Category Archives: Finance

Awaiting the Federal Reserve’s next move!

There is high anticipation from the United States Federal Reserve Board that it might announce some new decisions so that USA financial or economical market can be improved and also the interest in the investors can boot up to make the more investment in the Unites States of America. Suppose that Federal Reserve is a rock concert as an economic amplifier but at a lowest zero level option seem like doing nothing. It might seem too unclear from this about the future of economic environment of the United States of America.  Chairmen Ben Bernanke and other senior executives of the Federal Reserve stated in their report that the economy of United States of America is slumping and the threats have been reported by the Europe’s debt crisis. The two day meeting of the Federal Reserve’s executives decides some rules and regulations and made some changes to the market as by setting the interest rates, that gave the bleaker picture for the United States of America economy. It has been investigated by the economic analysts that Federal Reserve will not give much support for the economic empowerment to increase the economic strength. Federal Reserve has given some options for their perceived likelihood as discussed below:

Extend Operation Twist:  Under this twist the Federal Reserve have planned to sell USD 400 billion in short term treasury securities from September 2012 and will go to buy the long term treasury securities that will make the financial situation better. Investor will be attracted to this for a long term to get the high return.  In order to take decision for this the Federal Reserve will go for to lower the long term rates and increase the short term rates. It has been decided to fasten the economic growth of the United States of America but instead of it the Federal Reserve has restrict the option to make easy the monetary policy. There is advantage of this decision in the economic environment is as potentially lowering the long term rates because it is due to not expanding the Federal Reserve’s record high portfolio. It was explained in the meeting of the executives that in case the Federal Reserve if it goes for expanding the portfolio of the investments it may raises the risk of high inflation later. The next move of the Federal Reserve indicates that operation twist that has been defined by the Federal Reserve will be expiring by end of this month. The economic experts and the analysts say that Federal Reserve will rethink on the deadline and will announce for the extension of the deadline.

Third round of quantitative easing

The analysts observe that when the Federal Reserve will expand its portfolio through buying the more bonds as long term, it is considered as the quantitative easing. The monetary policies of the government when occasionally go for increase in money supply after buying the securities issues by the government and also buy the securities from the market. Quantitative easing increase the options for the money supply by flooding the financial institutions that helps in increase the lending and liquidity for the economics and finance situations over the United States of America market. In case the interest rates has already been lowered by the Federal Reserve but still the quantitative easing has attracted the central banks towards the investment. Still these policies failed to produce the desired effect. The ultimate risk of this decision is that even because the more money is floating around still the fixed amount of goods can be used for sale. This decision will lead to higher prices or inflation.  Federal Reserve has already been involved in the number previous rounds for the sum more than USD 2 trillion. In the third round the budget has been increased by twice of the earlier in the QE3. It can be considered as the most dramatic move for the Federal Reserve that it can be made. It would also trigger the most criticism because it would expand the Fed’s holdings by billions more dollars.

Stronger Language

Federal Reserve also made the statement after each meeting so that the change can be made in the statement for the future decisions. It can be said by defining that the pledge of the economy can be improved further and also spells for these statements can be improved. The timetable given by the Federal Reserve can be changed based on the requirement to raise the short term rates beyond the current target of late 2014 till the late of year 2015.

Do nothing

This would lead to the continuation of the Federal Reserve’s decisions so that it can meet the policy standards decided in the meetings in March and April. After these meetings the policy making can be put on hold till the final decision.

We can ride out another global crisis, says Montek

India has the ability to ride out even the worst sort of financial shock delivered by the Euro zone crisis, assured planning commission deputy chairman Montek Singh Ahluwalia here on Monday. In the worst case scenario where European investors might recall their roughly $140-billion investment, he said India would still have half its foreign exchange reserves intact.

Ahluwalia argued that the forecast of an economic collapse, following a Euro zone blowout, “assumes that no one would want to lend to us in such a situation”.

But, he argued, bankers who looked at the global system would consider India’s lowered 6.5% growth rate to be impressive in comparison to the rest of the world.

Ahluwalia, however, admitted: “We’re slowing down and this is not just because of the world situation.”

