puzzled by unusual movements in some credit markets, and have been buzzing about the identity of a deep-pocketed trader dubbed “the London whale.” That trader, according to people familiar with the matter, is a low-profile, French-born J.P. Morgan Chase & Co. employee named Bruno Michel Iksil. Mr. Iksil has taken large positions for the bank in insurance-like products called credit-default swaps. Lately, partly in reaction to market movements possibly resulting from Mr. Iksil’s trades, some hedge funds and others have made heavy opposing bets, according to people close to the matter… However, Mr. Iksil has turned more upbeat recently. He has been selling protection on an index of 125 companies in the form of credit-default swaps. That essentially means he is betting on the improving credit of those companies, which he does through the index—CDX IG 9—tracking these companies.“