Blog Posts by Jeff Macke

Yesterday JPMorgan (JPM) announced it was suspending its $15 billion buyback program. The move comes just 11 days after Jamie Dimon revealed a $2 billion trading loss stemming from a trade gone horribly wrong at the firm's Chief Investment Office.

Dimon said suspending the buyback was merely a proactive move designed to keep JPM on track to meet Basel III capital requirements. The now-deposed King of Wall Street insisted the suspension of the buyback had nothing to do with trading losses, which, he claimed, "barely nicked" JPM's balance sheet.

After JPM's May 10 conference call, Breakout discussed the Street's lack of faith in Dimon and the probability that the trading losses were likely to be much higher than Dimon's worst-case, long-term estimate of $3 billion, total. According to DealBook the toll is already $3 billion and the UK's Independent is putting the number at "$7 billion or more."

JPM is raising more questions with their every attempt to provide answers. As of the close yesterday the stock was down more than 20% since the losses were disclosed and some 30% since the start of Q2. If JPM's balance sheet is still strong the company should be buying shares hand over fist.

Shares of Facebook (FB) fell as low as $33 today, more than 13% below the offering price on Friday. Ironically the same shareholders who were assumed to be buyers of the stock at any price are now ditching FB at a steep discount.

The details of what caused the epic debacle of Facebook's IPO will be ironed out in time. The more pertinent questions for investors are what lies ahead for the company, and what, if anything, should you do with Facebook shares now?

"I would buy it, and I would buy some more on the dip," says Todd Schoenberger of the BlackBay Group. "Social networking is nothing without content," notes the last remaining Facebok bull, in the attached video. "Mark Zuckerberg has been very open about this; he wants every human being to use Facebook."

With more eyeballs will come more revenue, Schoenberger claims, citing Facebook's status as "the nucleus of social networking."

Facebook's problem as a company is its inability thus far to "monetize" the nearly 15% of the world already using the site. FB revenues in Q1 were lower than they were in Q4 of 2011. Companies trading at about 23x sales don't have the liberty of blaming seasonality; they need every quarter to be bigger than the last to justify such a lofty valuation.

Over the weekend Yahoo! (YHOO) finalized a deal to sell half of its long-standing 40% stake in Chinese e-commerce company Alibaba. The deal is valued at $7.1 billion -- $6.3 billion in cash and $800 million of newly minted Alibaba preferred shares.

The deal gives Yahoo! liquidity and a clarified mission, but it comes at a price. New Yahoo! board member Daniel Loeb recently cited reports valuing all of Alibaba at $63 billion. By that math Yahoo! just sold $12.6 billion worth of assets at a greater than 40% discount.

Yahoo! will also take a tax hit that would reduce the net proceeds of the deal to somewhere in the neighborhood of $4 billion, according to Kara Swisher at  AllthingsD.com. As Swisher notes, this transaction implies an Alibaba value of $35 billion, or some $28 billion below Loeb's prior claim.

Whatever the final tally, Yahoo!'s press release says the company "intends to return substantially all of the after tax proceeds to shareholders." Yahoo! also announced an increase in its share buyback program by $5 billion.

If troubles in Europe and falling markets are giving you a sense of deja vu, things are about to get really weird. House Speaker John Boehner is making noise about reviving last summer's infamous debt ceiling debate prior to November elections.

Before cursing Boehner or blaming Senate Majority Leader Harry Reid, avowed Republican John Mauldin has an anecdote you should hear. In the attached clip Mauldin says he had dinner with Boehner during which, as presumably often happens at Republican dinners, Senator Reid was blamed for last summer's deadlock.

Mauldin says Speaker Boehner was quick to rush to Reid's defense. "Harry?" Mauldin says, in what is presumably his best Boehner impression, "Hell, Harry isn't the problem. If it was me and Harry we'd get it done tomorrow night. It's Obama! He can't make a decision!"

All of the above is obviously hearsay as reported by a sworn Republican "talking his book,". But Mauldin's point is that there's room on the Left and the Right to make a deal on the deficit; it's simply a matter of getting everyone lined up in just the right way.

One week ago tonight J.P. Morgan (JPM) announced a real loss of more than $2 billion on synthetic CDS trades—and the news has only gotten worse for the bank since. At least two shareholder lawsuits are in the works, and an FBI informal investigation has already been launched—with more regulatory heat sure to follow. Twisting the knife were reports from The New York Times' DealBook suggesting JPM's trading losses have grown by 50% since last Thursday's conference call.

