Market/Financial Thread

[Look at Ray Ray Run]

Couple points, and SS2k I'm absolutely floored that you think this "These are the types of cases that the FINRA/SEC has brought its entire existence," which is true if you mean meaningless cases against people that pose the government no risk of legal pushback, and also that you believe that this guy deserves to go to jail for anything. He was posting his stake in GME when no one was viewing his posts, and the majority of people that were called him a dumb ass and money burner. He didn't push the position on anyone.

The SEC should be investigating actual market manipulators, like Citadel for example. Or pretty much any other hedge fund that trades solely on inside information or sure market manipulation via a network like CNBC. Most that work in industry but don't work for these crooks (even many who do) understands how much damage they've done to the industry in a whole.

1. The brokerages that shut down did not due so far margin reasons. They did so because of clearinghouse issues and a demanded escalation of collateral that places like Robin Hood couldn't afford - which is incredibly embarrassing and unacceptable in the first place. Now, I also think there were other issues here and the fact that Citadel and Cohen were even hovering around leads me to believe it wasn't just Clearinghouse issues but that no doubt was the primary driver. I also have issues with a brokerage preventing you from using your money for whatever you like - the forced sales on that day should also be 100% illegal for any traders/trades not being made on margin. If you want to shut down margin trading, fine, but pushing people out of positions by being in sell only mode is manipulation in it's own sense.

2. Given the short % of the company float (which is what this was) many of these shares that were borrowed, were either never actually purchased (illegal) or they were borrowed out multiple times (Illegal but loopholed), both which should constitute naked shorting; the way they get around this is they lend shares out multiple times to different people/funds. Which is still naked shorting but somehow this loophole has led to the SEC cowering and not pursuing the proper channels to shut this BS down. You're misleading people claiming this 140% ratio was related to daily volume; this 140% was the short interest of the company float (which is total shares in circulation). They were naked shorting the stock.

What the reddit kid did was not wrong. If a bunch of Hedge Fund managers and etc can go on CNBC in the middle of the day and declare apocalyptic BS to move prices in a direction to benefit their positions, then some guy posting his position on reddit for fun for months is not illegal.

[Look at Ray Ray Run]

On 2/18/2021 at 2:27 PM, southsider2k5 said:

One thing of note is that it helps if you understand what the short ratio is.  It is short interest compared to average daily volume.  If it is above 100%, it just means there are more short positions than average trading volume.  It isn't something taken against total shares or something like that.

On FTD's the explanation is in there...

and 

So in the case of the lack of cash, they are margin called.  That isn't illegal.  The second part of not doing a locate is a problem, and again those will be investigated and fines will happen for those as well.  As I said before, Robinhood especially is going to be in a world of trouble just for their margin problems.  if they, or any other firms, were allowing shorts without locates, they will pay for it.

Finally you can argue that anyone did anything.  Do you have evidence of coordination between the shorts?  Because if you do, call the SEC and tip them.  You will get a 10% reward that results in fines being paid.  "I would argue" doesn't really do anything.  Do you have email trails?  Recorded calls?  Because that is exactly how the LIBOR stuff was broken.  There will also be plenty of people looking to see if there was coordination here, as there is a LOT of money  to be made on fines and the like.  If it is there, it will be found.  There are billions of fines out there for institutions, as they are the people with the deepest pockets.

 

?

I'm not sure what part of this post is my favorite.

Where you act like Hedge Funds will be held accountable for their wrong doings - Steve Cohen just bought a professional sports team with the 8 billion he obtained via illegal insider trading - or where you act like bigruss needs to provide you with hard evidence to support the idea that the market manipulators who are two of the worst people in the history of the financial industry in this country (Steve Cohen and Ken Griffin), two of the biggest crooks in modern American times, and then all he has to do is tip off the SEC who... **checks notes** ... have never even gotten into a court room with Cohen or Griffin despite their obvious illegal activities.... and he'll get 10% of the "fines."

Your faith in the SEC is magical given that they spend 99% of their existence attacking little traders, and non-problem causers, and 1% doing nothing but saying very much. You claiming if it is there, it will be found is hilarious. The government literally had Steve Cohen's leading pharma/medical trader having hour+ long phone calls daily/weekly with the lead doctor of a Alzheimer's study/treatment that was in testing for a major pharma company; a company they had a major position on. Then the day before the studies results were to be released publicly at a conference, that same trader traveled to ann arbor michigan (where the doctor lived) and stopped by his house (phone records, receipts, all of it). After that meeting, the trader called Cohen, and that afternoon/following morning they moved out of their entire position before the doctor spoke at a conference where he had to declare the treatment did not succeed in trials (The doctor ironically enough was fired from his job at Michigan and fired as a consultant etc for his actions). They had the phone call made to Cohen right after the meeting; they had the sell calls put in to multiple different banks as to not set anything off; they had the phone calls nightly and weekly between trader and doctor (when no communication at all should have ever happened). What happened to Cohen? Nothing. That was one of many cases that led to him having to "close down" his first Fund which he was then allowed to open another one in 5 years. No actual charges were ever levied against Cohen either; just the fund. Certainly nothing criminal. You should probably stop trusting the SEC to actually hold incredibly wealthy funds/people accountable. Any by the way, everyone who works for Cohen is asked to do the same thing. Most big hedge funds are not operating on anything but illegal obtained information past company to company; or in citadels case, they get to front load all the robin hood buys/data because they pay for it; another thing that should be absolutely illegal.

