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J.P. Morgan Chase JPM +0.25% & Co. has taken $2 billion in trading losses in the past six weeks and could face an additional $1 billion in second-quarter losses due to market volatility, Chief Executive James Dimon said Thursday in a hastily arranged conference call after U.S. markets closed.
The losses stemmed from derivatives bets gone wrong in the bank's Chief Investment Office, which manages risk for the New York company.
"We will admit it, we will fix it and move on," Mr. Dimon said. "This trading violates the Dimon principle."
Australian shares are trading lower, led down by the banks after US banking giant JPMorgan spooked investors with a $US2 billion trading loss on a failed hedging strategy. European markets rose and the Dow Jones snapped a six-day losing streak, but Wall Street futures fell on the JPMorgan news.
Read more: www.smh.com.au...
Attempts to hedge his over-hedged positions and/or unwind them impacted the market too much and we suspect created the need for today's admission of guilt. And so, we find ourselves with - net CDS/CDO notionals remain huge (and implicitly on JPM's shoulders), his very recent lack of selling has left the credit index maybe 20bps rich to where it might trade given its rough correlation with the S&P 500 and this would imply at least $3bn of losses already in addition at fair-value. Of course, the situation is far worse