JP Morgan reported their trading results for the first half of the year yesterday which included 128 trading days. Lo and behold…they were a perfect 128 for 128 days where they made money, not one day did they lose even a dime. Is this even possible? I mean with the bond volatility that we saw… not to mention the currencies, commodities and precious metals. Did they actually “time” every single move perfectly or at least close enough so that winning trades outdid any losers (were there even any losers) EVERY SINGLE DAY?
I can still remember going to college during the caveman days of the early 80’s and listening to professors and then beginning a Wall Street career where I was told that anyone who traded and had a “win” ratio of 55-60% would be considered the equivalent of Babe Ruth in baseball. This current feat by JP Morgan is like Babe Ruth, Michael Jordan, Wayne Gretzky and Tiger Woods all wrapped up into one. I would have included God on that list but Goldman Sachs already chose him for their team they now say they are “doing God’s work.”
So, does anyone want to tell me that the market, ALL markets are not a bit (totally) rigged? Is it statistically possible for a firm to win …all day…every day…day after day? Without inside information? Or without being so big that they can push, pull or force markets to react how they wish? Of course, not “marking” assets (liabilities) to any “market” other than “fantasy” certainly helps their cause but…there is such a thing as “Mother Nature.”
Let me tell you a story about Mother Nature before I go any further. My horse who is now 14 years old lived in Costa Rica for 13 years. Costa Rica has only 2 seasons, the wet season and the dry season. They call these winter (wet season) and summer (dry season). They call their seasons in reverse to ours even though they are in the same hemisphere because the dry season (Dec.-April) is their beach season. Anyway, to make a long story short, my horse never ever changed hair growth or hoof growth during the seasonal changes. However, here in Texas he started to grow his coat in late Oct. last year and by Dec. 1st he looked like a “baby chick” he was so fuzzy. My farrier made the comment of how cold a winter we were in for as all the horses he worked on had grown coats thicker and faster than he had seen in 40+ years here…(he was correct and we had nearly 30 nights where we got below 32 degrees). So how did a horse whose coat NEVER changed in 13 years all of a sudden grow winter hair for the first time ever…and just before it got cold here? And why did his hoof growth slow to a crawl in the winter and then explode in the spring while he shed his coat? “Mother Nature,” that’s how!
“Mother Nature” also explains why gold is moving from West to East. The West has “underpriced it” and the East has responded by purchasing it and taking delivery. This will continue on and on and on until one of 2 things happens. Either the price will rise to “ration” or slow demand…OR the West will run out of gold…after which the price will rise. THIS is how Mother Nature works in the supply and demand department.
Let me go back to the beginning and talk again about JP Morgan. What do you suppose “Mother Nature” has to say about their spectacular 128 out of 128 day continuous profit run? Would she believe it to be possible? If it’s possible (it’s not) could they really be earning anything of “real value” if they simply “cannot lose?” I would also interject the question, “Why have their gold inventories nearly evaporated since the beginning of the year?” But wait, Ted Butler recently claimed that JP Morgan has amassed a huge long position in gold. Is this “real” gold or just that “paper” stuff? There is a big difference you know and when all is said and done, “Mother Nature” will be the arbiter of real and final results. She will not allow an engine to run on gasoline “contracts.” She will not allow stomachs to feed full with pork or bean future contracts. Do you see where this is going?
The real and true endgame will result in “esoteric” investments being washed away while “real” goods will have value. Mother Nature’s ways will at some point assure that getting “something for nothing” will cease…because it’s just plain “natural” that people would prefer not to GIVE “something for nothing.” I know the previous sentence “sounds” funny or maybe not even written correctly but I assure you that it is correct and correctly written. Please read it several times and then wonder to yourself if that is not truly a basic premise that may only be hidden for a time…but not ever eliminated. Mother Nature works 24/7 with zero effort, trying to shove her hidden away in a closet is a big job…and one that gets more difficult each and every day. No matter how many central bankers, economists, Congressmen, Prime Ministers or Presidents wish Mother Nature could be legislated away for “convenience,” she will never be permanently altered nor abolished because “something” and “nothing” doesn’t ever exist in the same sentence in her world!