Edited February 25, 2021 by Look at Ray Ray Run

[caulfield12]

33 minutes ago, Look at Ray Ray Run said:

?

I'm not sure what part of this post is my favorite.

Where you act like Hedge Funds will be held accountable for their wrong doings - Steve Cohen just bought a professional sports team with the 8 billion he obtained via illegal insider trading - or where you act like bigruss needs to provide you with hard evidence to support the idea that the market manipulators who are two of the worst people in the history of the financial industry in this country (Steve Cohen and Ken Griffin), two of the biggest crooks in modern American times, and then all he has to do is tip off the SEC who... **checks notes** ... have never even gotten into a court room with Cohen or Griffin despite their obvious illegal activities.... and he'll get 10% of the "fines."

Your faith in the SEC is magical given that they spend 99% of their existence attacking little traders, and non-problem causers, and 1% doing nothing but saying very much. You claiming if it is there, it will be found is hilarious. The government literally had Steve Cohen's leading pharma/medical trader having hour+ long phone calls daily/weekly with the lead doctor of a Alzheimer's study/treatment that was in testing for a major pharma company; a company they had a major position on. Then the day before the studies results were to be released publicly at a conference, that same trader traveled to ann arbor michigan (where the doctor lived) and stopped by his house (phone records, receipts, all of it). After that meeting, the trader called Cohen, and that afternoon/following morning they moved out of their entire position before the doctor spoke at a conference where he had to declare the treatment did not succeed in trials (The doctor ironically enough was fired from his job at Michigan and fired as a consultant etc for his actions). They had the phone call made to Cohen right after the meeting; they had the sell calls put in to multiple different banks as to not set anything off; they had the phone calls nightly and weekly between trader and doctor (when no communication at all should have ever happened). What happened to Cohen? Nothing. That was one of many cases that led to him having to "close down" his first Fund which he was then allowed to open another one in 5 years. No actual charges were ever levied against Cohen either; just the fund. Certainly nothing criminal. You should probably stop trusting the SEC to actually hold incredibly wealthy funds/people accountable. Any by the way, everyone who works for Cohen is asked to do the same thing. Most big hedge funds are not operating on anything but illegal obtained information past company to company; or in citadels case, they get to front load all the robin hood buys/data because they pay for it; another thing that should be absolutely illegal.

I really like SouthSider2k5 when he's on baseball-related topics, but he always comes across as Potter from It's a Wonderful LIfe when on the subject of finance/stock market.

It's perfectly natural for him to have a bias that's more towards protecting the point of view of his employer than representing the so-called 99%.

Sometimes it comes across like "you guys don't understand something so complex, so you're going to have rely upon the foxes and wolves to guard the hen house."

 

 

Janet Yellen's Net Worth: $16 Million

Between 2018 and 2020, Yellen earned $7 million from 50 speaking engagements.1 hour ago

 

Beyond the SEC, you have the Treasury Secretary, and she's almost as much captured by the system that she represents as Steve Mnuchin, Greenspan, Rubin, Larry Summers, etc.

Then you have basically degrees of complicity, but still with tendencies more towards advocating for Wall Street interests as opposed to protecting "Joe the Plumber."  

Heck, this idea of the Clintons being in the pocket of Wall Street was a not insignificant factor in her 2016 loss.

If we didn't witness what happened in 1997-98 (Asian crisis), the tech stock/Nasdaq crash (and the pumping and dumping of all those names like Nortel, JDS Uniphase, Enron, Worldcom, Cisco, Lucent, AIG, etc.), then in the 2000's, all the mortgage originators not even performing rudimentary due diligence and of course Wall Street banks not separating institutional investment, retail banking and all the collusion with the ratings agencies on the sub-primes and CDO's/credit default swaps.

Nobody got punished or held accountable.  And that was under a 100% Democratic-led executive and legislative branch from 2009-2010.

The last time it happened that anyone of note really got into trouble from the political and banking/high finance world was the S&L Scandal in the 1980's, and that left some of the key figures censured but certainly not out of commission permanently.

 

 

Edited February 25, 2021 by caulfield12

[gatnom]

12 hours ago, Look at Ray Ray Run said:

1. The brokerages that shut down did not due so far margin reasons. They did so because of clearinghouse issues and a demanded escalation of collateral that places like Robin Hood couldn't afford - which is incredibly embarrassing and unacceptable in the first place. Now, I also think there were other issues here and the fact that Citadel and Cohen were even hovering around leads me to believe it wasn't just Clearinghouse issues but that no doubt was the primary driver. I also have issues with a brokerage preventing you from using your money for whatever you like - the forced sales on that day should also be 100% illegal for any traders/trades not being made on margin. If you want to shut down margin trading, fine, but pushing people out of positions by being in sell only mode is manipulation in it's own sense.

