Using Veritas to Construct the "Per…

29-04-2017 Hits:84581 BoomBustBlog Reggie Middleton

Using Veritas to Construct the "Perfect" Digital Investment Portfolio" & How to Value "Hard to Value" tokens, Pt 1

The golden grail of investing is to find that investable asset that provides the greatest reward with the least risk. Alas, despite how commonsensical that precept seems to be, many...

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The Veritas 2017 Token Offering Summary …

15-04-2017 Hits:79050 BoomBustBlog Reggie Middleton

The Veritas 2017 Token Offering Summary Available For Download and Sharing

The Veritas Offering Summary is now available for download, which packs all the information about Veritas in a single page. A step by step guide to purchasing Veritas can be downloaded here.

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What Happens When the Fund Fee Fight Hit…

10-04-2017 Hits:78902 BoomBustBlog Reggie Middleton

What Happens When the Fund Fee Fight Hits the Blockchain

A hedge fund recently made news by securitizing its LP units as Ethereum-based tokens and selling them as tradeable (thereby liquid) assets. This brings technology to the VC industry that...

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Veritaseum: The ICO That's Ushering in t…

07-04-2017 Hits:83382 BoomBustBlog Reggie Middleton

Veritaseum: The ICO That's Ushering in the Era of P2P Capital Markets

Veritaseum is in the process of building peer-to-peer capital markets that enable financial and value market participants to deal directly with each other on a counterparty risk-free basis in lieu...

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This Is Ground Zero for the 2017 Veritas…

03-04-2017 Hits:79949 BoomBustBlog Reggie Middleton

This Is Ground Zero for the 2017 Veritas Offering. Are You Ready to Get Your Key to the P2P Capital Markets?

This is the link to the Veritas Crowdsale landing page. Here is where you will be able to buy the Veritas ICO when it is launched in mid-April. Below, please...

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What is the Value Proposition For Verita…

01-04-2017 Hits:82259 BoomBustBlog Reggie Middleton

What is the Value Proposition For Veritas, Veritaseum's Software Token?

 A YouTube commenter asked a very good question that we will like to take some time to answer. The question was, verbatim: I've watched your video and gone through the slides. The exchange...

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This Real Estate Bubble, Like Some Relat…

28-03-2017 Hits:53236 BoomBustBlog Reggie Middleton

This Real Estate Bubble, Like Some Relationships, Is Complicated...

CNBC reports US home prices rise 5.9 percent to 31-month high in January according to S&P CoreLogic Case-Shiller. This puts the 20 city index close to an all time high, including...

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Bloomberg Chimes In With My Warnings As …

28-03-2017 Hits:81258 BoomBustBlog Reggie Middleton

Bloomberg Chimes In With My Warnings As Landlords Offer First Time Ever Concessions to Retail Renters

Over the last quarter I've been warning about the significant weakness in retailers and the retail real estate that most occupy (links supplied below). Now, Bloomberg reports: Manhattan Landlords Are Offering...

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Our Apple Analysis This Week - This Comp…

27-03-2017 Hits:81269 BoomBustBlog Reggie Middleton

Our Apple Analysis This Week - This Company Is Not What Most Think It IS

We will releasing our Apple forensic analysis and valuation this week for subscribers (click here to subscribe - lowest tier is the same as a Netflix subscription). As can be...

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The Country's First Newly Elected Lame D…

27-03-2017 Hits:81074 BoomBustBlog Reggie Middleton

The Country's First Newly Elected Lame Duck President Will Cause Massive Reversal Of Speculative Gains

Note: Subscribers should reference  the paywall material here for stocks that should give a good risk/reward scenario for bearish trades. The Trump administration's legislative outlook is effectively a political desert, with...

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Sears Finally Throws In The Towel Exactl…

22-03-2017 Hits:86922 BoomBustBlog Reggie Middleton

Sears Finally Throws In The Towel Exactly When I Predicted "has ‘substantial doubt’ about its future"

My prediction of Sears collapsing once interest rates started ticking upwards was absolutely on point.

