Here’s the chart you’ve all been waiting for, courtesy of Reuters’s very own Scotty Barber: the spread on the CDX NA IG 9 index — the synthetic index on which JP Morgan’s Bruno Iskil was selling enormous amounts of protection — minus the spread on the index’s constituent bonds.
Three things jump out here. Firstly, the basis is negative, not positive. That means that the obvious trade was to buy the underlying bonds and hedge by buying protection on the index. That obvious trade, if held to maturity, should always make money. Iksil was funding that trade, by selling protection on the index.
Secondly, the chart is going up and to the right. Since Iksil was selling protection, that means the market was moving against him. Or, to put it another way, the obvious trade makes money when it expires at zero, and as the chart moves towards zero, Iksil loses money on a mark-to-market basis.
Finally, the move doesn’t seem to be all that huge — only about 30bp in this quarter. Which doesn’t seem remotely enough to cause a $2 billion loss. Still, Iksil managed it somehow.
UK Bribery Act Decision Tree & Anti Bribery Chart T. Markus Funk has two new extraordinary charts - a UK Bribery Act chart (Download UKBribery Act Decision Tree_TMF) and a chart that compares between the UK, US, German, Chinese, and India's anti-corruption laws (Download Anti Bribery Chart)...
Seating Chart Cake Jack Bogdanski (Lewis & Clark) celebrated the coming end of the semester with his Income Tax class with this "delectable, but not deductible" seating chart cake on the night he covered § 274(n): For another creative use of a seating chart, see here.