Posts Tagged ‘Robinhood’

LinkSwarm for February 19, 2021

Friday, February 19th, 2021

It. Has. Been. A. Week!

Regular readers know that Austin has been climbing out of a once in a century winter storm that froze our roads and wrecked our power grid. Right now it’s still 19°F, but it’s supposed to warm up to a balmy 39°F this afternoon…

  • Could be worse: ERCOT says that their quick thinking to impose rotating blackouts prevented the physical destruction of the Texas Interconnect Grid. That may even be true, but it’s sort of like a teenager saying “Thanks to my quick thinking, I only managed to burn down the garage and not the entire house!”
  • A list of every lie Joe Biden has told as President.
  • The Democrats’ minimum wage hike will help kill off the restaurant industry:

    Passage of this bill this year would lead to job losses and higher use of labor-reducing equipment and technology,” said Sean Kennedy, executive vice president for public affairs for the National Restaurant Association. “Nearly all restaurant operators say they will increase menu prices. But what is clear is that raising prices for consumers will not be enough for restaurants to absorb higher labor costs.”

  • The entire impeachment charade was a distraction from the Biden Administration’s hard left turn, including rejoining the Paris Climate agreement and stopping construction on the border wall. (Hat tip: Director Blue.)
  • China is eating Biden’s lunch:

    But for the fact that he’s president — given his track record of having been wrong on every defense and foreign policy issue for almost five decades — it would be easy to ignore his assessment of China. This is a man who said in 2019, “China is going to eat our lunch? Come on, man.” He added, “I mean, you know, they’re not bad folks, folks. But guess what? They’re not competition for us.” Despite the difficulty of being wrong on both occasions Biden managed it.

    Focus for a moment on what he said about the conversation with Xi. It is natural that China would be spending billions on transportation given the size of the country and the billions who inhabit it. Whether it is true that China is spending billions on climate change is another matter. It has, for decades, been spending billions on coal-fired electricity generation plants and has only recently made noises about reducing pollution.

    But “climate change” is probably the last priority for China while it is spending far greater sums on its military and cyberwar capabilities. Xi was clearly trying to gull Biden into some sort of race to reduce greenhouse gas emissions so that we could strangle our economy while China doesn’t do the same to its own. China may well be trying to reduce pollution — Beijing is infamous for its barely breathable brown air — but how much it is really doing remains to be seen.

    Biden apparently wants to be known as the “climate change president.” If Xi can increase Biden’s desire to make climate change his top priority for legislation and regulation (which seems altogether likely in any event) China will be greatly advantaged by Biden’s concomitant reductions in spending on the U.S. military and intelligence communities.

    To say that Biden is soft on China only proves the speaker’s command of the obvious.

  • All the lies of Robinhood’s Vlad Tenev:

    What Tenev did not say, or explain, is why his company – which is merely a client-facing front of Citadel, which buys the bulk of Robinhood’s orderflow to use it perfectly legally in any way it sees fit – was so massively undercapitalized that the DTCC required several billion more in collateral to protect Robinhood’s own investors against the company’s predatory ways of seeking to capitalize on the gamification of investing making it nothing more (or less) than a trivial pursuit to millions of GenZ and millennial investors, a point which Michael Burry made so vividly.

    The #mainstreetrevolution is a myth. Zero commissions and gamified apps were designed to feed flows to the two most influential WS trading houses. A few HFs got hurt, but if retail is moving toward more trading and away from fundamentals, WS owns that game. #Stonks by design. https://t.co/Y4raF0jiM3
    — Cassandra (@michaeljburry) February 9, 2021

    Incidentally we know why Tenev did not mention it: it’s because Robinhood’s back office is a shambles of a shoestring operation, one which never anticipated either such a surge in trading not a multi-billion collateral requirement; had Robinhood been a true brokerage instead of pretending to be one, and run merely to open as many retail accounts as it could in the shortest amount of time, thus generating the most profit in the quickest amount of time to allow its sponsors a quick and profitable exit, it would actually have been on top of this.

  • “Why Russia Is Terrified of SpaceX — and Starlink”:

    SpaceX wants to bring fast satellite broadband internet to the world — and in particular, to internet users in far-flung, rural locations, where download speeds are low and prices are high.

