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Morning Six-Pack: Brazil, Canada and the Holy See

A down and dirty guide to what we're reading today.

Here's a good rule of thumb. When one healthy bank buys a business from another healthy bank, it's almost always a case of regulatory arbitrage. It's never really because of synergies or managerial talent or whatever other hokum the media relations folks pull out of their kettles. It's just about one bank being better able to take advantage of the rules than the other bank.

So even though the rationale for JPMorgan Chase buying the over-the-counter commodities derivatives business of UBS remains mysterious, you can safely surmise this is regulatory arbitrage. Most likely, it's got to do with capital requirements. Exactly what to do with them, we're not sure. Basically, Switzerland's regulators don't want UBS running a commodities derivatives business but the U.S. regulators are just fine with JPMorgan doing it.

Alternate theory: Blythe Masters just got bored and wanted more stuff to do.

Morgan Stanley isn't having much luck selling its commodities business, which includes power plants, a tanker fleet and at least one pipeline. It's been shopping the business for at least a year, and probably longer. Now, instead of a straight out sale, it is looking to sell a minority stake. "But the bank is not in any hurry to sell a stake at any price and is not close to a deal," sources tell Reuters. Which is banker talk for we can't get any buyers at the price we want. That's a song we've heard before.

Meanwhile, over at Goldman Sachs, things are going worse than expected in the country that put the B in BRIC. Goldman had announced plans to hire 50 folks in Brazil but now has scrapped that plan. UBS and Barclays have also been downsizing Brazilian ambitions. Everyone blames market conditions being worse than expected. Somewhere in the world today, Jim Chanos is smiling.

Did you hear the one about the time the advisor to the Holy See walked into Citigroup? This happened way back in the days before the financial crisis. A guy named John Fiorilla, who is described as a 'legal advisor' to the Holy See, asked Citigroup to hedge his exposure to the Royal Bank of Scotland. Citi was all like, "Sure, dude, no probs. We got you covered." But they didn't. And now FINRA has ordered Citi to pay $11 million bucks to Fiorilla. Naturally we're asking: what is Fiorilla looking to hedge against today?

Bank of America Merrill Lynch, pronounced in these parts as BAM-LEE, has lost its top swaps trader, Sascha Prinz. And by lost we don't mean misplaced. We mean, he's left the bank after just three years trading U.S. interest rate swaps and Treasuries in London. What does this tell you about the performance of Bamlee's swaps traders?

Canada's version of Fannie Mae, which is called the Canada Mortgage and Home Corp.,announced that it will limit mortgage guarantees extended this month to $350 million (presumably, that's $350 million Canadian, which is the equivalent of approximately 70 million Molsons). The idea is that this will help cool off the Canadian housing market and reduce risk to tax payers. Note, however, that if CMHC had proper controls over the quality of the mortgages it was backing, a dollar cap would be unnecessary. This "reform" is really an admission of quality-control failure.

—By CNBC's John Carney. Follow me on Twitter @Carney

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