Good morning

The headlines:

  1. Reuters has an exclusive on JPMorgan betting against itself.

    Link: it’s called “hedging”, you journalist.

    Reuters has announced a new exclusive twist in the London Whale saga*: some of the JP Morgan traders bet against Bruno Iksil’s position, “said three people familiar with the matter”.

    And the US Senate Permanent Committee is “looking into how different divisions of the bank wound up on opposite sides of the trade”.

    Who are the editors of this story? Because JPM investors should be thanking those traders for off-setting the losses with some gains. It’s not a twist – it’s totally NORMAL for a bank to take trading positions to offset the risk of other trading positions.

    The only twist here is that said traders didn’t bet more. Because then Jamie Dimon could have called the entire thing a storm in a teacup, and it would have looked like a normal teacup. And, more pertinently, NOT like the teacup on the Beauty and the Beast ride at Disneyland, which does some spinning and then someone gets vomited on.

    *wrote about it here, here and here.

  2. Apple announces a bigger iPad.

    Link: like, finally.

    Yesterday, Apple announced an iPad that’s bigger than 64 gigs. It’s only 128 gb, but that’s 100% bigger. #Fact

    Still not really “wow”. Although I think that the price has the wow factor ($799 entry level price for the wifi only – which puts it in the same league as a laptop). More space though? No – we want more awesome.

    Which means iGlasses that look well-spiffy and allow me to surf the internet while I’m sitting in traffic. And an iCar that can fly.

    You know. The small things.

  3. Amazon does better/worse than expected.

    Link: it depends on who’s talking. announced its fourth quarter results yesterday, which showed their earnings drop by almost half of what they did in 2011. However, their share price was up by 9% in after hours trading, which sounds entirely contradictory.

    Closer inspection: their sales revenue increased by 22% (always a good sign); and they improved operating income – which suggests that the earnings drop was represented by some of Amazon’s expansion costs (I seem to remember writing about them building more warehouses/distribution centres after the 3rd quarter 2012 results).

    Also, when you think about how many high-street music/book/dvd retailers are dying (Virgin Megastores and FNAC in France; HMV in the UK), and how many have already disappeared, it looks like we’re reaching the tipping point in the way we shop (and read). We’re going to have to shop online – because the big stores just can’t compete with online efficiency, and are going to die.

    On the other hand: forward-looking P/E ratios in the 153 range are uncomfortable. But, possibly, not inaccurate when is the Google of shopping online.

  4. Michael Dell wants it back.

    Link: a buy-back.

    Michael Dell, who still holds 15.7% of the company he founded, is apparently seeking to regain majority control.

    Buyouts are always so interesting. It’ll be fun to watch.

  5. The woes of Anglo American.

    Link: this time, Brazil.

    Anglo American is writing off $4 billion of its investment in the Minas-Rio iron-ore project in Brazil, and it’s increasing its capital expenditure there.

    Which, like, deserves some raised eyebrows. Especially as the original spending estimate in 2008 was $2.6 billion; and now it looks like it may reach $8.8 billion. And when you add this to the fun South African stories… It’s a lot of bad-timing.

    On the encouraging side, it’s not like Anglo-American is pulling out of the mine, which tells you that there must be something there. The real test will be when outgoing CEO Cynthia Carroll gets properly replaced in April – because new CEOs tend to send everything out with the old.

    It just makes for a better success story.

That’s all for now.

Have a good day.