Given recent events relating to significant losses suffered by JP Morgan due to (mis)-measured VaR (Value at Risk), we thought our title would be appropriate, following the aforementioned events. JP Morgan restated its 1Q12 VaR associated with its Chief Investment Office from 67 million USD to 129 million USD.

Bloomberg TV’s Erik Schatzker sat down with Toronto Dominion CEO Edmund Clark, who calls himself an old-fashioned banker, to talk about the strategy of Canada’s second-biggest bank and why the countries’ banks have fared better than U.S. counterparts. Clark’s “old-fashioned” approach of lending money to businesses and consumers has helped TD post a three-year return that is 11x higher than JPMorgan’s, with almost half the volatility .

Thanks everyone for another good set of questions. I do my best to answer them all below:

As discussed earlier, we’ve had a substantial divergence between investment grade (IG) and high yield (HY) CDX spreads that started this year. These two indices historically move in tandem. There has been speculation in the market place that the JPMorgan CIO’s activities may be behind this trend. Based on the recent article by Euromoney, that indeed seems to be the case.

A number of hours per week for me are spent reading through various pieces of sell-side & independent economic and macro research. The merits of such a practice can be debated, but it no question provides me a “consensus” view of current economic views. Over the last week or two the sell-side has increasingly raised the likelihood of a Greek exit from the Euro. Take for instance:

The rhetoric around Greece’s future is beginning to get very serious.  As Dr. Krugman notes, this could be the beginning of the end for the entire currency experiment (via NY …

As discussed earlier, Greek exit from the Eurozone may be the only way the nation could gain some control over its monetary system. Given the complete “credit isolation” of Greece’s banks and the private sector from the rest of the Eurozone, the ECB is powerless to improve liquidity conditions in that nation. Some of the ECB’s policymakers are beginning to agree.

The next usual suspect is Italy. And indeed Italy will soon be paying 5-6% of GDP just to cover the interest on its debt. If it were not for interest, they would have an actual government surplus. While they are making progress, a European recession is not going to make it any easier.

STRONGER evidence of a significant slowdown in the Chinese economy has emerged with much weaker-than-expected imports for April, as well as lower growth in exports.

With increased talk of a country leaving the euro zone, or even of the end of the whole project, it is worth sketching out our view. Here are the main points of our view of Europe.