Jamie Dimon: That's why I'm richer than you

FORTUNE -- At JPMorgan Chase's annual investor day on Tuesday, CEO Jamie Dimon answered one analyst's question by saying, "That's why I'm richer than you."

Zing. The line got a bunch of laughs. And it quickly became a headline for articles recounting the Q and lack of A between Dimon and the Credit Agricole analyst Mike Mayo, who has the reputation of being one of the few analysts to be tough on Wall Street CEOs.

But what did Dimon mean by it? Mayo's question was about bank capital. European regulators are requiring banks there to hold more capital than U.S. rivals. Mayo wanted to know if that would give those banks, in this case UBS, an advantage over JPMorgan (JPM) in attracting clients who want a safe place for their money.

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http://news.firedoglake.com/2013/02/28/jamie-dimon-thats-why-im-richer-than-you/ At a J.P. Morgan investor event this week Mike Mayo, an analyst at CLSA, who has been a critic of large banks and, at times, Dimon, asked if J.P. Morgan wasn’t at a competitive disadvantage compared to more highly capitalized peers.

Mayo: I think what I hear UBS saying in the presentation is that if I’m an affluent customer I’ll feel a lot better going to UBS if they have 13.5 (percent) capital ratio than another big bank with a 10 percent ratio. Do you agree with that?

Dimon: You would go to UBS and not JPMorgan?

Mayo: I didn’t say that. That’s their argument.

Dimon: That’s why I’m richer than you.

GBP worst performing currency this year

On the heels of Abe's final decision to appoint a somewhat middle-of-the-road 'dove' as BoJ Governor, we thought it appropriate to look at the year's FX performance to see who is 'winning' the currency wars so far this year. The answer may surprise you (or not if you had read this or this).

GBP (blue) is the 'worst'-performing currency versus the USD this year - having overtaken the JPY in the last two days...higher on the chart below is USD strength

Interestingly, given US equity performance YTD, the USD is 2.25% stronger on the year against a broad basket of currencies.

The USD is 'seasonally' strong in Q1 on average over the past 30 years but this rise is quite remarkable relative to that average and we can only imagine what impact this will have on corporate earnings for Q1 as the S&P 500's 46% overseas revenues gets notched down on the income statement.

Charts: Bloomberg

http://www.zerohedge.com/news/2013-02-28/name-worst-performing-currency-year

Asking the right questions about Italy

Basically Berlusconi represents a return to Nationalism and a repudiation of the measures imposed upon Italy by Berlin/Brussels (The European Union). Grillo represents something stronger which is a total rejection of Berlin/Brussels (The European Union) and a demand that Italy return to self-governance.  Grillo’s party won more votes than any other party and taken together, Berlusconi’s coalition and the 5 Star Party won the vast majority of votes at just under sixty percent. Yes, there are other national issues such as corruption and nepotism and so forth that relate strictly to the political situation in Italy but again, these are the small questions and far less significant to the central question of what will happen to the European Union as a result of the vote of the Italian people.
 
I first direct your consideration to this; if it can happen in Italy then why not in Greece, Spain, Portugal or France? People in other countries will take heart from Grillo’s attempt and then success and the mob may begin to stir. However Italy is going to work out and whatever alliances may be made or whether there will be a second vote; the writing is emblazoned now clearly on the wall which declares opposition to living under the dictums handed down from other countries and enforced by the money that may or not be parceled out to the Italian nation. This is clearly defined by the total rejection of Monti and the Brussels/Berlin austerity measures that he put in place. The vote for Monti at just under ten percent is a ringing condemnation of the European Union by the people of Italy. In fact I would say that the Italian elections are exactly what the European Union has feared most, the very most, which is the rejection of the Brussels/Berlin governance by those who ultimately matter which are the people of a nation. I think it can now be said with a good degree of accuracy that the Italian people took a long hard look at the European Union and voted, “NO!”
 
What most people have not grasped yet, but the dawning will come, is that a Referendum has just taken place in Italy. All of the political upheaval in Italy was caused by anger and frustration with the European Union and their policies. This is what drove the election and not to appreciate this is a serious mistake. The EU is now cornered. This is the third largest nation in the Union and the voters, the people, have just turned out a majority that clearly and resolutely said “Basta!” (Enough!). I would say that how all of any of this works itself out is anyone’s guess now but I would also say that what has happened, like a wife catching her husband with another woman, will forever change the relationship. If the bureaucrats and technocrats in Brussels wanted to know what Dante’s Inferno looked like they have only to pay attention this morning. They can stare at it now.

http://www.zerohedge.com/print/470458

Fed Faces Explaining Billion-Dollar Losses in QE Exit Stress

Federal Reserve Chairman Ben S. Bernanke’s efforts to rescue the economy could result in more than a half trillion dollars of paper losses on the central bank’s books if interest rates rise abruptly from recent levels.

http://www.bloomberg.com/news/2013-02-26/fed-faces-explaining-billion-dollar-losses-in-stress-of-qe3-exit.html

Greece Likely to Exit Euro This Year, FX Concept’s Taylor Says

Greece will probably leave the euro as soon as next month as the government runs out of cash and European institutions fail to lend more to the nation, according to John Taylor of hedge fund FX Concepts LLC.

“This summer I think is very likely,” Taylor, founder and chief executive officer of FX Concepts in New York, said today in an interview on Bloomberg Television’s “Inside Track” with Erik Schatzker and Sara Eisen. “The Europeans aren’t going to give them the money, the International Monetary Fund’s not going to give them an OK. They will be out of money in June.”

http://www.bloomberg.com/news/2012-05-08/greece-likely-to-exit-euro-this-year-fx-concept-s-taylor-says.html

Bank of England closes in on China currency deal

Sir Mervyn King, Governor of the Bank of England, is on the brink of striking a deal with the People's Bank of China which would cement the UK's role as the leading G7 trade hub for the world's fastest growing currency.

http://www.telegraph.co.uk/finance/currency/9888141/Bank-of-England-closes-in-on-China-currency-deal.html

Japan trade deficit hits record as yen weakens

Japan's monthly trade deficit hit a record in January after its recent aggressive monetary policy stance weakened its currency sharply.