This is a margin call. Robinhood (the broker) got margin called by the clearinghouse. Since they are not allowed to use customer funds as collateral, they disallowed new positions from being taken. It would be insane if they didn't allow traders to sell out of their positions.

[caulfield12]

He’s quite fortunate that he is now going to be able to get out of his original $750k investment in AMC at around $8 with a 30-40% profit in just a few weeks.  Claimed to already have lost the same roughly on GME.

https://twitter.com/RazerSliced/status/1364746958049533957/photo/1

BlackBoxStocks

Edited February 25, 2021 by caulfield12

[Look at Ray Ray Run]

2 hours ago, gatnom said:

This is a margin call. Robinhood (the broker) got margin called by the clearinghouse. Since they are not allowed to use customer funds as collateral, they disallowed new positions from being taken. It would be insane if they didn't allow traders to sell out of their positions.

This is fair BUT the implication from the post - as I understood it - was this was related to investors themselves (not the brokerage) extended on margin with the brokerage. Additionally, I'm not sure I would use the term margin call regarding a broker and a clearinghouse as the broker is not an investor per se.

Given that it takes two days for them to clear the trades with the CH, and the volatility of GME, the clearinghouse upped the collateral requirements (also something I find shady) to reduce the overall risk.

My problem is 100% not with them allowing traders to sell out of their positions. My complaint is entirely regarding manipulating the market by ONLY allowing you to sell out of a position. That should be 100% illegal. If trading is halted on the buy side, a promotion of sell-only by a brokerage should 10000% be illegal and classified as market manipulation.

Additionally, as I said further down in my post it's flat out embarrassing that Robinhood ran into this capital issue in the first place. They'll be out of business (imo) soon enough.

Edited February 25, 2021 by Look at Ray Ray Run

[Look at Ray Ray Run]

14 hours ago, caulfield12 said:

I really like SouthSider2k5 when he's on baseball-related topics, but he always comes across as Potter from It's a Wonderful LIfe when on the subject of finance/stock market.

It's perfectly natural for him to have a bias that's more towards protecting the point of view of his employer than representing the so-called 99%.

Sometimes it comes across like "you guys don't understand something so complex, so you're going to have rely upon the foxes and wolves to guard the hen house."

 

 

Janet Yellen's Net Worth: $16 Million

Between 2018 and 2020, Yellen earned $7 million from 50 speaking engagements.1 hour ago

 

Beyond the SEC, you have the Treasury Secretary, and she's almost as much captured by the system that she represents as Steve Mnuchin, Greenspan, Rubin, Larry Summers, etc.

Then you have basically degrees of complicity, but still with tendencies more towards advocating for Wall Street interests as opposed to protecting "Joe the Plumber."  

Heck, this idea of the Clintons being in the pocket of Wall Street was a not insignificant factor in her 2016 loss.

If we didn't witness what happened in 1997-98 (Asian crisis), the tech stock/Nasdaq crash (and the pumping and dumping of all those names like Nortel, JDS Uniphase, Enron, Worldcom, Cisco, Lucent, AIG, etc.), then in the 2000's, all the mortgage originators not even performing rudimentary due diligence and of course Wall Street banks not separating institutional investment, retail banking and all the collusion with the ratings agencies on the sub-primes and CDO's/credit default swaps.

Nobody got punished or held accountable.  And that was under a 100% Democratic-led executive and legislative branch from 2009-2010.

The last time it happened that anyone of note really got into trouble from the political and banking/high finance world was the S&L Scandal in the 1980's, and that left some of the key figures censured but certainly not out of commission permanently.

 

 

I find this part to be a bit ironic. For one, many in industry despise these big hedge funds who have basically found a loophole around insider trading and have exploited/manipulated the market in ways to benefit them which has directly effected other market players and cost them money. So if anything, the major players near the top have harmed 99% of those within industry which has led to animosity. Additionally, they give the entire industry a bad rap and a bad name; many are trying to make an honest living. Many didn't lobby for the profitization of the commodities market which directly led to starvation globally and immense issues for farmers in this country. Many didn't lobby to have things like mortgages turned into securities and then blocked and reblocked to turn subprime garbage into A graded securities. Many didn't lobby and push for the destruction of lending regulations that took advantage/exploited people into loans and etc they couldn't afford. The fact is, there are a lot of scum bags in industry, but the majority are people genuinely trying to make an honest living and the SEC/Governments reluctance to actually hold the worst of the worst (like Griffin and Cohen) accountable for the destruction of the industry has not only cost people below them lots of money but it's also given the industry in general a black eye. Instead, just like in '08, the SEC and government attempt to hold little people with little influence and support accountable as an example, as opposed to actually going after those whom have spent years manipulating every aspect of the market to the betterment of themselves.