"The media is making it way worse than it actually is," insists Anthony Scaramucci, founder and current managing partner of SkyBridge Capital. Risks are part of business, says the author of The Little Book of Hedge Funds. "If you want to over-regulate these banks and create a nanny state in these United States, then you can kiss growth goodbye."

The over-regulation in question would likely come via the details of the Volker Rule, currently being hammered out in corridors of Washington. In essence, the conversation revolves around whether or not commercial banks such as JPM should be allowed to make proprietary trades with their own money.

Those opposed to the regulation insist that the banks need to make the trades in order to hedge their considerable market risk. Proponents of tighter regulation claim JPM's losses illustrate the excessive risk these trades pose. The reason this risk is a topic of conversation for the government, as opposed to merely JPM and its shareholders, is that the failure of the bank would constitute a risk to the global financial system, making the banks, in effect, "too big to fail."

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Unleash the hounds! Facebook's (FB) first day of trading can no longer really be characterized as just an IPO. Despite an increase in both the number of shares being sold and the price at which they're being offered, Facebook shares are getting snatched up as fast as they can be printed. The official price for FB shares was just set at $38 each, giving the company an implied valuation of $104 billion --the largest valuation ever for a U.S. company during its IPO.

Unfortunately, individual investors can forget about paying $38 a piece. Retail brokerages don't have any more shares available for the public at the insider price, leaving the rest for so-called institutional investors. If you're waiting to get Facebook stock at the same price as the big guys, you're going to be disappointed.

TD Ameritrade (AMTD), Fidelity, and E*Trade (ETFC) are just a few of the retail brokerages that had to stop taking buy orders earlier this week.

The Main Street frenzy and opening trade "pop" are just a matter of numbers, according to Anthony Scaramucci, author of The Little Book of Hedge Funds, and managing partner at SkyBridge Capital. "There's 901 million users," Scaramuccci says in the attached video. "If 10% of those users have an interest in the stock, this thing will trade a double, possibly a triple, on the opening just in terms of people putting in market on open orders."

John Mauldin, outspoken author of "The Little Book of Bull's Eye Investing" has one message for Germany and the European Central Bank: "If you want to keep the Union together we're going to have to have inflation."

The goal isn't to spend forever; just long enough to get through the Spain's elections in three years. Yes, Spain. In Mauldin's mind the departure of Greece, now officially dubbed "the Grexit," is a foregone conclusion.

"Greece will leave; they have no choice," he states, adding that the cost of the Grexit isn't unknowable, but the solution is.

The ECB will simply have to do whatever it takes, even if that means printing "trillions and trillions and trillions of Euro." Of course such actions will lead to inflation but there are few, if any, alternatives. Besides which the Euro is more concept than currency at this point; legitimacy of the paper will only come through time and battle.

A right-leaning patriot, Mauldin thinks America ought to be cheering for ECB printing. It strengthens the dollar, which is already on a historic rise, and it's not our currency they're destroying; it's theirs (EUR=). It's not a reckless view but one borne of pragmatism.

More than 2/3 of European voters have said no to austerity already. The current path makes destruction of the entire EU a certainty. "Something else" is the solution.

Technically speaking, a Form 13-F is an SEC document that managers who control more than $100,000,000 must file within the end of each quarter. To James Altucher of Formula Capital, the regulatory requirement transforms the titans of finance into your personal staff every 90 days. Not only that but sometimes you get them for cheap.

"George Soros has his team of a thousand researchers, or whatever he has got, and he decided to buy J.P. Morgan (JPM) in the 40's," says Altucher gleefully. "I get that for free!" Even if we're talking about data that's more than a month-and-a-half-old and, in the case of Mr. Soros, the position has declined in value, Altucher still thinks investors are getting a deal.

"What did Warren Buffett do?" Altucher asks. "He added to IBM (IBM). He added to Wal-Mart (WMT). He added Wells Fargo (WFC). He bought GM, and he bought Viacom (VIA)."

Berkshire Hathaway (BRK) was long 10 million shares of General Motors (GM) as of the end of last March. As a result, Altucher says, "Warren Buffett works for me. He's like the little kid free intern that's happy to give me stock picks at higher prices! I'm a discount to what the great Warren Buffett paid!"

The fact that Buffett would seem to be down on the investment makes it all the better. "Now I'm getting a deal off Warren Buffett! Why wouldn't I take it?"