May 13, 2012
Weekly Market Outlook
By Keith Schneider
While Obama proclaimed his support for same sex marriage, the uncivil union between commercial banks and security firms reared up once again. JPMorgan announced a "small" trading loss of over $2 billion in a credit bet breaking bad, knocking off over $10 billion in its market cap.
If JPMorgan (the largest US bank) currently considered the most proficient manager of risk in the banking/trading sector has enormous trading losses, it calls into question how secure is the whole financial sector and our bank accounts? "We know we were sloppy. We know we were stupid. We know there was bad judgment," Dimon (CEO of JPMorgan) said in an interview with NBC television. So if the smartest guy in the room can be that stupid, what type of damage could a really moronic bank do to our financial system? Look no further than 2008.
Between the elections in France, a faltering US recovery and the huge trading losses that rocked JPMorgan, the market is teetering. Not all is lost however; the stock market was buoyed on Friday by improving consumer sentiment which moved to its highest levels since the 2008 meltdown. Why the US consumer feels good about the state of affairs is another mystery. Watch this week’s video to see how the markets have moved into a strong warning phase and its implications.
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