JPMorgan is Moving Markets Thanks to The London Whale

JPMorgan is Moving Markets Thanks to The London Whale

Jamie Dimon, the CEO of JPMorgan Chase & Co. (NYSE:JPM) has been an influential leader in the investment banking industry and has certainly brought riches and power to his firm. This is can easily been seen in JP Morgan’s chief investment officer title. Dimon has been able to increase speculation, increase sizes and risk.

An executive in London, Achilles Macris was hired in 2006 as the CIO’s top executive in which to lead an expansion for the firm in debt investments, particularly corporate and mortgage. This all shows that JP Morgan has shifted the duties of what the CIO is responsible for. Traditionally, CIOs are responsible for protecting the firm’s banking business from interest rate and currency risks. Now it appears they are capable of expanding the business operations into new territories and actively generate more profits for the firm.

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Getting back to the importance, one of Macris’s traders, Bruno Iksil has been in the news lately because he was moving markets with his trades (Ilksil is also known as ‘The London Whale’). This shows that JP Morgan is capable of moving markets just like Fed Chairman Ben Bernanke can in Treasuries.

Macris’s group of traders have total assets of $200 billion and took home a profit of $5 billion in 2010, which is more than a quarter of JPMorgan Chase & Co. (NYSE:JPM)’s net income in 2010. That just shows you how much power this elite group of traders has. Their profits are giving JP Morgan as much as 25% of their net income yearly.

As a whole JPMorgan Chase & Co. (NYSE:JPM) has been able to stay above the industry in the recovery, as they have adjusted themselves more efficiently to rising challenges such as new regulation.

Generally speaking, they have been even surprising analysts lately with earnings. That being said the bank’s latest earnings, Q1 2012,fell a little short of expectations in some areas. However, it was an overall beat for the bank.

My main concern for JP Morgan and other banks is investors suing the banks due to the bad loans they had sold to them back in 2007-2008. This is making the industry pay hundreds of billions of dollars worth in bad bonds which they now have to hold on their balance sheets.

They are giving hard earned money in exchange for bad bonds. However, they shouldn’t have sold the bonds in the first place but expect these legal fees to catch up and start effecting the bottom line of the banks if they continue at the current rate.