Credit deflation and the reflation cycle to come (part 2)

[Shamone]

14 hours ago, Hancock said:

Id be willing to be this is done to look cool on Social Media as opposed to a fingers up at the system.

Younglings seem more brainwashed than ever with global warming, BLM and all that shite.

Even their raves look absolutely shite.

Ours were so much better.

[reformed nice guy]

1 hour ago, Hancock said:

I cant get how a bunch of people on a Reddit forum have managed to collectively get billion of dollars.

Surely this guy with £20 million sells as do many like him and it all hits the fan, with most of them losing whatever they put in.

I suppose it could be serious. It could be the trigger that results in a massive financial dislocation as a series of hedge funds cause runs due to their intricate derivative exposure.

But I dont really give a shit about the Wall street and City of London nobs. If they start high diving from sky scrapers then it means I might get some more ladders in

[wherebee]

2 hours ago, reformed nice guy said:

I suppose it could be serious. It could be the trigger that results in a massive financial dislocation as a series of hedge funds cause runs due to their intricate derivative exposure.

But I dont really give a shit about the Wall street and City of London nobs. If they start high diving from sky scrapers then it means I might get some more ladders in

I think it's great.  It's a dose of reality smacking those 'masters of the universe' who have develped more and more complex products, regulations, and rules to allow them to stack the deck.  Example: high frequency trading using tech to get orders in a picosecond before you and I, so they can make a fraction of a cent on each and every deal.  Legal, but disgusting.

We've talked about the fund managers taking their 1% commission as they rotate pensions out of the inflation stocks.  Legal, but disgusting. 

As RNG says, high diving following basement dwelling Gen Z people power would be fantastic karma after they have screwed over millions of people re their life savings for 40 years.

[Barnsey]

5 hours ago, Hancock said:

I cant get how a bunch of people on a Reddit forum have managed to collectively get billion of dollars.

Surely this guy with £20 million sells as do many like him and it all hits the fan, with most of them losing whatever they put in.

It's just incredible, 48% of trading is by retail customers, and the closure of sports betting combined with excess savings and indiscriminate stimulus cheques has supercharged the Robinhood phenomenon.

Google searches for "short squeeze" going back to 2004...

[Castlevania]

5 hours ago, Hancock said:

I cant get how a bunch of people on a Reddit forum have managed to collectively get billion of dollars.

Surely this guy with £20 million sells as do many like him and it all hits the fan, with most of them losing whatever they put in.

They mainly buy deep out of the money short dated call options. As the price gets closer to the option price, the option dealer invariably has to buy more and more of the underlying stock to hedge their exposure. Which pushes the price higher, and creates a positive feedback loop. So you have what’s called a gamma squeeze.

[wherebee]

4 minutes ago, Castlevania said:

They mainly buy deep out of the money short dated options. As the price gets closer to the option price, the option dealer invariably has to buy more and more of the underlying stock to hedge their exposure. Which pushes the price higher, and creates a positive feedback loop. So you have what’s called a gamma squeeze.

plus, as one of the above articles above indicated, these are often young adults who are fucked with no jobs, and 50k+ of student debt.  They can borrow on credit cards/personal loans.  Use that to gamble with.  If they win, they become debt free and independent.  If they lose, they declare bankruptcy and know that they have cost Wall Street in terms of the written off loan (not the student loan, Biden supported the law in 2005ish that fucked the students in changing the bankruptcy laws).

to be frank, in their shoes I would be doing the same.  What's the downside?  Nothing, really.

[Festival]

15 hours ago, Cattle Prod said:

That may well be the case in the UK; I have been astonished at the levels of stupidity on display by the people running the place. Add to that chunks of the EU and other western 'liberal' 'democracies', but luckily they are not the world. I get the feeling that half to three quarters of the world are going 'wtf are they doing', and laughing. Like India hadning out Ivermectin/Doxy tablets and getting on with life.

I don't think there'll be any need for supression measures for years to come, coronaviruses are not like the flu, and I think it will fade away into low endemic proportions like many others. That's not to say they won't suppress us, or have the FT navel gazing about it. As for vaccines not being the answer? They were never really needed IMO, the 99% of people who could handle it would have given protection to the vunerable if it was let pass through, like Sweden has, with 40% antibodies and who knows how much T cell immunity in the community. New variants are welcome as far as I'm concerned, almost all the 'it's deadlier' scaremongering has been bactracked on. As I said there are tens of thousands of variants by now, and the more transmissible less deadly ones will be selected for. Sooner it gets through the population the quicker to background endemic. The vunerable should definietly take the vaccine as it clearly gives them an advantage, but I don't see it as the be all and end all either. If the investing world thinks so, I'll be buying TFD.