    One of the first places in America to get SpaceX Starlink service was Alaska, the state with the lowest population density in the country — just one person per square mile. The company next extended service into Canada (population density: three people per square mile), followed last month by service in the UK — a big jump in concentration, with 650 people per square mile. (Even in the UK, there are plenty of isolated locations where internet service is expensive, slow — or both).

    SpaceX’s globe-spanning satellite constellation should be capable of providing 100 megabit-per-second internet service to anywhere by the end of this year. You can expect that a lot of countries, no matter how urbanized they are (or not), will be lining up to sign up for Starlink service. And the more countries Starlink signs up as customers, the better the prospects for the SpaceX subsidiary’s promised IPO.

    One country that most definitely does not want Starlink, however, is Russia.

    Snip.

    As Ars points out, “Russia is planning its own satellite Internet constellation, known as ‘Sphere.'” And in contrast to SpaceX’s Starlink, which is a privately funded and privately built communications system, the 600-satellite Sphere constellation will be a project built and run by the Russian state under the aegis of its Roscosmos space agency. And that could be a problem.

    Sphere, you see, is rumored to cost $20 billion to build, may not begin launching until 2024, and won’t be completed before 2030.

    Those numbers alone tell you Sphere will never be built, Starlink or no Starlink. Russia is a profoundly broke and profoundly broken country. Sphere is just the sort of prestige project Putin loves to announce to much fanfare, national greatness vaporware that either never gets built or else creeps out into the real world years (or even decades) late and in much-reduced form, like only ordering 100 T-14 Armata tanks.

  • Iranian fuel tanker convoy to Afghanistan goes boom.
  • After warning against “far right extremists” in the army, the FBI arrests…an ex-military left-wing radical.
  • Teacher’s unions have been letterbombing Virginia’s Democratic assembly delegates to keep schools closed.
  • Why does India have a so much lower rate of death from the Wuhan coronavirus?

  • Democrats are so focused on unity they introduced a bill to punish Donald Trump after he’s dead. (Hat tip: Stephen Green at Instapundit.)
  • The media want you to know that it’s Trump’s fault they couldn’t investigate such trivial scandals as Lincoln Project pedophiles, because how would they have time when Orange Man Bad?
  • Speaking of the Lincoln Project, founder Rick Wilson managed to pay off his mortgage early just as the John Weaver pedophilia scandal was breaking. How fortuitous!
  • Savage:

  • Back in The Before Time, The Long Long Ago, newspapers actually defended free speech.

    Back in 1977, the New York Times maintained that as long as Nazis did not engage in any illegality, they were “entitled” to the protection of the law, and then put the onus of maintaining peace on the Skokie residents:

    The argument that they will provoke violence simply by appearing on the streets of Skokie only emphasizes the obligation of the police to keep the peace—and gives an opportunity the people of Skokie to demonstrate their respect for the law.

    These days, the Times board will chase you out of the building for allowing anyone to voice an opinion that chafes against the brittle sensitivities of its writers. The paper employs full-time speech monitors to vet wrongthink.

  • The cancel mob comes for Baen Books. Book editors and writers kindly tell them to get stuffed.
  • Special for Black History Month:

  • Facebook head Mark Zuckerberg told employees they need to “inflict pain” on Apple because Apple won’t let Facebook steal every single bit of personal data from Apple devices.
  • “Bill Gates Bankrolling Educational Organization That Says Math is Racist.” “A conglomerate of 25 educational organizations called A Pathway to Equitable Math Instruction asserts that asking students to find the correct answer is an ‘inherently racist practice.’ The organization’s website lists the Bill & Melinda Gates Foundation as its only donor.” How many fingers, Winston?
  • Who owns Jack Ryan?
  • “Sustainable”

  • If you have a warrant out for your arrest, maybe you shouldn’t apply for a gun carry permit. Especially not if you try to use the name “Barack Obama.”
  • “Secret Service Puts Finishing Touches On Biden’s Presidential Scooter, ‘Chair Force One.'”
  • “Democrats Vow To Follow The Science Of Whichever Union Donates The Most Money.”
  • “Journalists Cheer As Jen Psaki Announces The Gulags Will Be Run By A Woman Of Color.”
  • “Man Asks That You Respect His Preferred Adjectives.” “‘Here are the adjectives I identify with,’ Becker put on social media. ‘Cool, witty, handsome, innovative, fun.’ Please use one of these adjectives when describing me. It distresses me when people use adjectives I don’t identify as,’ Becker later explained. ‘Like “creepy,” “weird,” or “off-putting.” That’s basically denying my existence and trying to genocide me.'”
  • Dog on drums:

    (Hat tip: the Ace of Spades HQ pet thread.)

