Dude, Where’s My Stuff

Link: https://am.jpmorgan.com/us/en/asset-management/institutional/insights/market-insights/eye-on-the-market/dude-where-is-my-stuff/

Graphic:

Excerpt:

COVID has disrupted supply chains in two major ways: surging demand for imported consumer goods in the West due to pandemic work from home trends and other home improvement spending, and a decline in workers required to maintain and operate these supply chains. The surge in US import demand has led to a sharp rise in eastbound freight rates (see charts for Shanghai->LA and Shanghai->Rotterdam). However, westbound freight rates have not risen nearly as much, leading to an odd and problematic phenomenon: incentives for container owners to move them back to China empty to accelerate receipt of eastbound freight rates, instead of waiting for containers to be refilled to earn westbound freight rates as well. This is illustrated in the fourth chart which shows departing containers from LA/LB: a lot of them started leaving empty once eastbound freight rates surged. This further exacerbates supply chain issues, since US goods (i.e., grains) that were supposed to depart US railcars and warehouses for export remain in place, occupying space that US imported goods were destined for. 

Author(s): Michael Cembalest, Chairman of Market and Investment Strategy

Publication Date: 27 Sept 2021

Publication Site: JP Morgan

The Biggest Business Fails of All Time

Link: https://moneywise.com/a/the-biggest-business-fails-of-all-time

Excerpt:

3. Spreadsheet error costs JPMorgan $3.1 billion

You might recall the “London Whale” incident in 2012, when notorious trader Bruno Iksil — whose other monikers include the White Whale and even Voldemort — conducted a series of credit default swaps that cost JPMorgan Chase $6.2 billion.

What you might not know, however, is that half the loss was incurred by a simple Excel spreadsheet error.

Bloomberg reports that the Excel model, which relied heavily on copy and pasting of information, accidentally “underestimated risk by half.”

Author(s): Serah Louis

Publication Date: 1 March 2021

Publication Site: MoneyWise