He also admitted that New Delhi now had less “firepower’” to handle a financial crisis and it could take another two years to get a reasonable growth rate again.

[This article was published originally by Pramit Pal Chaudhuri, Hindustan Times Los Cabos (Mexico), June 19, 2012]

Standard & Poor threat to junk India spooks investors

An unexpected warning by global ratings major S&P on the possibility of India losing its investment grade sovereign rating spooked investor sentiments on Monday, a day that started on a strong note for markets globally after the European leaders agreed to a $125-billion bailout for the Spanish banking system.

The S&P warning also led the rupee to weaken against the dollar by 27 paise to 55.73, while the sensex reversed its five-session winning run to end 51 points in the red at 16,668. The slide in thestock market left investors poorer by Rs 21,000 crore with BSE’s market capitalization now at Rs 58.9 lakh crore.

The warning that India may be relegated to a junk bond status jolted Dalal Street investors and led to a 225-point fall in the sensex from its intra-day high. However, institutional players who deal with FIIs, the most influential of the investor groups on the Street, feel the warning could turn out to be positive for the market and the country. “This is a warning to the government to pursue its economic agenda which will lead to faster GDP growth,” said Dharmesh Mehta, MD (institutional equity), Enam Securities. “After reading the logic behind S&P’s warning, I see this as a positive development for the economy and the market. This would push the government to move faster on reforms, with RBI helping through rate cuts,” Mehta said.

Several other top broking house officials and dealers echoed the same view and said for the current week and the next, there are two things that matter the most. First, the Greek elections on Sunday, which is being equated to a referendum to see if its people are willing to be in the Eurozone. And the other one is the monetary policy decision by RBI on Monday.

Expectations are that Greece would leave the currency block, which could be disastrous for India as its throws the market into uncharted territory, while back home, given low inflation and lower crude oil prices, RBI would cut rates further, a positive for the market.

Usually, a cut in ratings by a global major leads to outflow of FII money both from the stocks and the bond markets.

On Monday, however, FIIs in the stock market were still net buyers at Rs 130 crore while domestic funds were net sellers at Rs 215 crore.

 [This article was originally published on Times of India, TNN | Jun 12, 2012, 05.00AM IST]

Gold crosses Rs 30,000-level, zooms Rs 960

 Gold prices breached Rs 30,000 mark for the first time today on heavy buying by stockists and retailers amid strong overseas trend, triggered by global financial uncertainty which has increased the metal’s appeal as a safe investment haven.

Gold shot up by a hefty Rs 960 to touch a record high of Rs 30,300 per 10 grams in line with global rally where it jumped the most in ten months.

Traders said gold, both of 99.9 and 99.5 per cent purity, recorded the biggest single day gain of Rs 960 each to Rs 30,300 and Rs 30,160 per 10 grams, respectively.

Sovereign also shot up by Rs 350 to Rs 24,200 per piece of eight grams.Marketmen said signs of weakening job growth in the US and deepening euro-zone debt crisis has increased metal’s appeal. Increased demand from investors further fuelled the trading sentiment, they added.

In New York, gold jumped 4.24 per cent to $1,626.30 an ounce, the biggest rise since August 8.

Gold prices in global markets usually sets the trend in the domestic markets.

Silver, in the bullion market here, also rose by Rs 650 to Rs 54,550 per kg in the local market. In New York, the metal rose by 3.5 per cent to USD 28.68 an ounce, the largest gain in two weeks.

Silver ready surged by Rs 650 to Rs 54,550 and weekly-based delivery by Rs 880 to Rs 54,510 per kg.

Silver coins spurted by Rs 1,000 to Rs 65,000 for buying and Rs 66,000 for selling of 100 pieces.

 [This article was originally posted on Times of India, 02 June, 2012
]

No re-opening pre-April 1 tax cases: Govt

In a bid to mollify harried foreign investors, Finance Minister Pranab Mukherjee today reiterated that assessments that have already been completed will not be reopened by the income tax department under the retrospective amendments proposed in the Finance Act, 2012.

Further, the minister said the department has also done away with the cascading impact of tax deducted at source (TDS) that was introduced in the Budget on sale of software.