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    Posted in Austin, Border Control, Crime, Democrats, Foreign Policy, Global Warming, Media Watch, Social Justice Warriors, Texas, unions | 3 Comments »

    GameStop Short Sellers Refusing To Fold?

    Saturday, January 30th, 2021

    You might think that, having suffered billions in losses, hedge funds would want to get out of the GameStop short-selling game.

    You’d be wrong.

    The astronomical rally in GameStop has imposed huge losses of nearly $20 billion for short sellers this month, but they are not budging.

    Short-selling hedge funds have suffered a mark-to-market loss of $19.75 billion year to date in the brick-and-mortar video game retailer, including a nearly $8 billion loss on Friday as the stock kept ripping higher, according to data from S3 Partners.

    Still, short sellers mostly are holding onto their bearish positions or they are being replaced by new hedge funds willing to bet against the stock. GameStop shares that have been borrowed and sold short have declined by just about 5 million over the last week, marking an 8% dip in the short interest, according to S3. Most of the short covering occurred on Thursday, when the stock fell for the first time in six days.

    “I keep hearing that ‘most of the GME shorts have covered’ — totally untrue,” said Ihor Dusaniwsky, S3 managing director of predictive analytics. “In actuality the data shows that total net shares shorted hasn’t moved all that much.”

    “While the ‘value shorts’ that were in GME earlier have been squeezed, most of the borrowed shares that were returned on the back of the buy to covers were shorted by new momentum shorts in the name,” Dusaniwsky added in an email.

    Shares of GameStop were back up Friday after Robinhood and other retail brokers allowed trading to resume.

    The borrow fee on GameStop’s stock — or the cost-to-borrow shares for the purpose of selling them short — jumped to 29.32% on existing shorts and 50% on new short positions, S3 said.

    “If most of the shorts had covered, we would not be seeing stock borrow rates at these high levels — by now you would be able to borrow GME stock at single digit levels due to an increase in the lendable stock loan supply due to borrowed shares being returned after all the ‘supposed’ buy-to-covers,” Dusaniwsky said.

    GameStop remained the most-shorted name in the market as short interest as a percentage of shares available for trading stands at 113.31%, S3 said.

    (Supposedly Melvin Capital and Citron are out of their GameStop short positions. So who is still in?)

    Assuming all the above is true, the remaining hedge funds and their allies are still shorting more than 100% of the stock, despite the theoretically infinite risk involved. I can think of several theories to explain what appears to be apparently irrational behavior:

    1. Short sellers fully expect their friends in the Biden Administration and/or the financial regulatory apparatus to come to their aid and extricate them from the bind they’ve put themselves into by suspending or changing the rules. Huh. I wonder why they could possibly think that?

    2. Short sellers expect to use their power to force trading companies to bend to their will by forcing retail investors to sell their shares (as Robinhood was reportedly doing on Thursday).
    3. Short sellers expect one or more “whales” (i.e., rich individual investors) to flip and either sell their shares or lend them out to cover shorts once the temptation to take profits is too great.
    4. Deeper-pocketed short sellers expect the squeeze to force weaker rivals out of the game, either taking huge losses to liquidate their positions or going bankrupt. In either case, they expect this winnowing to drop shorted shares below the 100% threshold, relieving the pressure on the shorts for the remaining short sellers.

    Obviously, it could also be a combination of all these. (Or something else; feel free to float other theories in the comments.)

    It’s the first two possibilities that should worry us from a policy position: If the big players can break the rules at will to reverse their fortunes when they’ve been beaten at their own game by the little players, then it’s not a free market. And if it’s not a free market, what’s to keep ordinary Americans from getting out of the game entirely?

    (Hat tip: Director Blue.)

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    Posted in Democrats, Economics, Regulation | 3 Comments »

    Corrupt Establishment Moves To Screw Retail Investors, Bail Out Hedge Funds

    Thursday, January 28th, 2021

    Seldom has Wall Street moved so blatantly and illegally as they have today to crush the retail investors carrying out the GameStop Short Squeeze. This is a fast-moving story, so here are a few highlights from today’s developments:

  • The Robinhood trading platform has halted trading of stocks noted for being shorted by hedge funds:

  • Not only that, there are widespread reports that Robinhood is forcibly selling shares of GameStop against the will of account holder:

    If this is true, and it applies to cash-purchased shares and not those bought on margin (a margin call is a different type of beast), then the leadership of Robinhood should be arrested and charged with embezzlement and grand larceny, no matter what their EULA claims they can do.

