The Tide is Going Out: JPMorgan, Deutsche Bank and AIG Appear to Be Swimming (Read Trading) Naked

by Pam Martens and Russ Martens
Wall Street on Parade

Warren Buffet is credited with the quote: “Only when the tide goes out do you discover who’s been swimming naked.”

Friday’s closing prices among some of the heavily interconnected mega Wall Street banks and insurance companies known to be counterparties to Wall Street’s derivatives appeared to show who’s swimming naked in the realm of derivatives – naked meaning who has sold derivative protection (gone short the risk) on something that is blowing up.

As the chart above shows, the S&P 500 stock index (SPX) closed with a loss of 3.37 percent while the following three stocks closed with more than double that percentage of loss: Deutsche Bank was down by 7.44 percent; JPMorgan shed 7.12 percent while AIG was off by 7.27 percent.

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