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The Transformation of Television in Amer…

21-03-2017 Hits:84938 BoomBustBlog Reggie Middleton

The Transformation of Television in America and Worldwide

TV has changed more in the past 10 years than it has since it's inception nearly 100 years ago This change is profound, and the primary benefactors look and act...

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I was perusing ZeroHedge the other day (a fine, rabble rousing rag after my own heart), when I came across a guest post accusing JP Morgan of some funny stuff. Those that follow me know that I really believe JPM to be highly overrated. In reviewing the authors allegations, he may actually be on to something in regards to portions of the AML stuff. In order to truly ascertain the extent, if any, I would have to dig a little further, which I don't have the time to do right now.

I feel he is jumping the gun on the general liquidity argument though. No disrespect intended to the man, for anyone willing to break out a calculator and dispel the "this is the best thing since sliced bread" propaganda and disinformation is cool in my book.

We looked into the concerns raised by the author in the aforelinked article and believe the author has looked at only a few aspects of the cash flow movement and is missing a holistic view. While the concern for shrinking deposit base is quite valid, the apprehension over application of release of cash from purchase and repurchase arrangement is not warranted.

·         The author is primarily looking at the change in the various assets and liabilities balances on an year on year basis to question a substantial decline in cash in hand. However, if we look at the y-o-y change, we observe that the decline in cash occurred in 4Q08 and not in the last quarter. Further, the decline in cash in hand ($33 billion in absolute terms) is resulting from a) a change in the allocation of funds into various asset categories and b) overall deleveraging resulting in reduced total assets.

·         Cash as proportion of total assets has declined from 2.4% as of Sep 2008 to 1.0% in Sep 2009, primarily because of increased investment in securities available for sale (now, the quality of these securities may be a story for another day) as well as increase in Deposits with Banks. Investment securities increased from 6.7% of total assets as of Sep 2008 to 18.3% in Sep 2009, while the deposits with the banks have increased from 1.5% to 2.9%. The investment in securities was also financed by increased liquidity provided by repo and reveres repo transactions. Also, a portion of funds, provided by reduced cash balance and repo and reverse repo transactions, was used to reduce the other borrowed funds on the liabilities side.

·         With regards to concerns about the declining deposits, the Company has also cut back on lending (quite contrary to what they have been alleging to congress) to maintain the loan deposit ratio. The loans as % of deposits has declined from 78.5% as of Sep 2008 to 75.2% in Sep 2009. We did raise our concerns about the shrinking loan portfolio in our preliminary JPM 3Q09 results review (see Reggie Middleton on JP Morgan's Q309 results), which is leading to shrinking of interest earning asset base. This is a significant issue that is, in my opinion, quite under-appreciated.

·         The proportion of funds invested in highly liquid assets (cash, deposits with banks, federal funds sold, securities borrowed) has declined from 21.1% as of Sep 2008 to 18.6% in Sep 2009 might impact its liquidity standing but there is no serious concern yet. Also, from solvency view point, JPM was able to improve y-o-y with JPM’s tangible asset to tangible equity improving from 3.2% as of Sep 2008 to 4.4% in Sep 2009. Of course this solvency standing is only valid when following the current banking regulatory regime, you know, the same one that nearly allowed the banking system to collapse in the first place. If one were to take into consideration the appropriate counterparty concentration capital risk charges, I am confident JP Morgan would be flirting with insolvency. Alas, it appears that it is better to call JPM solvent with rampant risk awash in the system than to brand it more accurately insolvent and account for risks as they should be dealt with.

Now, for fear of anyone believing all is find and dandy with JP Morgan, I have a plethora of issues with it - practically all of which never sang in the popular media nor the sell side banks. See If a Bubble Bubble Bursts Off Balance Sheet, Will Anyone Be There to Hear It?: Pt 2 - JP Morgan and download


For those of you who want to read more on the rampant counterparty concentration risk abound in the system, see: