Why the GameStop stock frenzy is likely to end in financial crisis; Day-Trader Mania Will Challenge SEC Under Gensler

Feb 1, 2021

First Read

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CBD Prices Languish As KSU Studies Using Hemp In Feed
Thom Thompson – John Lothian News

It has been quiet lately in hemp country – which, since the 2018 Farm Act, of course, includes all 50 states. In fact, industrial hemp plantings were reported to the USDA’s Farm Service Agency by farmers in 48 states in 2020 (Alaska and Mississippi didn’t come to the party).

PanXchange’s January 2021 Hemp: Benchmarks & Analysis data show that prices for hemp at various stages of processing for CBD continue to soften, while both conventional and organic hemp grain prices rose (10% and 2%, respectively) over the month as consumers pay the market for storage as they would with other grain crops.

To read the rest of this story, go here.


Hits & Takes
John Lothian & JLN Staff

John J. Lothian & Company, Inc. applied for a second draw in the PPP program under the CARES Act and was approved for the funds. They arrived in our bank account this morning. Thank you to Congress and for this support of small businesses like ours.

The bank JJLCO uses is U.S. Bank. They provided an easy to use process to apply for and receive the forgivable loan. Thank you also to our head of administration and finance Nancy Ashburn, who has been keeping on top of the latest nuances of the PPP program for us and her other clients.

In support of U.S. Bank’s efforts, I have placed an order in my IRA account to buy some U.S. Bank shares. This is something I have been looking to do for some time.

We have had no new donations to the JLN MarketsWiki Education GoFundMe campaign. We have had 119 donations so far and are just short of 10% of our goal of $300,000.

Have a great day and stay safe and treat people the same way you want to be treated: with respect, equality and justice.~JJL


The Spread: Game Over

This week, one company’s stocks skyrocketed due to the coordinated trading of retail investors – and for once, I’m not talking about Tesla.

Momentum trading is when investors buy stocks whose prices are actively rising, and sell them when they think the stocks have peaked. This happened with Tesla’s stock more often than not last year. The most recent case of runaway momentum trading is GameStop, a large entertainment retailer that makes most of its money selling used video games and preorders for upcoming games. This week users in investment communities on Reddit, like WallStreetBets, bought shares and tons of options on struggling companies like GameStop, causing GameStop’s stock value to skyrocket and post year-to-date gains exceeding more than seventeen hundred percent. This resulted in market volatility that caused major losses across the board for a lot of hedge funds who had been short sellers of the stocks.

Watch the video »


Nasdaq Tech Chief Credits Cloud With Helping Manage Market Frenzies; Cloud-based computing capacity helps the exchange quickly adjust to wild market swings
Angus Loten – WSJ
Nasdaq Inc.’s enterprise technology leader said an aggressive cloud strategy that proved its mettle during the pandemic helped gird the exchange operator’s systems for shocks like this week’s market turmoil. Brad Peterson, the exchange operator’s executive vice president and chief technology and information officer, said the company used prior peaks in trading activity as benchmarks to ensure it had enough computing capacity in its own data centers to handle sharp swings in demand.

***** I love it when a plan comes together.~JJL


The wave of populism shaking Wall Street; Retail investors using social media take on the short sellers
The editorial board – FT
Gordon Gekko, the sharp-suited trader who came to epitomise Wall Street, famously said, “greed is good”. The army of retail investors that has flooded into the shares of video game retailer GameStop has taken Mr Gekko’s advice to heart, and turned it against Wall Street to great effect. The rush of money into what was an unloved stock has crushed some big hedge fund investors and signalled a new development in equity markets, where populism, social media and cheap money have combined to upset the status quo.

*****Retail traders working together to take on the big guys has been talked about for more than 25 years on the internet. The planets aligned on this one.~JJL


What’s the DTCC and How Did It Stop GameStop Mania?
Annie Massa, Viren Vaghela, and Yalman Onaran – Bloomberg
Small investors and others watching the market gyrations around GameStop Corp. and other stocks have learned a long list of trading terms, including short squeeze, call options and gamma hedging. The decision by Robinhood Markets and other trading platforms to slam the door shut on the most volatile stocks is introducing them to two others, clearinghouse and collateral requirements. They’re parts of Wall Street’s infrastructure that are invisible, except when things get wild.

*****Sooner or later the plumbers get thrown into any controversy.~JJL


Market Manipulation Is Like Pornography: You Know It When You See It; Figuring out what’s legal and illegal in the GameStop case is not going to be easy.
Peter Coy – Bloomberg
In a 1964 decision, U.S. Supreme Court Justice Potter Stewart said he would not attempt to define hard-core pornography, and “perhaps I could never succeed in intelligibly doing so.” He famously added, “But I know it when I see it.” It’s kind of like that with market manipulation: What’s legal and what’s illegal is in the eye of the beholder. That will make it hard for the Securities and Exchange Commission to bring cases against the people behind the spectacular short squeeze on GameStop Corp. shares.

*****That was my description of spoofing at a CFTC roundtable about the subject.~JJL


Citadel’s Griffin now at center of Reddit-fueled conspiracy theories; Amateur sleuths are finding fertile ground to fan speculation on the role the Chicago billionaire played in the Robinhood-GameStop debacle.
The name is a byword for power on Wall Street. But suddenly, there it was, in the White House Briefing Room, too: “Citadel.” Given the wild stock-market spectacle involving GameStop Corp., the question last week for the new press secretary was this: would Janet Yellen, now Treasury secretary, recuse herself from the matter given the hundreds of thousands of dollars she’d collected in speaking fees from Citadel?

*****Getting in the papers and it not being about 100 million dollar real estate deals is not part of the plan.~JJL


Rights to a WallStreetBets/GameStop movie have already been sold
Jennifer Bisset – CNET
One of the biggest stories of the year is barely a week old, but Hollywood is already calling. Deadline reports that MGM has snapped up the rights to a proposal for a book covering the story of the anti-establishment Redditors who trolled Wall Street. With some of the same people behind The Social Network involved, this sounds promising. The book, titled The Antisocial Network, comes from Ben Mezrich — the same author who wrote the book The Social Network was adapted from. Michael DeLuca was a producer on the David Fincher film and, according to Deadline, this new project will pair him with Mezrich once more.

*****Big surprise.~JJL


Boy Scouts’ Coed Recruiting Touched Off ‘Ground War’ With Girl Scouts; The Girl Scouts perceived a grave threat from the Boy Scouts and tried to steer parents away from coed programs, documents show
Peg Brickley and Andrew Scurria – WSJ
In May 2017, ahead of a meeting of the Boy Scouts of America’s top leaders, a Girl Scouts of the USA employee emailed a counterpart at the Boy Scouts to ask about speculation it was considering admitting girls into the historically boys-only programs.

*****We don’t use the phrase “Ground War” in Boy Scouts.~JJL


Friday’s Top Three
Our top story Friday was the Houston Chronicle’s San Antonio 10-year-old cashes in on GameStop stocks he was gifted 2 years ago. Second was The New York Times’ The ‘Roaring Kitty’ Rally: How a Reddit User and His Friends Roiled the Markets. Third was the Financial Times’ r/WallStreetBets throws down challenge to regulators. Pistols at dawn?


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Lead Stories

Why the GameStop stock frenzy is likely to end in financial crisis; The drama unfolding around GameStop is a tale of the internet levelling the playing field between at-home retail investors and Wall Street. The US stock market may become as retail dominated, and as volatile, as the Chinese market
Andy Xie – South China Morning Post
A blood sport is emerging on Wall Street. A band of millennials is buying stocks that big hedge funds have heavily shorted. The surging stock prices have triggered heavy losses for these funds. This game of hunting short-sellers may bankrupt many big hedge funds, which could take their financing banks down with them. The potential for a financial crisis is high, and rising.

Day-Trader Mania Will Challenge SEC Under Gensler, Biden’s Choice for Chairman; Marriage of social media and online-trading platforms brings more investors in to the market but amplifies risks
Dave Michaels and Paul Kiernan – WSJ
The trading mania around shares of companies like GameStop Corp. GME 67.87% this week poses a dilemma for Gary Gensler, the Biden administration’s choice to head the Securities and Exchange Commission: While broadening investor participation, the stampede also poses new risks that could spread to other participants.

Robinhood and Citadel’s relationship comes into focus as Washington vows to examine stock-market moves; Trading firms at center of Reddit-fueled stock surges have worked closely to share users’ market data, build political influence
Douglas MacMillan and Yeganeh Torbati – Washington Post
Robinhood, the online trading app heralded by some as a democratizing force to empower small investors, has spent the past few years nurturing a close relationship with one of Wall Street’s biggest players and building ties with some of the most powerful institutions in Washington.

GameStop curbs put clearing houses under the spotlight; Volatility prompts firms with crucial settlement role to increase collateral demands
Philip Stafford and Joe Rennison – FT
The crucial role played by clearing houses in financial markets has been thrust into the spotlight after contentious moves by US brokers such as Robinhood and Charles Schwab to restrict retail investors’ bets on stocks at the heart of the Reddit-fuelled trading boom.

Robinhood tightens GameStop trading curbs again as SEC weighs in; Online brokerages come under scrutiny over restrictions on volatile stocks
Michael Mackenzie and Colby Smith, Kiran Stacey and Miles Kruppa – FT
US regulators on Friday said they would review trading curbs imposed by online brokerages and act on any evidence of market manipulation, as Robinhood again tightened restrictions on purchases of hot stocks including GameStop.

A Reddit Army Descends on Hedge Funds Chained by Risk Models
Justina Lee – Bloomberg
Risk models seen fueling fund deleveraging in short squeeze; Volatility also jumped as stock market correlations broke down
A hellish week for hedge funds will be remembered for how much damage Reddit traders caused by chasing a handful of the most-shorted names in the $43 trillion U.S. stock market. But just why were the institutional pros forced to downsize their market exposures at the fastest pace since pandemic-spurred March rout? One reason is that their risk models told them to.

Short sellers face the rage of an army of small traders; Hedge funds have been attacked despite helping to identify overvalued and struggling companies
Michael Mackenzie – FT
Few tears are being shed for the hedge funds that were humbled by an army of retail investors in a wild week of trading on Wall Street.

Reddit investors’ real power is over Wall Street’s future behaviour; Trading against hedge funds will not deliver social justice, but a mass movement could curb corporate excess
Merryn Somerset Webb – FT
If you have spent any time following financial news on social media this week, you will have been told a fabulous story. Ordinary people have had it with establishment Wall Street. They’re furious at the way the banks were bailed out in 2008. They’re angry about the amount of money made by the hedge fund industry. They have had enough of inequality, crony capitalism and a world where there’s one rule for the rich and another for the poor. They’re taking action.

Robinhood’s bid to ‘democratise finance’ collides with Wall St reality; An urgent dash for cash and a rebuke from loyal users highlight strains for online broker
Miles Kruppa and Madison Darbyshire and Philip Stafford – FT
Robinhood’s ambition to “democratise finance” is set for one of its biggest tests after a week of chaotic trading that pushed it to seek an urgent injection of $1bn and infuriated many of its most loyal clients.

GameStop Day Traders Are Moving Into SPACs; So-called blank-check companies are a hit with individual investors looking for speculative trades
Amrith Ramkumar – WSJ
Day traders fueling enormous gains in popular stocks such as GameStop Corp. GME 67.87% are also powering big swings for another suddenly hot investment: so-called blank-check companies. Special-purpose acquisition companies—shell companies planning to merge with private firms to take them public—are rising more than 6% on average on their first day of trading in 2021, up from last year’s figure of 1.6%, according to University of Florida finance professor Jay Ritter. Before 2020, trading in SPACs was muted when they made their debut on public markets.

At Least One Central Bank Is Worried About Speculation: China’s; China’s short-term lending rates shot up to their highest levels in two years last week
Nathaniel Taplin – WSJ
Markets in the U.S. are going haywire, but since the economy is also in the tank, central bankers are hesitant to step in and spoil the fun. Not so in China. Markets there look bubbly too and the central bank isn’t amused.

Why banking isn’t working for Chicago’s largest bank; Northern Trust is making next to nothing on the bread-and-butter business of making loans and collecting deposits. How long can that go on?
John R. Boehm – Crain’s Chicago Business
2020 should have been a good year for Northern Trust. After all, the S&P 500 improbably returned 16 percent; Northern is one of three global titans making most of its money managing and safeguarding assets for investors, and much of its fee revenue is tied to the values of those investments.

Robinhood Needed $3 Billion to Shore Up Volatile Trading in GameStop, Other Stocks; CEO Vlad Tenev explained in an interview alongside Tesla boss Elon Musk why the brokerage blocked users from trading
Anna Hirtenstein – WSJ
Robinhood Markets Inc. blocked trading of volatile stocks such as GameStop GME 67.87% last week after a clearinghouse asked for $3 billion to back up the trades, the trading app’s chief executive said in an interview posted online.

‘How free exactly is the market?’ asks WallStreetBets founder
Ines Ferré – Yahoo Finance
“How free exactly is the market?” asks Jaime Rogozinski, the founder of WallStreetBets, the forum on Reddit at the center of the GameStop (GME) saga. Robinhood, Interactive Brokers and other brokerage firms on Thursday restricted trading on stocks going through recent massive short squeezes like GameStop and AMC Theaters (AMC).

What’s Driving Everything From a Market Frenzy to an Embrace of U.S. Deficits? Magical Thinking.; Traders and politicians are making new, risky arguments about low interest rates to justify their actions
Greg Ip – WSJ
TCoronavirmbracing sky-high stock values and the Washington pols embracing big deficits may be ideological opposites, but they have something important in common. Both draw sustenance from near-zero interest rates which make stocks more valuable and debt more supportable. And both risk taking this basically sound logic to extremes. The rally in everything from big tech stocks to Tesla Inc. to bitcoin are all manifestations of what Wall Street calls “TINA” for “there is no alternative”: when bank deposits pay nothing and government bonds next to nothing, investors will grasp at almost anything in search of a return.

