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BREAKING NEWS FROM CNBC’S KATE KELLY: JPMORGAN LOSS LIKELY TO BE LESS THAN $9B

When: Today, Thursday, June 28, 2012

Where: CNBC’s “Fast Money Halftime Report

Following is the unofficial transcript of breaking news from CNBC’s Kate Kelly. All references must be sourced to CNBC.

KATE KELLY: THANKS SO MUCH SCOTT. THE NEW YORK TIMES TODAY OUT WITH A STORY SUGGESTING THAT THE JPMORGAN LONDON WHALE TRADING LOSSES COULD REACH 9 BILLION DOLLARS . STOCK WAY DOWN THIS MORNING ON THAT NEWS MORE THAN 4 PERCENT THE LAST I CHECKED. HERES THE DEAL JPMORGAN’S RISK ASSESSMENT FOLKS AND THEIR TRADERS PUT TOGETHER SOME SCENARIOS SOMETIMES ON A DAILY BASIS TO LOOK AT LOANS, TRADES, ALL SORTS OF THINGS, EUROPE AS YOU GUYS JUST MENTIONED AND WHAT ITS GOING TO MEAN TO THEM. IN THIS CASE IN LATE MAY JUST AS THEY WERE TRYING TO GET THEIR ARMS AROUND THE SITUATION, THERE WAS THE RISK ASSESSMENT THAT PUT THE TOTAL LOSSES RELATED TO THE LONDON WHALE TRADING AT AS HIGH AS 9 BILLION DOLLARS. SO THAT WAS REALITY FOR THEM POSSIBLY ABOUT A MONTH AGO. SINCE THEN HOWEVER THEY HAVE DONE A LOT IN THE WAY OF UNWINDING THIS TRADE THEY ARE ABOUT MORE OR LESS 70 PERCENT OUT OF IT IM TOLD AND THAT MEANS THE WORST IS BEHIND THEM FOR THIS QUARTER WHICH ENDS ON SATURDAY AND WILL BE REPORTED ON JULY 13TH JAMIE DIMON HAS SAID A COUPLE OF THINGS PUBLICLY ALREADY HE SAID ON MAY 10TH THE LOSSES ARE MORE THAN 2 BILLION LETS SAY THAT’S ABOUT 2 AND A HALF BILLION IF WE KIND OF DO SOME ROUGH MATH HE THOUGHT THAT THAT COULD POTENTIALLY DOUBLE DURING THE QUATRTER SO THAT PUTS US IN THE ZIPCODE OF 4 BILLION DOLLARS THEY ALSO HAVE SOME GAINS THERE WILL BE DVA GAINS IM TOLD THERE WILL BE LOAN LOSS RESERVE REDUCTIONS BECAUSE HOUSING IS IMPROVING SOMEWHAT SO ITS HARD TO KNOW EXACTLY WHAT THE NUMBERS ARE GOING TO BE BUT AGAIN DIMON HAS SAID AT CONGRESS THERE GOING TO BE SOLIDLY PROFITABLE IN RECENT QUARTERS IN THE LAST 6 QUARTERS OR SO THEY’VE MADE BETWEEN 3 AND HALF AND 5 BILLION DOLLARS IM TOLD THAT WHEN HE SAYS SOLIDLY PROFITABLE HE MEANS THEY WILL BE IN THAT ZONE SO WHAT DOES THIS MEAN ALL TOGETHER THE TOTAL LOSSES RELATED TO THE LONDON WHALE ARE LIKELY TO BE BETWEEN 4 AND 6 BILLION DOLLARS THEY STILL ARE APPARENTLY ON TRACK TO BE SOLIDLY PROFITABLE THIS QUARTER WHICH MEANS AT LEAST 3 AND HALF BILLION DOLLARS IN NET INCOME AND THE PAIN OF THIS LONDON WHALE TRADE IS PROBABLY LARGELY OVER SCOTT BECAUSE THEY’VE GOTTEN OUT OF THEIR LONG POSITION IN THE CDX IG9 WHICH IS THIS SOMEWHAT OBSCURE CREDIT DERIVATIVES INDEX BUT THERES LIKELY TO BE A LITTLE MORE OF AN UNWIND IN THE NEXT QUARTER SO THIS WONT BE OVER YET.

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