As for your second part, yeah the entire "complexity" thing is by design. There's nothing complex about 99% of the processes; it's the rhetoric and verbiage that are designed to confuse people and inflate the "difficulty" of what is being done. The SEC is a joke; certainly not some organization to be lauded for their crackdown on illegal activity that they never crack down on. All in all, no one should believe the government is going to do anything to any of these people; especially not after 2008 where they let the biggest fraudsters in the industry walk out of their buyouts with big bags of cash and zero accountability for bankrupting and making-homeless millions of Americans. If blatant predatory actions are no longer criminally illegal (fines don't deter given that that fines were much less than the profits made), then there's no reason for people to stop doing them. It's a damn shame, honestly.

Edited February 25, 2021 by Look at Ray Ray Run

[gatnom]

On 2/25/2021 at 10:33 AM, Look at Ray Ray Run said:

This is fair BUT the implication from the post - as I understood it - was this was related to investors themselves (not the brokerage) extended on margin with the brokerage. Additionally, I'm not sure I would use the term margin call regarding a broker and a clearinghouse as the broker is not an investor per se.

Given that it takes two days for them to clear the trades with the CH, and the volatility of GME, the clearinghouse upped the collateral requirements (also something I find shady) to reduce the overall risk.

My problem is 100% not with them allowing traders to sell out of their positions. My complaint is entirely regarding manipulating the market by ONLY allowing you to sell out of a position. That should be 100% illegal. If trading is halted on the buy side, a promotion of sell-only by a brokerage should 10000% be illegal and classified as market manipulation.

Additionally, as I said further down in my post it's flat out embarrassing that Robinhood ran into this capital issue in the first place. They'll be out of business (imo) soon enough.

You're right, I didn't word that very well. But, it is my understanding that somewhere down the line Robinhood itself is runs on margined trading (Citadel, order flow, etc.) with the clearinghouse. Since they were probably crazy long due to the fact that all of their traders were buying and not selling, they are basically unable to take on a longer position without being able to come up with that money, and thus they are not allowed to have anybody buy more shares.

I want to point out that at this point, the system is actually working as intended: clearing is essentially an insurance fund to manage counterparty risk. Due to the volatility and extreme position, capital requirements went up to collateralize. This all makes sense and is generically a good thing. It is also worth noting that Robinhood may have been required to collateralize >100% of their position, though I have no idea if that is true in this case.

I don't necessarily disagree with your main point that the system is designed to keep the "little guy" out as much as possible. That's basically what the SEC is constantly enforcing: the flipside of gatekeeping is protecting people from doing stupid things with their money. This is a separate issue than how the clearing process manages risk, though. Should it take three days to clear these trades? Probably not (I don't know enough about how it works to be definitive), but that seems more of a technology issue than a regulations/SEC problem. I would agree with you that the system should be more open, which would technically also loosen the protections on common citizens.

In the end, I will admit that I'm mostly in the commodities space, so my understanding can be completely wrong here. If ss2k5 or whoever knows more than I do here, I am totally open to being corrected.

[Texsox]

4 hours ago, gatnom said:

That's basically what the SEC is constantly enforcing: the flipside of gatekeeping is protecting people from doing stupid things with their money.

I've been thinking a lot about that recently. What should the government's role be in protecting people from doing stupid things with their money? I remember my dad basically gave away a car in a deal on a leased vehicle. I was livid, they really took advantage of him. He didn't understand how leases work, he just saw the monthly price and thought it was a good deal. We have folks in Texas who out of 200+ choices in electric companies and each of those with multiple plans these folks picked a variable rate plan that may bankrupt them. Whose fault is it? Let the buyer beware is how most of our laws are written. It seems like the folks that can least afford to squander any assets are the ones always getting taken. That just seems unfair to me. 

[Look at Ray Ray Run]

6 hours ago, gatnom said:

You're right, I didn't word that very well. But, it is my understanding that somewhere down the line Robinhood itself is runs on margined trading (Citadel, order flow, etc.) with the clearinghouse. Since they were probably crazy long due to the fact that all of their traders were buying and not selling, they are basically unable to take on a longer position without being able to come up with that money, and thus they are not allowed to have anybody buy more shares.

I want to point out that at this point, the system is actually working as intended: clearing is essentially an insurance fund to manage counterparty risk. Due to the volatility and extreme position, capital requirements went up to collateralize. This all makes sense and is generically a good thing. It is also worth noting that Robinhood may have been required to collateralize >100% of their position, though I have no idea if that is true in this case.

I don't necessarily disagree with your main point that the system is designed to keep the "little guy" out as much as possible. That's basically what the SEC is constantly enforcing: the flipside of gatekeeping is protecting people from doing stupid things with their money. This is a separate issue than how the clearing process manages risk, though. Should it take three days to clear these trades? Probably not (I don't know enough about how it works to be definitive), but that seems more of a technology issue than a regulations/SEC problem. I would agree with you that the system should be more open, which would technically also loosen the protections on common citizens.

In the end, I will admit that I'm mostly in the commodities space, so my understanding can be completely wrong here. If ss2k5 or whoever knows more than I do here, I am totally open to being corrected.

My issue of this is obviously the "extreme" position definition. It's vague and not at all quantifiable in the sense that we could understand it.

For example, the market has soared and following airline bailouts, bank bailouts and even auto industry bailouts we saw market hikes in those sectors influenced significantly by stock buy backs. Those buy backs are an artificial inflation of company/market value, given that they were basically funds taken from profits or government assistance and repurposed as shares in your own company. This reinvestment following bailouts should not be allowed, and additionally I believe most profit should be reinvested in company growth/employees and etc. The market right now is running at all-time highs in the midst of of a pandemic where an estimated 30% of small businesses have gone bankrupt. While the market itself has never been a direct reflection of GDP/business growth, it has mirrored financial progress enough so that it didn't feel out of sync entirely as it does now. THe issue has a lot to do with the easy access to money, the marrying of investment and non-investment banks, and the complete lack of oversight over not only those mergers but the continued actions in the world of securities. Additionally, these buy backs are toxic. My main point is I'd argue the market has been in an extreme position for months - influenced heavily by market insiders working directly with banking execs and QE with easy access/low cost funding. I see it often, and it's unfair and to me it feels illegal. Defining volatility and extreme positions always sides with the "experts" who are more-so insider trading money movers; using many avenues to exploit market moves for their profit and at the demise of people and companies everywhere.

Even the GME thing was heavily influenced - moreso than by reddit - by other funds seeing an opportunity to capitalize off a completely idiotic position taken (the short % of float was simply a greedy play with far too much risk for any fund investing that much and controlling money from places like retirement funds) who helped bury a fellow fund allowing Cohen and Citadel to come in and "bail them out" (Who's shocked the person running Melvin is a former Cohen disciple, not me). I'm pretty sure Cohen has lost a boat load as well on this, but now he'll get it all back reinvesting in Melvin and getting a stake for well below the funds market value. In general, this boys club of insider moves, legalized manipulation via the media, and front loading of trade data has turned the entire market "extreme."

[gatnom]

3 hours ago, Texsox said:

I've been thinking a lot about that recently. What should the government's role be in protecting people from doing stupid things with their money? I remember my dad basically gave away a car in a deal on a leased vehicle. I was livid, they really took advantage of him. He didn't understand how leases work, he just saw the monthly price and thought it was a good deal. We have folks in Texas who out of 200+ choices in electric companies and each of those with multiple plans these folks picked a variable rate plan that may bankrupt them. Whose fault is it? Let the buyer beware is how most of our laws are written. It seems like the folks that can least afford to squander any assets are the ones always getting taken. That just seems unfair to me. 

It's really a problem with no solution. I typically have pretty libertarian views, so I am generally in favor of letting people sink or swim on their abilities. Ideally, clearly predatory behavior would actually get punished in our society, but these things get murky quickly.

I guess I would settle for not giving the people who destroy our economy the next time a stack of get out of jail free cards and a blank check.

[gatnom]

2 hours ago, Look at Ray Ray Run said:

My issue of this is obviously the "extreme" position definition. It's vague and not at all quantifiable in the sense that we could understand it.

For example, the market has soared and following airline bailouts, bank bailouts and even auto industry bailouts we saw market hikes in those sectors influenced significantly by stock buy backs. Those buy backs are an artificial inflation of company/market value, given that they were basically funds taken from profits or government assistance and repurposed as shares in your own company. This reinvestment following bailouts should not be allowed, and additionally I believe most profit should be reinvested in company growth/employees and etc. The market right now is running at all-time highs in the midst of of a pandemic where an estimated 30% of small businesses have gone bankrupt. While the market itself has never been a direct reflection of GDP/business growth, it has mirrored financial progress enough so that it didn't feel out of sync entirely as it does now. THe issue has a lot to do with the easy access to money, the marrying of investment and non-investment banks, and the complete lack of oversight over not only those mergers but the continued actions in the world of securities. Additionally, these buy backs are toxic. My main point is I'd argue the market has been in an extreme position for months - influenced heavily by market insiders working directly with banking execs and QE with easy access/low cost funding. I see it often, and it's unfair and to me it feels illegal. Defining volatility and extreme positions always sides with the "experts" who are more-so insider trading money movers; using many avenues to exploit market moves for their profit and at the demise of people and companies everywhere.

Even the GME thing was heavily influenced - moreso than by reddit - by other funds seeing an opportunity to capitalize off a completely idiotic position taken (the short % of float was simply a greedy play with far too much risk for any fund investing that much and controlling money from places like retirement funds) who helped bury a fellow fund allowing Cohen and Citadel to come in and "bail them out" (Who's shocked the person running Melvin is a former Cohen disciple, not me). I'm pretty sure Cohen has lost a boat load as well on this, but now he'll get it all back reinvesting in Melvin and getting a stake for well below the funds market value. In general, this boys club of insider moves, legalized manipulation via the media, and front loading of trade data has turned the entire market "extreme."

In the Robinhood case, it's actually pretty simple. Suppose the two of us are trading on their platform, and you buy 100 shares of GME and I sell 100 shares of GME. Then, from a clearing perspective, I have the shares and you have the money, so the net position within Robinhood's account is zero. Now, if you're the "democratized finance" platform and 9 out of every 10 clients is taking the same position on the same stock, you're not netting out near zero; you've got a large position one direction or the other. I will admit the rest of the risk calculation is opaque and somewhat arbitrary, but that is the crux of it.

