The finance lawyer who blogs at Economics of Contempt has a very nice summary of what is required for JP Morgan to claim that the trades at the CIO unit are allowed under the Volcker Rule because they were “portfolio hedging”. It is a more comprehensive and textual version of our requirement that JP Morgan [...]
JP Morgan’s $2 billion loss on credit derivatives traded by its Chief Investment Office (CIO) has moved the debate over implementation of the Volcker Rule to the front page. Many claim that these trades are a clear example of the type of speculative, proprietary trading banned by the Volcker Rule. JP Morgan CEO Jamie Dimon [...]
Delta Airlines’ deal to buy the Trainer Refinery owned by Phillips66 was formally announced yesterday. The 8K filing is available here and includes the press release and slide show. Until yesterday the deal was being talked about as a way to hedge the fluctuating price of jet fuel oil. But the announcement makes clear that [...]
Lots of commentary on the web about the news that Delta Airlines is thinking about buying ConocoPhillips’ Trainer Refinery as a way to hedge the cost of jet fuel. Liam Denning at the WSJ’s Heard on the Street column offers a concise statement of the critical view.
In a previous post, I criticized a report by the consulting firm IHS on the potential impact of the Volcker Rule on the US energy industry. Kurt Barrow, Vice President of IHS Purvin & Gertz and co-author of that report, has sent me the following reply: Thank you for your interest in our report. We wanted [...]
Natural gas producers in the US are faced with tough choices. Advances in drilling technology have made low cost production from shale resources viable on a large scale, and the industry has been in a race to lay claim to the most valuable properties and to capture a competitive advantage in mastering the technology. But [...]
Earlier today, the consulting firm IHS released a report decrying the horrible consequences that the Volcker Rule would have for the US energy industry and the economy. It’s a hatchet job. Why?
Companies are often required to hedge when taking a loan, and especially companies with volatile revenues and little flexibility to quickly adjust their costs to stabilize earnings. Creditors care about being paid back, so they worry that the firm does not fall into a state of low earnings. Hedging reduces the likelihood of that happening, [...]
February 23, 2012 – 8:18 am
As a part of its restructuring of debt, the Greek government has decided to issue GDP-linked securities: Each participating holder will also receive detachable GDP-linked Securities of the Republic with a notional amount equal to the face amount of the New Bonds of the Republic issued to that participating holder. The GDP-linked Securities will provide [...]
February 17, 2012 – 8:25 am
As part of the fallout from last August’s bankruptcy of the Federally-backed solar firm Solyndra, the Obama Administration appointed Herbert Allison, a Republican banker and former Treasury official to review the Department of Energy’s loan guarantee program. His report was completed at the end of January and released earlier this week. It contains many useful [...]