The Central Board of Direct Taxes (CBDT) has written to all chief commissioners of income tax and director generals of international taxation clarifying that cases where assessment proceedings had been finalised before April 1, 2012 would not be opened.

“The board…directs that in case where assessment proceedings have been completed under section 143(3) of the act, before April 1, 2012, and no notice of reassessment has been issued prior to that date, then such cases shall not be reopened under section 147/148 of the Act on account of the clarificatory amendments introduced in the Finance Act, 2012,” the CBDT said in an internal communication to its officers.

The amendment is likely to impact around 10 cases that are pending at various levels, including Euro Pacific Securities Ltd, Cairn UK Holding Ltd, Unilever HPC Finance Service Inc. USA, Accenture Services Pvt Ltd, Tata

Industries Ltd and AT&T, Mcleod Russel India, SAB Miller (A&A), and Sanofi Pasteur Holding SA. The total gain for the exchequer is likely to be around Rs 15,000 crore.

“I gave a commitment in Parliament with regard to retrospective amendments that CBDT will issue a policy circular to clarify that in cases where assessment proceedings have become final before first day of April 2012, such cases shall not be reopened,” Mukherjee said at an event here.

s a reprieve to software distributors, Mukherjee announced that the income tax department will soon issue a circular to avoid multi-level taxation of software. “On the advice of (the advisory) group and Nasscom, I have approved issuance of a circular to avoid multi-level TDS on software under section 194 J (of the Income Tax Act). This will remove hardship in case of software distributors,” he said. Section 194-J of the I-T

Act deals with fees for professional and technical services and covers royalty and non-competence fees.

The issue was also flagged after a meeting last week of the advisory group relating to transfer pricing and International taxation and the NASSCOM, Mukherjee said. Som Mittal, President, NASSCOM said the move to resolve the current issues of multi-level TDS on packaged software products under ‘Section 194J’ of the IT Act was a positive step forward that provided a boost to the software industry, especially the smaller software distributors. “While we await the detailed circular, this announcement will help to alleviate industry concerns on this issue,” he said.

On the major issue of transfer pricing and international taxation, he said the advisory group constituted by the Finance Minister has held its first meeting on May 25 and the issues are expected to be taken up in due course. “The fact that we’re engaging on the issue is in itself a positive outcome,” he told The Indian Express.

The budget proposals required captive BPOs to re-compute their taxable profits based on transfer pricing guidelines, without adequate safe harbour provisions. Safe harbour provisions essentially enable the income tax authorities to accept the transfer pricing — the price at which one arm of a company, usually a multinational corporation, transfers goods or services to another division of the same organisation — returns without scrutiny.

This article was originally published on Indian Express | ENS Economic Bureau : New Delhi, Wed May 30 2012, 00:27 hrs

How To Save Money At The Grocery Store

With the economy still not back on the fast track to recovery from the recent recession, many people are looking for ways to squeeze a few more dollars out of their monthly budgets. Groceries are often a target for savings and, with a little practice, you can save money at the grocery store like a pro.

Be forewarned, however, that the retailers and the manufacturers are out to pick your wallet. Unwary shoppers can easily fall for fake specials and colorful ad copy. The trick is to know whether what you’re buying is a true bargain and to stick to your playbook. Here are four ways to make sure you’re getting the best deals the grocery store has to offer:

Keep a Price Book
Just because a shiny flyer says something is on sale, it doesn’t mean that it truly is. You need toknow how much the item is normally to know if it’s a deal or not. The best way to assemble this information is to keep your local store’s regular prices on the groceries you buy the most often in a notebook. For example, if you know that your favorite cola is normally $1.49 and it’s on sale for 99 cents, it’s time to stock up. After working with a price book for a period of time, you will start remembering prices and knowing what your “trigger” sale price is.