You're preaching to the choir as far as your complaints about the market are concerned. I hate the way the fed and government continue to pump the markets and then act flabbergasted when income inequality skyrockets. I'd argue that it has felt out of sync for basically a decade now, but at this point we're just speculating.

[caulfield12]

18 minutes ago, gatnom said:

It's really a problem with no solution. I typically have pretty libertarian views, so I am generally in favor of letting people sink or swim on their abilities. Ideally, clearly predatory behavior would actually get punished in our society, but these things get murky quickly.

I guess I would settle for not giving the people who destroy our economy the next time a stack of get out of jail free cards and a blank check.

How would you define who’s most responsible?  Barney Frank?  Rubin and Clinton?  Summers?  Greenspan?  Mortgage lenders who didn’t even verify incomes in the quest to beat the competition and generate as many new loans as possible?  Investment banks mixing retail and investment banking?   The rating agencies?

You could go through that Inside Job documentary (Matt Damon narrated) and there would be so many guilty parties there would be nobody left but Elizabeth Warren, and she’s not entirely the saint the media created, either.

I think that’s why nothing substantive was done.  You would have to destroy our whole financial and regulatory system and basically start over from scratch

[caulfield12]

6 minutes ago, gatnom said:

In the Robinhood case, it's actually pretty simple. Suppose the two of us are trading on their platform, and you buy 100 shares of GME and I sell 100 shares of GME. Then, from a clearing perspective, I have the shares and you have the money, so the net position within Robinhood's account is zero. Now, if you're the "democratized finance" platform and 9 out of every 10 clients is taking the same position on the same stock, you're not netting out near zero; you've got a large position one direction or the other. I will admit the rest of the risk calculation is opaque and somewhat arbitrary, but that is the crux of it.

You're preaching to the choir as far as your complaints about the market are concerned. I hate the way the fed and government continue to pump the markets and then act flabbergasted when income inequality skyrockets. I'd argue that it has felt out of sync for basically a decade now, but at this point we're just speculating.

One positive with this new bill is that at least checks are only going out to those under $75,000 household income and families...if it went to those over $75,000 as well, you’d see 50-75% of that money going right back into the stock market, rather than paying off debts and being recirculated right back into the economy for goods and services, keeping those small businesses and hourly workers in their jobs.

The goal on the flip side of the equation is consolidation/mergers, wiping out anything remotely resembling small mom and pop stores or local restaurants....just feeding into the continued massive corporatization of the country.

Those corporations, meanwhile, figure out any possible way to cut down on both human resources and physical office space, driving up stock prices (more buybacks) and driving the bottom 2/3rds of Americans further away from the American dream.  This next decade, it will be increasingly challenging for that bottom group to even afford a decent house, with interest rates/inflation rising.

[Texsox]

1 hour ago, gatnom said:

It's really a problem with no solution. I typically have pretty libertarian views, so I am generally in favor of letting people sink or swim on their abilities. Ideally, clearly predatory behavior would actually get punished in our society, but these things get murky quickly.

I guess I would settle for not giving the people who destroy our economy the next time a stack of get out of jail free cards and a blank check.

Thinking of Griddy the Texas electric supplier,  they warned their customers to cancel and find a fixed rate plan in advance of the storm. They only made money on the $9.99 a month service fee. The wholesale cost was simply passed on.  (BTW a plan that's available in most states like Illinois). 

Their customers gambled on a really cheap plan. My gut tells me there is a villain, but I'm not certain who it is. The easiest explanation is they bet everything on a really safe bet and lost. I just don't think anyone, especially the customers,  could have predicted this. The company was happy with 27,000 customers paying them $9.99 a month. Tight margins, but they weren't trying to buy low and sell high. That seemed honest. 

So because someone was harmed the government steps in and eliminated the harm,  but also eliminates the benefit in the process. 

I'm leaning towards no one should profit on life's necessity like electric, food, housing,  and water. But that probably labels me as a communist. 

[caulfield12]

1 hour ago, Texsox said:

Thinking of Griddy the Texas electric supplier,  they warned their customers to cancel and find a fixed rate plan in advance of the storm. They only made money on the $9.99 a month service fee. The wholesale cost was simply passed on.  (BTW a plan that's available in most states like Illinois). 

Their customers gambled on a really cheap plan. My gut tells me there is a villain, but I'm not certain who it is. The easiest explanation is they bet everything on a really safe bet and lost. I just don't think anyone, especially the customers,  could have predicted this. The company was happy with 27,000 customers paying them $9.99 a month. Tight margins, but they weren't trying to buy low and sell high. That seemed honest. 

So because someone was harmed the government steps in and eliminated the harm,  but also eliminates the benefit in the process. 

I'm leaning towards no one should profit on life's necessity like electric, food, housing,  and water. But that probably labels me as a communist. 

Well, it’s essentially like an adjustable rate mortgage for utilities such as gas, water and electric.

