Courtesy of John Nyaradi.
ETFs ended flat after a rough week topped off with JP Morgan’s $2 Billion loss
ETFs and major indexes ended flat today as a hard week of Greek worries, lackluster economic reports, and a $2 billion mistake by JP Morgan sent investors home for the weekend. The SPDR S&P 500 ETF (NYSEARCA:SPY) lost .29%, the SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA) lost -.20%, the PowerShares QQQ Trust Series 1 ETF (NASDAQ:QQQ) lost -.02%, and the iShares Russell 200 Index ETF (NYSEARCA:IWM) lost .25%.
The latest from Greece indicates that a Greek coalition government is in doubt, as Evangelos Venizelos of the socialist PASOK party has yet to form a coalition government, thereby suggesting that new elections will take place in a month, followed by the ever increasing possibility Greek exit from the Euro. The clock is ticking and couple the Greek mess with the fact that Spanish bond yields have again risen above 6%, Monday could be ugly, especially if the newly elected Greek politicians cannot get the job done over the weekend.
This week’s lackluster economic reports were further “lacklustered” with today’s negative Producer Price Index report which indicated a -.2% decline, and a semi-positive University of Michigan Consumer Sentiment Report which indicated that consumer sentiment had increased from 76.2 to 77.4 on the report’s index. All in all, nothing to write home about.
Major markets were looking like they might finish out the rough week in a slightly positive note, only to have JP Morgan’s $2 billion mistake crush any miniscule gains. JP Morgan Chase CEO Jamie Dimon announced yesterday after hours that the bank’s chief investment office had managed to lose $2 billion in trading losses – a hefty number to be sure, especially when JP Morgan’s stock plummeted 9.28% today.
More importantly, the trading error resurfaced discussions surrounding the landmark 2008 Dodd-Frank Act and specifically the Volcker Rule, which currently prohibits large banks from proprietary trading. Although JP Morgan did not break the Volcker rule in this particular blunder, CEO Dimon and many other Wall Street bank executives have been very outspoken against the Volcker rule and have lobbied to revise it. Yesterday’s news will likely curb any progress or hope by major banks that the Volcker rule or Dodd-Frank will be revised in the near future, as JP Morgan’s debacle comes just months behind the infamous MF Global failure and underscores the fact that major institutions are still realizing substantial losses due to risky trading.
Bottom Line: Markets finished flat today after a hefty week of news worthy events and losses. Next week could be ugly as well as investors continue to absorb the Greek situation and JP Morgan’s trading blunder.
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