Exports rose in January, the first jump in eight months, as its goods became more affordable to foreign buyers.

However, a weak currency also pushed up its import bill resulting in a monthly trade deficit of 1.6tn yen ($17.1bn; £11.1bn), a 10% jump from a year ago.

http://www.bbc.co.uk/news/business-21515024

EES: Currency Wars Heat Up With G20 Meeting

The G20 recently met to discuss the so called "Currency Wars" orcompetitive devaluation of domestic currencies by central banks.

http://seekingalpha.com/article/1204401-currency-wars-heat-up-with-g20-meeting

Iceland Foreshadows Death of Currencies Lost in Crisis - Bloomberg

Iceland is hinting its currency may be too small to survive in the volatile world left behind by the global financial crisis.

Less than five months after Finance Minister Katrin Juliusdottir said the krona probably will never be restored to a free floating regime, central bank Governor Mar Gudmundsson is signaling the same.

Iceland Foreshadows Death of Currencies Lost in Crisis - Bloomberg

Saxo Bank CEO Says Euro Is Doomed as Currency Woes Resurface

Lars Seier Christensen, co-chief executive officer of Danish bank Saxo Bank A/S, said the euro’s recent rally is illusory and the shared currency is set to fail because the continent hasn’t supported it with a fiscal union.

“The whole thing is doomed,” Christensen said yesterday in an interview at the bank’s Dubai office. “Right now we’re in one of those fake solutions where people think that the problem is contained or being addressed, which it isn’t at all.”

http://www.bloomberg.com/news/2013-02-17/saxo-bank-ceo-says-euro-doomed-as-single-currency-woes-resurface.html

G-20 Takes Harder Line on Currencies

Group of 20 finance chiefs sharpened their stance against governments trying to influence exchange rates as they sought to tame speculation of a global currency war without singling out Japan for criticism.

Two days of talks between G-20 finance ministers and central bankers ended in Moscow yesterday with a pledge not to “target our exchange rates for competitive purposes,” according to a statement. That’s stronger than their position three months ago and leaves Japanese officials under pressure to stop publicly giving guidance on their currency’s value.

http://www.bloomberg.com/news/2013-02-16/g-20-pleges-not-to-target-exchange-rates-to-aid-economies.html

Why Bankers Rule the World - It’s the Interest

In the 2012 edition of Occupy Money released last week, Professor Margrit Kennedy writes that a stunning 35% to 40% of everything we buy goes to interest. This interest goes to bankers, financiers, and bondholders, who take a 35% to 40% cut of our GDP. That helps explain how wealth is systematically transferred from Main Street to Wall Street. The rich get progressively richer at the expense of the poor, not just because of “Wall Street greed” but because of the inexorable mathematics of our private banking system.

http://www.marketoracle.co.uk/Article39053.html

EES: The Best Way To Trade The Currency Wars - Buy Gold Yen

So what's the best way to trade the currency wars, and to go long gold?

XAU/JPY

The simple answer is to be long gold/yen, or XAU/JPY. On a day like today when gold is down, instead of buying the normal XAU/USD which is what most investors would do, the best way to play both the JPY decline and potential rise in gold is to go long XAU and short JPY. It's possible to buy Gold against major currencies now and even some exotics.

http://seekingalpha.com/article/1188621-the-best-way-to-trade-the-currency-wars-buy-gold-yen

EU Seeks Broad Transaction Tax

The European Union proposed a tax on financial transactions that could be collected worldwide as soon as the start of next year by the 11 nations that have so far signed up to participate.

The proposal, which marks a new stage in the EU’s efforts to raise revenue from the financial industry, came under immediate fire from banking groups. The EU plan would harm the German economy as a whole, eight lobby groups that represent industries ranging from the commercial country’s banks to skilled tradesmen said in a joint statement today.

The EU plan invokes “residence” and “issuance” ties to firms in participating countries, in a bid to prevent traders from escaping the levy by trading outside the tax’s zone, according to the proposal unveiled by EU Tax Commissioner Algirdas Semeta today in Brussels. To escape the proposed tax entirely, firms in other nations would have to entirely cease financial-services business with the 11 nations involved, according to the EU.

With the proposal, the EU is trying to curb what it sees as a “patchwork” of local levies. Like a prior, failed proposal for all 27 EU nations, today’s plan would set a rate of 0.1 percent for stock and bond trades and 0.01 percent on derivatives trades.

The EU estimates the arrangement could raise 30 billion euros ($40 billion) to 35 billion euros per year. To become law, the proposal has to be approved by the nations that agree to participate. They now comprise Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia. All 27 EU nations can sit in on the talks and have the option to join.

EU Seeks Broad Transaction Tax to Curb Rules ‘Patchwork’ - Bloomberg

Putin goes long Gold

When Vladimir Putin says the U.S. is endangering the global economy by abusing its dollar monopoly, he’s not just talking. He’s betting on it.

Not only has Putin made Russia the world’s largest oil producer, he’s also made it the biggest gold buyer. His central bank has added 570 metric tons of the metal in the past decade, a quarter more than runner-up China, according to IMF data compiled by Bloomberg. The added gold is also almost triple the weight of the Statue of Liberty.

http://www.bloomberg.com/news/2013-02-10/putin-turns-black-gold-into-bullion-as-russia-out-buys-world.html