  • A class action lawsuit has been filed:

  • Barstool Sports on Robinhood’s betrayal:

    Feel free to skip the ad that runs from 2:30-3:00.

  • Pressure from Sequoia Capital and the White House?

    File under “Unproven but it wouldn’t shock me.”

  • Short sellers reportedly sustained losses of $70 billion so far in 2021. (Hat tip: Daddy Warpig.)
  • Sean Davis explains that Wall Street insiders have simply decided that the vile peasants must not be allowed to win:

  • Big tech has joined in to crush the rebellion:

  • Bastards:

  • True, dat:

  • Analogy:

  • Eric Weinstein’s exegesis on the expansion of wrestling’s kaybafe to the political world may also apply to Wall Street. “Were Kayfabe to become part of our toolkit for the twenty-first century, we would undoubtedly have an easier time understanding a world in which investigative journalism seems to have vanished and bitter corporate rivals cooperate on everything from joint ventures to lobbying efforts.” If all of Wall Street is in on a con game against ordinary investors, and is willing to blatantly break the law to keep any insider from being trounced by mere peasants, then we no longer have anything resembling a free market in stocks. And if Wall Street is running a crooked game rather than a free market, then conservatives are no longer obligated to protect Wall Street. Too cynical? Possibly. But it isn’t a hypothesis we can reject out of hand.
  • After dinner mint:

    if Dogecoin is up 500%, now I want a more obscure cryptocoin to speculate on…

    • What really gives me pause is this: Everyone in the world was paying attention to the GameStopo short-selling shenanigans the last few days, and they’re still blatantly, and nakedly, trying to illegally rig the system, even though they’re in the wrong, and even though everyone is watching. If they’re willing to so blatantly break the law with everyone watching, what sort of crimes are they getting away with when we’re not watching?

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    Posted in Democrats, Economics | 5 Comments »

    The Great GameStop Short Squeeze

    Thursday, January 28th, 2021

    Here’s a Wall Street story that has everything to do with the current political moment.

    GameStop is the video game retailer that almost went out of business last year. This year, a whole bunch of powerful hedge funds bet on GameStop stock going by selling the stock short.

    Tiny problem:

    For those unfamiliar, a short squeeze happens when a rising stock price forces short-sellers out of their position. When panic strikes and those sellers buy back stock, they send shares even higher. Here, you have what InvestorPlace Markets Analyst Tom Yeung calls a powerful feedback loop.

    Yeung also sees GME stock as being a particularly relevant candidate for a short squeeze. Right now, 71.2 million of its shares are being sold short. That is even more than its total outstanding share count!

    This tweet thread explains what that means:

    So the short selling bear hedge funds are totally screwed. The result? Carnage:

    Across most of America, GameStop is just a place to buy a video game. On Wall Street, though, it’s become a battleground where swarms of smaller investors see themselves making an epic stand against the 1%.

    The funds serving the financial elite are starting to walk away in defeat. Big bets they made that GameStop’s stock would fall went wrong, leaving them facing billions of dollars in collective losses. All the wild action pushed GameStop’s stock as high as $380 on Wednesday, up from $18 just a few weeks ago.

    The stunning seizure of power gives some validation to smaller-pocketed investors, many of whom are encouraging each other on Reddit and are trading stocks for the first time thanks to brokerages offering free-trading apps. It’s also left more investors on Wall Street asking if the stock market is in a dangerous bubble about to pop, as AMC Entertainment, Bed Bath & Beyond and other downtrodden stocks suddenly soar as well. The S&P 500 set a record high earlier this week, though it fell Wednesday.

    Two investment firms that had placed bets for money-losing GameStop’s stock to fall have essentially thrown in the towel. One, Citron Research, acknowledged Wednesday in a YouTube video that it unwound the majority of its bet and took “a loss, 100%” to do so.

    Snip.

    Melvin Capital is also exiting GameStop, with manager Gabe Plotkin telling CNBC that the hedge fund was taking a significant loss. He denied rumors that the hedge fund will fail. The size of the losses taken by Citron and Melvin are unknown.