Learn the Sales Cycles
Once you have determined that a sale item is a good deal (and that it is something you would buy anyway), you need to decide how much of it to buy. On one hand, you want to buy enough so that you don’t have to buy it at full price for a while. On the other, you don’t want to tie up more money and storage space than needed. The two components to “right-sizing” your sale buys are assessing how much of the product you go through and how often it goes on sale. The first is easy to calculate by tracking how much you use. For example, write down how often you open a new package of dishwasher detergent. You may go through a package a month. This tells you that buying 200 packages on sale is pointless because you won’t use it all. Learning the sales cycle takes a bit more time and each store chain does it differently. Some stores put certain items on sale at fixed intervals like clockwork. On average, for example, you may find that milk is on sale one week per month. The goal is to be able to buy enough of a good sale to get you through to the next one.

Be Prepared to Invest in Sales
When faced with a significant sale of an item that stores well and doesn’t often go on sale, apply a substantial amount of your grocery budget to it. If you do this for all such sales, you will end up spending far less on average than those who buy their week’s worth of groceries every week. It may mean that one week you buy two cases of canned corn and 50 rolls of toilet paper, and the next you pick up 25 pounds of ground beef for the freezer and 10 tubes of toothpaste. You’ll get used to the odd looks from cashiers after a while and, in the meantime, you will be saving a ton on your overall grocery bill.

Know Coupon Policies
While paying attention to sales will save you more money on average than clipping coupons, using them can add to your overall savings. Find out your local store’s coupon policy which is likely outlined on its website. Some stores don’t accept online coupons, some take competitors’ coupons, and some double or even triple the face value of some coupons. For those who want to become serious couponers, there are several websites that outline the best coupons in weekend newspapers and offer strategies as to how best to use them.

The Bottom Line
You can save a significant amount of money in the checkout aisle of your grocery store if you focus on the math and forget the hype. Smart grocery shoppers learn when to buy and, more importantly, when to leave something on the shelf.

[This article was originally published by By Angie Mohr | Investopedia – Sat 26 May, 2012 2:07 AM IST on Investopedia.com]

New Investment Avenue: Investment in Commercial Property

In the existing investment market one of the fastest growing domains is investment in commercial property. Unlike investment in personal property the rate of return is on the higher side.

The concept of commercial property is different from that of personal property. A personal property is mainly used for personal use whereas commercial property is used for business purpose

With economy on the rise, India is becoming an important market for investment opportunities. Foreign Direct Investment is coming in rapidly to the tap the potential resources. Especially, with IT industry spreading all over the country, even the smaller cities have become a hotspot for setting up offices. Further, SEZ has fuelled the expansion in the last couple of years.

The companies who are investing have to minimize the expenditure to maintain the profit margins. Thus, many companies are renting commercial properties rather than buying land. This factor has generated the growth of commercial property investment.

A commercial property can be used for various purposes like setting up offices, warehouse, branches, institutes and coaching centres. To cater these business units the property should be ideal for business purpose.

The basic requirements to look into before investing in commercial property:

  1. Understanding the location and deciding the quantity of investment: Investment will only bring return if the investment is made at the right place. One has to study the area in term of business viability. If there are growth opportunities in the region then investment is ideal. One should look into the plans of the government on whether they want to encourage investment. The interests of the investors are also important. Based on these factors investment should be made.
  2. Availability of necessities: Commercial property investment does not end with the purchase of the property. One has to ensure facilities electricity, water supply and security. The availability of proper transportation and easy connectivity should also be considered before investment.
  3. Legal issues: The property should be free from any legal issues. One must not invest in a disputed property as it may turn off the investors.
  4. Proper agreement: The owner must have a proper agreement with the business units they are leasing or renting their property. This is necessary not only from return point of view, but also to maintain goodwill of the property. Any act violating the law can be detrimental for the reputation to the commercial property.

The investment opportunities are ample; one must not just eye for the IT sector. The rise in standard of living has also played a major role in increasing the demand for commercial property. With shopping complex and malls opening at rampant pace investment opportunities are high.

Investment can be difficult initially due to shortage of funds. A proper planning would help in getting loans from bank or other credit institutions. What must be remembered is that a commercial property can be taken by a single business house or be rented to small traders. So, it is necessary to understand the optimum use of the property. Those who have the appetite to take some risk and earn higher returns then investment in commercial property is ideal. Nevertheless, it is always advisable to study the opportunities and threats before making any investment as a wrong decision can result in big loss.

