This transcript is automatically generated
More on JPMorgan let's bring in Matt McCormick his portfolio manager and banking analyst.
At scale and Gator and Tom's a lot of who was co president chief investment officer at on the best group gentlemen.
We have a difference of opinion -- the meaning of what happened at JPMorgan and how that might spill over to the economy in the financial sector.
One and he was bullish the other bearish -- I wanna go to you first is this.
Is this what happened -- JP were just a bad trade or is it somehow symptomatic.
Of something deeper in the financials here.
Think it's a combination of both Dave when you look at what happened to JPMorgan.
I equated to a black guy it hurts it stings but it'll go away they certainly have more enough money to survive this.
However when you look at what it gives its opponents mainly.
The politicians that are trying to put more teeth to Dodd-Frank.
It's gonna give them and other critics more -- to say the financial some particularly the money center banks don't know what they're doing they're not supervised and there's a lot of risk.
It to certain aspect investors have to give the pundits give the people that want to put more teeth to this legislation.
Some -- some ammo because you look at it.
There there are mistakes here even Jamie Dimon said there egregious.
-- it's very difficult to value their true liabilities and what we do is our -- we say hey we can't duplicated.
These esoteric CDS whatever you called it.
How do you put a value to it I think the perceptions are right now that these are volatile names.
For risk that no one knows and nor can truly analyze and if you're gonna own them you have to have a cast iron stomach and be ready to withstand the volatility because these are volatile -- and I believe.
The disclosures from JPMorgan in the losses are only going to increase not decrease okay.
Well somebody is here with a titanium stomach and that's Thompson water because not only has the on financials he hasn't had come then the JPMorgan.
The last three times he's here Tom are you buying today just holding sitting tight watching what's going on.
We're sitting tight we're not we're not buying a -- we're still.
Positive on JPMorgan yes that the black guy -- -- pull -- way.
-- go way do they have enough money to whether they do bull regulation become more heated.
I hope not it's -- regulations that -- they're -- the problem as opposed to Iowa.
How can you say that this this is a trader that was making his own bets and of course approved by some of his superiors where does regulation -- -- that well.
The it's -- regulation that is forcing banks to do things that they wouldn't have done otherwise what do we mean by that we're seeing banks off loading the proprietary trading units.
Why because of the Volcker Rule should we have a role -- I don't think so.
Like because they think that we get a lot of information from proprietary trading information about what large institutional investors are doing and actually why are they doing them.
Well -- even under the vocal rule by the way this trade may have been permitted because you are allowed -- hedge under the vocal rule and this could have been.
Considered -- -- but let me just talk about some peoples -- Richard Fisher the Dallas fed president.
Has has voiced a lot of concern about whether some of what we have seen in the past when he first might be endemic to visit to a larger issue the too big to fail issue let's just play -- -- -- spoke with a much.
A couple of weeks ago you're talking about this let's play that sound bite and then get your reaction.
In the end we're gonna have to break up these institutions it's un American to have that much concentration inhibits.
The functioning of monetary policy and -- moneyweek.
You know -- to this accommodation try to get out to the system and our taxpayers and depositors shouldn't be hostage.
Two institutions that are too big to fail we saw this happen before I certainly don't wanna be put -- position again.
So Matt not only is this an institution -- -- Richard Fisher is tube is too big to fail but.
But this particular trading group the London whale was trading about 15% of all the assets.
Of JPMorgan chase is that too much for one group to be trading.
I I look at it this way I agree with your guess about talking about the vocal rule in -- You more regulation is coming.
The Volcker Rule does not guarantee a positive trade you have market.
Action that you could win or lose money it's not a guaranteed everybody makes money however.
The Fed was on top of JPMorgan they still allow this to happen I'm in favor just -- and.
Dodd-Frank in the -- -- because it doesn't exist it's un definable and going black to -- -- going back to Glass-Steagall Glass-Steagall was 37 pages long and it worked for over sixty plus years so I agree with the Fed governor I don't want somebody's too big -- -- -- this was some esoteric hedge fund they blew up.
And they went out of business buying but this is JPMorgan where our government says they are too big to fail.
In a sense the government may have to come in and help propel us down to -- I don't think they'll -- do but there's still the chance and I -- that is investor I think that was American.
And I don't wanna be hostage to one entity.
The -- -- we -- the investor viewers watching that really listening to maps argument saying don't tell me I have to bail these people out again here's the question up.
In in -- worst market because we got a pretty basically decent and stable market even though Europe is a problem.
If this happened in -- less stable environment could -- have shaken the system more.
It definitely would have taken the system and I think that's what we need to take perhaps off in applaud the fact that a financial system.
Has healed itself incredibly over the last three years we didn't have a systematic response today.
Two to what happened with -- we didn't see it throughout the financial system yes Citigroup is down some of the big banks were down but that as you suggested or said.
That most of the financials on on the New York where the S&P were actually up on the day -- -- again I think we take all of this with a with a grain of salt was that a bad trade.
Yes would regulation help but note -- may have exacerbated it exacerbated the problem is that we need more.
What would agree sober view of everything from both -- an issue -- -- and top terrific stuff Geist.