I suppose what matters is what those in power decide to do. I see the world divided into three camps atm. In the west it’s a flip flop between opening up and closing down, in parts of Asia and Australia etc it’s a suppress hard then open more widely and in much of the rest of the world it’s a stay open wherever possible. Cant see the west changing tack to either other approach so vaccines seem front and centre of the reopening plan to me and some parts of the economy may not reopen at all for a while such as foreign travel. Maybe I’m missing something 

[geordie_lurch]

Zerohedge have even more on the short squeeze stuff behind their new paywall here but if you load it in Firefox browser then click Reading View in the browser's address bar you can see it all for free, Safari might do the same

I know some dismiss ZH but they have been in front of this thing all the way and maybe this could even be the first ripples of the BK a lot of us thought might be coming?

ZH stuff below...

Is This The Next Big Hedge Fund To Blow Up... And What Happens Next

“The recent squeeze in heavily shorted stocks has been nothing short of extraordinary,” said Jonathan Krinsky, chief market technician at Bay Crest Partners. “If shorts cause too much pain, there is usually some repercussion on the other side as longs have to be sold to offset losses.”

Why? Because these are among the top long holdings of such hedge funds as Melvin and... Maplelane. In other words, these are the stocks that will be liquidated next if any of a number of hedge funds caught in the massive squeeze has to liquidate their short book.

And once the reflexive selling of long to cover shorts begins, it will only escalate in a feedback loop that leads to gross deleveraging of the fund(s), more short covering, more long selling, while at the same time the prices of the most shorted stocks continues to soar.

So will this happen? Well, that's the $64 trillion question.

Ultimately, nothing that is taking place is the fault of either hedge funds or redditors or robinhooders. No, the only entity at fault here is the Fed which has injected trillions and trillions in hopes of preserving the "market" while instead it merely made a grotesque mockery of what it used to be. As we noted yesterday, "what is remarkable is how many people are "surprised" by what is going on in the "market." You throw $20 trillion stimulus at it, you nationalize the bond market, you break all links between price and fundamentals... what do you think happens?"

[BadAlchemy]

7 hours ago, AWW said:

I just spent ten minutes having a read of https://www.reddit.com/r/wallstreetbets/

I'm pissing myself at what's going on with GameStop. Now they're going to do it with Nokia and Blackberry.

Almost worth chucking a few hundred quid at, just for the lols.

Just need to get them to turn their attention to CNA.

EDIT: There's a guy on the WSB subreddit who stuck 50k into GME  last year and is now worth 20m. Can't wait for the film.

Yes, I think I'll be putting a few hundred quid on these too. Why not!

Amusingly, Blackberry (BB) is up 4.94% at the moment but there is also company called "Bed, Bath and Beyond" (BBBY) which is up 20% ! Possibly a case of mistaken identity? Like that time someone here bought the wrong MOS share and did exceedingly well out of it

[Boon]

Personally I think there are some whales using reddit as some cover.... wouldn't someone like Musk love to see shorters go bust? Perhaps Soros as well, wasn't Black Wednesday a bit similar to a short squeeze.

The fundamentalist in me has a hard time buying Gamestop but I was tempted yesterday simply for laughs.

Hopefully some of these guys will buy Bitcoins with their profits.

[Castlevania]

The Frankfurt secondary listing for GameStop is at €230. Up 142% from yesterday’s German close. This is the most obvious short. Just how long can the market stay irrational.

[Harley]

Talk yesterday about the need to ban wallstreetbets!!!!!

[Harley]

6 hours ago, reformed nice guy said:

I suppose it could be serious. It could be the trigger that results in a massive financial dislocation as a series of hedge funds cause runs due to their intricate derivative exposure.

But I dont really give a shit about the Wall street and City of London nobs. If they start high diving from sky scrapers then it means I might get some more ladders in

Shorts have to cover, usually by selling longs!  Just as well these guys will be selling their tech, etc holdings, them not holding our stuff, right?   Unless I suppose if those bailing them out just give them their longs as collateral to make up margin instead.  But when the shorts expire, as they are beginning to?

[Green Devil]

27 minutes ago, Castlevania said:

The Frankfurt secondary listing for GameStop is at €230. Up 142% from yesterday’s German close. This is the most obvious short. Just how long can the market stay irrational.

 

15 minutes ago, Harley said:

Talk yesterday about the need to ban wallstreetbets!!!!!

 

1 minute ago, Harley said:

Shorts have to cover, usually by selling longs!

OK, if it screws up some bankers somewhere, im buying some today when the US opens 

[Heart's Ease]

 

Quoting myself on different thread to highlight ZHs table. Be careful out there!