Rupee hits record low of 55.09 versus the dollar

The rupee fell to a new record low of 55.09 to the dollar, its fifth consecutive all-time low, as arbitrage measures taken by the Reserve Bank of India late on Monday provided only a brief sentiment boost.

At 10:05 a.m., the partially convertible rupee was trading at 54.95/00 per dollar, rebounding from the record low and strengthening from its close of 55.03/04 on Monday.

Traders said some exporters were selling dollars in the market, limiting a steeper fall, but the overall bias is still towards a weaker rupee.

The central bank said capital inflows will determine the direction of the rupee and stepped in to arrest volatility in currency movement.

The Reserve Bank on Monday excluded banks’ net overnight open positions from currency futures and options segment. It also said foreign exchange future and options positions cannot be offset against OTC trades.

RBI capped the position limit in the exchanges for trading currency F&O at $100 million or 15% of the OTC market. As the risk of rupee further depreciating remains, RBI has also allowed banks to use funds from FCNR deposits for granting loans to domestic borrowers to meet working capital needs to attract overseas money.

“Demand from oil has been strong, particularly today (Monday), and the capital flows are not matching that,” said Subir Gokarn, deputy governor at the Reserve Bank of India. “Ultimately, capital flows are going to be the main determinant of how the currency behaves.”

This article was originally published on The Economic Times

Will the Facebook IPO Ruin Facebook?

With Facebook’s IPO today, the big question has been how Facebook is going to raise revenue to fit with stock valuation. There are several options, and many of them involve more ads: pushing more ads onto mobile interfaces, more ads in general, more narrowly targeted ads, more back-end data sales, further expanding Facebook Connect, and further expanding Facebook Payment. In all, though, I think Facebook’s best option is to reconcile revenue and valuation the other way around. Don’t raise revenue to fit with valuation. Instead, let the bubble burst.

So much of Facebook’s success has to do with network effects, not with the quality of the site itself. Just as a telephone represents little value to you until and unless people you want to talk to have telephones as well, so too Facebook is valuable to users primarily because a great many other users are also there. Now, surely, there are things Facebook could do that would drive more users away, and there are things that Facebook has done very well, but for the most part we go to the site because of network value (we want to talk with our friends and share pictures with family), not because of intrinsic value (the site itself is good per se).

This gives Facebook something of the character of a utility. We just want it to work, and for the company itself to be as unobtrusive as possible. The only good conversation with your cable provider is no conversation. Nobody likes thinking about their phone plan.

Facebook’s encroachment into the user experience and into user data is precarious, and perhaps already overextended. If Facebook were one site among many, from which we could freely choose what we preferred, there would be little issue with cutting new bargains with users—but the fact that what Facebook primarily offers to the user is nothing other than its own wide adoption means that it has a de facto monopoly. So if we don’t like the deal they offer us—e.g. the tradeoff between data privacy and number of ads—we can’t just walk away from it to another service provider (unless we convince most or much of our network to walk away with us).

The monopolistic, public-utility-like aspect of Facebook’s business model of trading on network effects ought to make users concerned that they may be exploited or abused. And so they should be! Where network effects inhibit competition that might otherwise bring about market-based regulation of corporate behavior, we are left with little recourse but to hope that a company will simply choose to treat users fairly. And indeed, there seems to be more and more anti-Facebook sentiment, even in college kids; my students today are usually wary of or troubled by Facebook, where only a few years ago my students were generally uncritical of it. The fact that discomfort with Facebook is so often expressed on Facebook itself is neither ironic nor hypocritical; instead it is simply reflective of the problem: the fact that it’s the only place to have a conversation along with several hundred friends and contacts makes it both deserving of concern and discussion, and at the same time an unparalleled location to voice that concern and to have that discussion.
Facebook has managed to maintain this precarious position so far, but a step in any direction risks a fall. More ads on either the standard or the mobile site will most certainly annoy users. They likely will be perceived by some as crass and trashy, although users will, I’m sure, tolerate them so long as there remains no real alternative. A further complication is the targeting of ads. Right now, most everyone seems to be getting “dumb” ads: broadly-based ads, not the narrow targeting that Facebook’s data analytics promises; no more demographically well-informed than a billboard in one section of town rather than in another. Combined with the abysmal click-through rate of online ads, this is not a terribly impressive sort of ad to sell. But, as Target reportedly discovered in the recent Case of the Pregnant Teen, well-targeted advertising can quickly become creepy.