When someone benefits by rates going lower, they are smart.  When the rates go up, or they have a balloon payment they can’t make after buying a house, essentially enjoying a service they couldn’t ordinarily afford...who is responsible?

If they bought the house with an ARM or interest-only loan but flipped it for profit in the meantime...will they not enjoy profit?

We had a president bragging for years about taking advantage of the system, loopholes, paying no taxes for nearly a decade...why should it be surprising everyone now wants special treatment?   Like forgiving student loans, for example. 
 

 

HOUSTON, Feb 26 (Reuters) - Texas's grid operator on Friday shut Griddy Energy LLC's access to the state's power network for unpaid bills and shifted its 10,000 customers to other utilities, as new signs of a financial crisis rose after a state-wide blackout.

Griddy was the power marketer that sold consumers electricity at wholesale rates, which rose to $9,000 per megawatt hour as cold weather struck the state last week. Unable to cope with demand, utilities cut power to 4.3 million residents as temperatures fell below freezing.

Grid operator Electric Reliability Council of Texas (ERCOT) "effectively shut down Griddy," the electricity marketer said in a statement on its website. Requests for further comment were not returned.

ERCOT separately said $2.1 billion of its service bills went unpaid from utility and other grid users on Friday, another sign of the devastation from high electricity rates during the cold snap.

https://finance.yahoo.com/news/1-electric-firm-griddy-loses-005444136.html

 

[Texsox]

Businesses will fail because of this. Ironically Griddy had arguably the most favorable to them situation in that they weren't selling at a loss when their costs went up like all of the fixed rate plan suppliers. Griddy makes $9.99 per customer regardless of the cost of energy. Other sellers profit by mark ups. Griddy got squeezed when their customers couldn't or wouldn't pay. 

Imagine if an ARM went to 100%. 

 

[Chisoxfn]

31 minutes ago, Texsox said:

Businesses will fail because of this. Ironically Griddy had arguably the most favorable to them situation in that they weren't selling at a loss when their costs went up like all of the fixed rate plan suppliers. Griddy makes $9.99 per customer regardless of the cost of energy. Other sellers profit by mark ups. Griddy got squeezed when their customers couldn't or wouldn't pay. 

Imagine if an ARM went to 100%. 

 

Yeah - except all those arms have caps that put a max on how much it can go up. I don’t know if these power plans had caps. 

[Texsox]

1 hour ago, Chisoxfn said:

Yeah - except all those arms have caps that put a max on how much it can go up. I don’t know if these power plans had caps. 

There was only one provider in Texas with a plan like this and no, there weren't any caps, high or low. Some people actually reported that their price went negative and they were paid to use electricity some nights in the spring and fall as the grid tried to balance production and demand. 

These plans seem to exist everywhere folks have electric choice. Illinois for example has one and it says upfront no upper limit. 

[Look at Ray Ray Run]

22 hours ago, caulfield12 said:

How would you define who’s most responsible?  Barney Frank?  Rubin and Clinton?  Summers?  Greenspan?  Mortgage lenders who didn’t even verify incomes in the quest to beat the competition and generate as many new loans as possible?  Investment banks mixing retail and investment banking?   The rating agencies?

You could go through that Inside Job documentary (Matt Damon narrated) and there would be so many guilty parties there would be nobody left but Elizabeth Warren, and she’s not entirely the saint the media created, either.

I think that’s why nothing substantive was done.  You would have to destroy our whole financial and regulatory system and basically start over from scratch

1. Greenspan is legitimately a clown; a guy who conned and schmoozed his way into elite circles. He's just a puppet in the game, he's not the one leading the charge.

2. This is a culmination of many things and many administrations. It all can likely be traced back to the infiltration of big money into politics that led to a slow decline and degradation of regulations and accountability. I still vividly remember reading that Obama didn't demand the big bank leaders didn't take massive bonus following bailouts because Larry said they would "lose them all" and the industry would weaken. As if the industry needed these morons to be there leading the charge with their securities fraud. 

3. You're looking at Regan as the start of this entire process, so we're going on 41 years now. Glass Steagell repeal certainly hurt, which ironically enough was motivated by Rubin and other former direct workers who would benefit from the repeal. Clinton was a major player in this. But there are so many politicians complicit in this it's impossible to blame it on one person.

As the emphasis is, it hurts the industry and the thousands/millions who are trying to make an honest buck in something that should be skill based on that speculatory driven by funds large enough to front load and move in their favor for profits.

[caulfield12]

11 hours ago, Look at Ray Ray Run said:

1. Greenspan is legitimately a clown; a guy who conned and schmoozed his way into elite circles. He's just a puppet in the game, he's not the one leading the charge.

2. This is a culmination of many things and many administrations. It all can likely be traced back to the infiltration of big money into politics that led to a slow decline and degradation of regulations and accountability. I still vividly remember reading that Obama didn't demand the big bank leaders didn't take massive bonus following bailouts because Larry said they would "lose them all" and the industry would weaken. As if the industry needed these morons to be there leading the charge with their securities fraud. 