[wherebee]

2 hours ago, geordie_lurch said:

Zerohedge have even more on the short squeeze stuff behind their new paywall here but if you load it in Firefox browser then click Reading View in the browser's address bar you can see it all for free, Safari might do the same

I know some dismiss ZH but they have been in front of this thing all the way and maybe this could even be the first ripples of the BK a lot of us thought might be coming?

ZH stuff below...

Is This The Next Big Hedge Fund To Blow Up... And What Happens Next

“The recent squeeze in heavily shorted stocks has been nothing short of extraordinary,” said Jonathan Krinsky, chief market technician at Bay Crest Partners. “If shorts cause too much pain, there is usually some repercussion on the other side as longs have to be sold to offset losses.”

Why? Because these are among the top long holdings of such hedge funds as Melvin and... Maplelane. In other words, these are the stocks that will be liquidated next if any of a number of hedge funds caught in the massive squeeze has to liquidate their short book.

And once the reflexive selling of long to cover shorts begins, it will only escalate in a feedback loop that leads to gross deleveraging of the fund(s), more short covering, more long selling, while at the same time the prices of the most shorted stocks continues to soar.

So will this happen? Well, that's the $64 trillion question.

Ultimately, nothing that is taking place is the fault of either hedge funds or redditors or robinhooders. No, the only entity at fault here is the Fed which has injected trillions and trillions in hopes of preserving the "market" while instead it merely made a grotesque mockery of what it used to be. As we noted yesterday, "what is remarkable is how many people are "surprised" by what is going on in the "market." You throw $20 trillion stimulus at it, you nationalize the bond market, you break all links between price and fundamentals... what do you think happens?"

Great time for a debate, people.  Is this the upwave that will kick off the BK?  Should we be taking profits on a few of the high runners and buying more units on the other side?

Maybe I'll start a poll/

[Harley]

1 hour ago, Boon said:

wouldn't someone like Musk love to see shorters go bust

Ask Pelosi!

37 minutes ago, Castlevania said:

Just how long can the market stay irrational.

The current one is doing just fine!

[Noallegiance]

This isn't meant as a slight against anyone. Just shining a torch in a corner.

All the chatter (not just here) about high flying stocks, happiness among potentially tens of thousands across the world at unexpected parabolic moves in surprise stocks, more people piling in, more people expecting more debt to pile in even more...

The only people who win will be the realisers of gains which is when the selling starts.

Yes, it's happening bigger and faster because of the tech involved but strip away the fancy exterior and this, to me, looks like any other mania that's sucking in the most number of people possible before it hurts them.

[Harley]

2 hours ago, geordie_lurch said:

Zerohedge have even more on the short squeeze stuff behind their new paywall

For a minute there I thought one of our holdings was on the list: "Ollies Bargain Outlet Holdings"!

[geordie_lurch]

6 minutes ago, Noallegiance said:

This isn't meant as a slight against anyone. Just shining a torch in a corner.

All the chatter (not just here) about high flying stocks, happiness among potentially tens of thousands across the world at unexpected parabolic moves in surprise stocks, more people piling in, more people expecting more debt to pile in even more...

The only people who win will be the realisers of gains which is when the selling starts.

Yes, it's happening bigger and faster because of the tech involved but strip away the fancy exterior and this, to me, looks like any other mania that's sucking in the most number of people possible before it hurts them.

Yep some people will get burnt and I'm not jumping into any of those stocks but as per the various links and things others have said a lot of those are using such methods as a fight back against TPTB unless of course it's just Soros or Musk gaming people under a front

[Harley]

Now that was tearfully brilliant:

The energy on reddit, awesome.  Fascinating to see where this goes, for now.

[Democorruptcy]

Have I got this right? Instead of buggering about with reflation etc we could have just done a Gamestop on Debenhams and we would all be minted?

[geordie_lurch]

Real Vision has a great overview of Gamestop and Wallstreetbets etc but also that things might be about to pop...

 

[Lightscribe]

Just to add, I think some are unaware here, it’s not just stimulus checks. There’s many ‘whales’ from Reddit and biz from the early crypto years. Massive amounts of capital after partly cashing out and reaching ‘Lambo’ level. Many of which haven’t got much to spend on and still living at home with mum cooking their ‘tendies’.

As I said before a massive dislocation in social structure. A younger generation angry at the legacy that’s being handed down to them. But this time instead of shaving their hair into Mohicans, wearing big boots, badges, tartan trousers and leather jackets, they can cause massive rifts in the financial sectors for the ‘lulz’.

[feed]

That reddit is funny, does seem that mostly in for the lolz and a massive game of financial chicken.  Not sure I’d attribute much more to it than that. 

It’ll end badly of course.