Selling data from the back end presents its own problems. Facebook has to let purchasers and investors know what kind of saleable demographic trends and correlations they can mine from their unprecedented data stores—but the more valuable that information seems to be, the more Facebook will draw the scrutiny of regulators and the ire of users. There’s a similar catch-22 with Facebook Connect and Facebook Payment: as Facebook further leverages its de facto monopoly into increased ubiquity and indispensability, the perception of its economic value will be tied to awareness of its anti-competitive effects. How much further can Facebook expect to expand before conversations about the Sherman Antitrust Act arise again?

It’s true enough that a public company has certain obligations, both legal and moral, to shareholders. These obligations, notably, do not include sacrificing long-term profits and viability in the name of short-term return on investment. Many companies no longer exist today because they learned too late that working for the quarterly report is a poor form of stewardship. (Or, put more cynically: the public LLC structure is built to focus on the short term, and executive compensation through stock options encourage cycles of overvaluation and collapse.) With the large percentages of shares being retained by Mark Zuckerberg, Eduardo Saverin, and other previous owners—along with Zuckerberg’s values-based letter accompanying the IPO—it seems like Facebook is welcoming public ownership on its terms rather than being transformed by an imagined need to sacrifice fundamentals in the service of the stock ticker.

And so I suggest to Facebook: stick with what’s working. Don’t offend users’ sensibilities and make Facebook feel tacky and unfriendly and monetized through a new barrage of ads. Don’t creep users out by mining and selling ever more detailed data about user demographics. Don’t make users feel trapped by expanding out Connect and Payment and making Facebook ever-present, unavoidable, and stifling. Do not build a tower on these shifting sands, pushing revenue to reach ever-greater heights, but instead let the stock values fall to earth. Push us too far, and we will break you or abandon you; you will go the way of either Ma Bell or MySpace.

The articles was originally published on http://blogs.wsj.com byD.E. Wittkower is a philosopher of technology at Old Dominion University, and editor ofFacebook and Philosophy and iPod and Philosophy.

JPMorgan’s Trading Loss Is Said to Rise at Least 50%

BY NELSON D. SCHWARTZ AND JESSICA SILVER-GREENBERG

The trading losses suffered by JPMorgan Chase have surged in recent days, surpassing the bank’s initial $2 billion estimate by at least $1 billion, according to people with knowledge of the losses.

When Jamie Dimon, JPMorgan’s chief executive, announced the losses last Thursday, he indicated they could double within the next few quarters. But that process has been compressed into four trading days as hedge funds and other investors take advantage of JPMorgan’s distress, fueling faster deterioration in the underlying credit market positions held by the bank.

A spokeswoman for the bank declined to comment, although Mr. Dimon has said the total paper trading losses will be volatile depending on day-to-day market fluctuations.

The Federal Reserve is examining the scope of the growing losses and the original bet, along with whether JPMorgan’s chief investment office took risks that were inappropriate for a federally insured depository institution, according to several people with knowledge of the examination. They spoke on the condition of anonymity because the investigation is still under way.

The overall health of the bank remains strong, even with the additional losses, and JPMorgan has been able to increase its stock dividend faster than its rivals because of stronger earnings and a more solid capital buffer.

Still, the huge trading losses rocked Wall Street and reignited the debate over how tightly giant financial institutions should be regulated. Bank analysts say that while the bank’s stability is not threatened, if the losses continue to mount, the outlook for the bank’s dividend will grow uncertain.

The bank’s leadership has discussed the impact of the losses on future earnings, although a dividend cut remains highly unlikely for now. In March, the company raised the quarterly dividend by 5 cents, to 30 cents, which will cost the bank about $190 million more this quarter.

A spokeswoman for the bank said a dividend cut has not been discussed internally.