    Before its recent explosion, GameStop’s stock had been struggling for a long time. The company has been losing money for years as sales of video games increasingly go online, and its stock fell for six straight years before rebounding in 2020.

    That pushed many professional investors to make bets that GameStop’s stock will decline even further. In such bets, called “short sales,” investors borrow a share and sell it in hopes of buying it back later at a lower price and pocketing the difference. GameStop is one of the most shorted stocks on Wall Street.

    But its stock began rising sharply earlier this month after a co-founder of Chewy, the online seller of pet supplies, joined the company’s board. The thought is that he could help in the company’s transformation as it focuses more on digital sales and closes brick-and-mortar stores. Its shares jumped to $19.94 from less than $18 on Jan. 11. At the time, it seemed like a huge move for the stock.

    Smaller investors were meanwhile exhorting each other online to keep GameStop’s stock rolling higher.

    The raucous discussions are full of sarcasm, self deprecation and emojis of rocket ships signifying belief that GameStop’s stock will fly to the moon.

    Snip.

    There is no overriding reason why GameStop has attracted this cavalcade of smaller and first-time investors, but there is a distinct component of revenge against Wall Street in communications online.

    “The same rich people that caused the market crash in 2007/08 are still in power and continue to manipulate the market to get even richer, we are just taking back our fair share,” one user wrote on Reddit.

    “hey mom i can’t come up for dinner,” another user wrote. “i’m bankrupting a 10 figure hedge fund with the boys.”

    Beyond personal attacks, the battle has also created big financial losses for Wall Street players who shorted GameStop’s stock.

    As GameStop’s gains grew and short sellers scrambled to get out of their bets, they had to buy shares to do so. That accelerated the momentum even more, creating a feedback loop. As of Tuesday, short sellers of GameStop were already down more than $5 billion in 2021, according to S3 Partners.

    Much of professional Wall Street remains pessimistic that GameStop’s stock can hold onto its immense gains. The company is unlikely to start making big enough profits to justify its $22.2 billion market valuation anytime soon, analysts say. The stock closed Wednesday at $347.51. Analysts at BofA Global Research raised their price target Wednesday — to $10.

    All the mania is raising some concern that investors are taking excessive risks, and reporters asked Federal Reserve Chair Jerome Powell on Wednesday whether the Fed’s moves to support markets through the pandemic is helping to push stock prices too high.

    In short, the hedge funds suffered a serious bloodletting:

    Did the Wall Street titans laid low by retail investors shrug their shoulders over the loss and slink off quietly into the night to lick their wounds? They did not. Instead, our elites staged a fullbore freakout over being beaten at their own game(stop).

    Perhaps the most flagrant example was where noted CNN tool Chris Cillizza declared the GameStop short squeeze an example of Trumpism. Because how dare ordinary people think they can beat the elite at their own games?

    There was the “white supremacy” canard.

    (Babylon Bee: “Merriam-Webster Changes Definition Of ‘White Supremacist’ To ‘Anyone Who Wins In The Stock Market When They’re Not Supposed To’.)

    There’s even the “Russia! Russia! Russia!” cliche:

    And finally, a Berkeley professor wants you know they’re investing in GameStop because they’re not having sex:

    Secretary of the Commonwealth of Massachusetts William Galvin wants a 30-day trading suspension of GameStop, because retail investors can’t be allowed to make money off the mistakes of their betters.

    Likewise, NASDAQ head Adena Friedman says that they’ll halt trading in a stock if mere mortals are making money off it.

    And trading platforms Robinhood and Ameritrade halted trading in GameStop And AMC.

    Here’s Tucker Carlson:

    Here’s a Saagar Enjeti clip from The Hill:

    There are valid reasons for hedge funds and short sellers to exist. But no one, least of all our corrupt political establishment, should let them get away with the classic “I keep my profits private but force the government to underwrite my losses” con game.

    The memes and Tweets are something to behold:

    And this morning?

    This may all seem extremely irrational. But thanks to the Federal Reserve’s endless money pump, the market has been irrational for a long time. And the biggest irrationality was short-sellers shorting more stock than actually existed.

    I should point out that I have no money in GameStop, AMC, or Nokia stock (unless there’s some tucked away in one of my various 401K funds, which I rather doubt). Though honestly, as weird as this year is already going, I’m tempted to put a few hundred dollars in Dogecoin…

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    Posted in Economics, Media Watch | 7 Comments »