3. You're looking at Regan as the start of this entire process, so we're going on 41 years now. Glass Steagell repeal certainly hurt, which ironically enough was motivated by Rubin and other former direct workers who would benefit from the repeal. Clinton was a major player in this. But there are so many politicians complicit in this it's impossible to blame it on one person.

As the emphasis is, it hurts the industry and the thousands/millions who are trying to make an honest buck in something that should be skill based on that speculatory driven by funds large enough to front load and move in their favor for profits.

https://qconline.com/news/local/debate-sparks-over-glass-steagall-act/article_da61ae1e-056f-566a-b254-32f038075496.html

Of course, Rep. Leach from our district in Iowa was acting in retrospect like he wasn’t at the center of all this, along with Phil Gramm of Texas.   (Well, at least his niece, Leslie, who went to Occidental, was nice...Leach was always perceived as a center-right banking expert and had as much to do with financial rules and regulations as anyone in the 1980’s and 90’s.)

I guess if blame had to be assigned going all the way back to Reagan/Regan/Stockman, it’s 55-60% GOP and the remainder on the Clinton administration, with Obama giving everyone a convenient free pass at the end of it all.

 

On GME second move...
 

“But, don’t expect it to happen once more. Wall Street will likely fight back against another onslaught of coordinated buying by Reddit investors. Whether that’s via trading restrictions, as we saw brokerages like Robinhood do at the height of the short-squeeze saga. Or, perhaps Wall Street could pressure Reddit itself to shutter the popular subreddit.

How Wall Street fights back isn’t the point. It’s the fact it’ll likely curb any future short-squeeze sagas any which way it can. With it more a game of predicting the unpredictable, the ability to handicap the situation is limited. We’ll know in the coming days whether this second round has legs, or if it quickly sputters out.”

https://www.yahoo.com/finance/news/despite-reddit-rebound-stay-away-160643747.html

 

 

Edited February 28, 2021 by caulfield12

[caulfield12]

SPAC’s, likely the next great speculative bubble to pop? 

Among the more worrisome is the incredible explosion in SPACs, often called blank-check companies, which are essentially pools of cash from investors looking to acquire hot startups and take them public while avoiding the traditional initial public offering process. Former Trump administration officials like Larry Kudlow and Wilbur Ross are now among the investors setting up their own SPACs, as are famous entertainers and athletes such as Shaquille O’Neal.

“I’m more concerned about the bursting of bubbles in cyber assets, gold and SPACs,” said Joseph Brusuelas, chief economist at consulting firm RSM US. “I mean Shaq has a SPAC. What could go wrong?”

https://www.yahoo.com/news/biden-bubble-trouble-frothy-markets-043041879.html

 

 

https://www.sportico.com/business/finance/2021/sportico-sports-spac-tracker-1234623199/
Notice Theo Epstein, Billy Beane, Ricketts/Crane Kenney (Marquee-connected), A-Rod, Jeff Smulyan, etc.

 

SPACS: WHAT A SPECIAL PURPOSE ACQUISITION COMPANY MEANS FOR SPORTS

https://www.sportico.com/feature/spac-special-purpose-acquisition-company-sports-1234616048/

 

SHAQ SPAC II: O’NEAL, DISNEY VETS MAYER AND STAGGS SEEK $300 MILLION FOR MEDIA BUSINESS

https://www.sportico.com/business/finance/2021/shaquille-oneal-disney-executives-1234623077/

Forest Road II is led by Thomas Staggs and Kevin Mayer, who share the roles of CEO and chairperson of the proposed business. Staggs is a veteran of Walt Disney Co., including as its chief financial officer and as lead of its valuable theme parks business. He also is credited with a leading role in the acquisition of ESPN.  Mayer is also a Disney alum, having led the internet businesses, including ESPN.com. He is also said to be the architect of Disney’s direct-to-consumer strategy that started with the acquisition of BAMTech—the business behind MLB’s wildly successful app—which led to the launch of Disney+ last year.

[Kyyle23]

LOL has this guy ever had a good real world idea

[caulfield12]

It’s a bizarre environment that’s confounding even the most seasoned economists and investors: an unusual mix of sentiment seen in 1999, just before the dot-com bust, the period a decade ago after the 2008-09 financial crisis, and the early years of the roaring 20s after the pandemic a century ago that concluded with the crash of 1929.

The perfect “Goldilocks” scenario could still arrive: faster economic growth with limited inflation, perhaps gently letting the air out of the biggest bubbles. But darker scenarios exist, including a big spike in inflation, a popping of all of the bubbles at once — with big risks for investors who got overextended — and an economic recovery that hits turbulence.

 

Another quote from previous article...do we still have another 10-15% run in the stock market due to huge earnings growth (and even more stimulus spending, not to mention IRS refunds catching up) in the second half of the year, or do inflation/interest rate fears and irrational exuberance finally catch up and knock everyone back for a loop?

Pretty amazing to think we were nearing Dow 18k roughly a year ago.

[bmags]

Irrational exhuberance:

https://www.ismworld.org/supply-management-news-and-reports/reports/ism-report-on-business/pmi/february/