At the bank’s annual meeting in Tampa, Fla., on Tuesday, Mr. Dimon did not definitively rule out cutting the dividend, although he said that he “hoped” it would not be cut.

John Lackey, a shareholder from Richmond, Va., who attended the meeting precisely to ask about the dividend, was not reassured. “That wasn’t a very clear answer,” he said of Mr. Dimon’s response. “I expect that shareholders are going to suffer because of this.”

Analysts expect the bank to earn $4 billion in the second quarter, factoring in the original estimated loss of $2 billion. Even if the additional trading losses were to double, the bank could still earn a profit of $2 billion.

And many analysts and investors remain optimistic about the bank’s long-term prospects.

Glenn Schorr, a widely followed analyst with Nomura, reiterated on Wednesday his buy rating on JPMorgan shares, which are down more than 10 percent since the trading loss became public last week.

What’s more, the chief investment office earned more than $5 billion in the last three years, which leaves it ahead over all, even given the added red ink.

But the underlying problem is that while these sharp swings are expected at a big hedge fund, they should not be occurring at a bank whose deposits are government-backed and which has access to ultralow cost capital from the Federal Reserve, experts said.

“JPMorgan Chase has a big hedge fund inside a commercial bank,” said Mark Williams, a professor of finance at Boston University, who also served as a Federal Reserve bank examiner. “They should be taking in deposits and making loans, not taking large speculative bets.”

Not long after Mr. Dimon’s announcement of a dividend increase in March, the notorious bet by JPMorgan’s chief investment office began to fall apart.

Traders at the unit’s London desk and elsewhere are now frantically trying to defuse the huge bet that was built up over years, but started generating erratic returns in late March. After a brief pause, the losses began to mount again in late April, prompting Mr. Dimon’s announcement on May 10.

Beginning on Friday, the same trends that had been causing the losses for six weeks accelerated, since traders on the opposite side of the bet knew the bank was under pressure to unwind the losing trade and could not double down in any way.

Another issue is that the trader who executed the complex wager, Bruno Iksil, is no longer on the trading desk. Nicknamed the London Whale, Mr. Iksil had a firm grasp on the trade — knowledge that is hard to replace, even though his anticipated departure is seen as sign of the bank’s taking responsibility for the debacle.

“They were caught short,” said one experienced credit trader who spoke on the condition of anonymity because the situation is still fluid. The market player, who does not stand to gain from JPMorgan’s losses and is not involved in the trade, added, “this is a very hard trade to get out of because it’s so big.”

He estimated that the initial loss of just over $2 billion was caused by a move of a quarter percentage point, or 25 basis points, on a portfolio with a notional value of $150 billion to $200 billion — in other words, the total value of the contracts traded, not JPMorgan’s exposure. In the four trading days since Mr. Dimon’s disclosure, the market has moved at least 15 to 20 basis points more against JPMorgan, he said.

The overall losses are not directly proportional to the move in basis points because of the complexity of the trade. Many of the positions are highly illiquid, making them difficult to value for regulators and the bank itself.

In its simplest form, traders said, the complex position assembled by the bank included a bullish bet on an index of investment-grade corporate debt, later paired with a bearish bet on high-yield securities, achieved by selling insurance contracts known as credit-default swaps.

A big move in the interest rate spread between the investment grade securities and risk-free government bonds in recent months hurt the first part of the bet, and was not offset by equally large moves in the price of the insurance on the high yield bonds.

As the credit yield curve steepened, the losses piled up on the corporate grade index, overwhelming gains elsewhere on the trades. Making matters worse, there was a mismatch between the expiration of different instruments within the trade, increasing losses.

The additional losses represent a worsening of what is already the most embarrassing misstep for JPMorgan since Mr. Dimon became chief executive in 2005. No one has blamed Mr. Dimon for the trade, which was under the oversight of the head of the chief investment office, Ina Drew, but he has repeatedly apologized, calling it “stupid” and “sloppy.”

Ms. Drew resigned Monday and more departures are anticipated.

This story BY NELSON D. SCHWARTZ AND JESSICA SILVER-GREENBERG was originally published on http://dealbook.nytimes.com.