GameStop’s wild ride: how Reddit traders sparked a ‘short squeeze’; The week that have-a-go individual investors forced a defeat from hedge funds and shook up the market
Ian Smith and Robin Wigglesworth – FT
This week, the global stock market went down the Reddit hole. A growing army of day traders has been a feature of the recovery in stocks since the sell-off last March, as a mixture of lockdowns, low interest rates and cancelled sporting competitions encouraged more and more everyday investors to try their hand at the equity market. This has accelerated since the start of 2021, as the Reddit message board, and its fast-expanding r/WallStreetBets community, have managed to channel the energy to a handful of previously unloved stocks.

‘This is the way’: the Reddit traders who took on Wall Street’s elite; A look inside the WallStreetBets forum at the eye of a market hurricane
Eric Platt and Colby Smith, Madison Darbyshire, Alice Kantor and Robin Wigglesworth – FT
Michael Frawley had already been dabbling in financial derivatives for a few months when he joined a raucous, profane trade-tipping internet forum last year. Reddit’s WallStreetBets would prove the gateway into the 25-year-old Ohio engineer’s wildest ever bet. GameStop is a struggling bricks-and-mortar video game retailer in a world that is rapidly moving online. The stock had been languishing for six years, and many hedge funds were betting on a terminal decline.

Canada’s Answer to Robinhood Warns Traders But Won’t Halt Stocks
Kevin Orland – Bloomberg
Wealthsimple deploys emails, notifications amid trading frenzy; CEO Katchen sees options, margin accounts as ‘highly risky’
Wealthsimple Inc., a commission-free Canadian online brokerage with more than 350,000 clients, is warning traders about the risks of investing in certain highly speculative stocks, but isn’t planning to halt trading in those shares. Wealthsimple, whose motto is “get rich slow,” doesn’t offer riskier investment choices such as options trading or margin accounts, and has sent clients emails reminding them about the dangers of speculation, Chief Executive Officer Mike Katchen said in an interview with BNN Bloomberg Television Friday. It also embedded in-app notifications for users looking at certain stocks.

How One True GameStop Believer Scored Big After Years of Work
Joe Weisenthal and Tracy Alloway – Bloomberg
‘Odd Lots’ podcast talks with longtime GameStop bull; Rod Alzmann helps run GMEDD.com site that lays out case
This is the week that everyone got obsessed with Reddit traders, retail buying and the GameStop frenzy. But in fact this has been in the works for a long time. Long before GME was a meme stock (or even before the concept of a meme stock existed), a number of contrarian investors were bullish on the shares, when everyone else had left it for dead.

Short Sellers Face End of an Era as Rookies Rule Wall Street
Nishant Kumar and Hema Parmar – Bloomberg
From Citron to Carson Block, bears are pulling in their reins; Supporters say they serve to police markets, uprooting fraud
The latest assault on Wall Street short sellers has a long tradition, dating back to, well, at least Napoleon. “Treasonous,” he called them for betting against government securities. They survived that and numerous other attacks over the next several centuries. But the GameStop uprising could mark the end of an era for the public short — the long-vilified folks who try to root out corporate wrongdoing, take positions betting a stock will fall and then wage public campaigns.

The Brutal Truth for Bankers Is They’re Expendable; Capital flight will barely register if Hong Kong financial workers move to the U.K. but the home property market is another matter.
Matthew Brooker – Bloomberg
What happens to a global financial center when hundreds of thousands of residents head for the door? The jury is still out on London after its Brexit- and pandemic-inspired exodus. Now it’s Hong Kong’s turn to pose the question.The U.K. starts taking applications as of Jan. 31 under a new immigration program for Hong Kong residents, introduced in response to a national security law that was enacted by China’s legislature last June. The British government calls the law a “clear and serious breach” of the Joint Declaration that governed the former colony’s return to Chinese sovereignty in 1997, which guaranteed that Hong Kong’s rights, freedoms and way of life would remain unchanged for 50 years.

Saudi Arabia’s Oil Fears Look Well Founded; The recovery in oil demand is taking a pause.
Julian Lee – Bloomberg
It’s starting to look like Saudi Arabia’s concerns over the oil demand recovery were well founded. At the start of the month, the joint leader of the OPEC+ group of oil-producing countries announced a surprise output cut of 1 million barrels a day for February and March. Its co-chair, Russia, pushing for restraints to be eased, was granted a small output increase in each of those two months.

‘Trillion Dollar’ Mt. Gox Demise as Told by a Bitcoin Insider
Matthew Leising – Bloomberg
Tokyo-based exchange once handled 80% of Bitcoin trading; Peter Vessenes has spent years trying to recoup lost coins
In early 2013, Peter Vessenes was in his Seattle office working on a deal to obtain the North American customer operations of the world’s largest Bitcoin exchange at the time, Mt. Gox, when his phone rang.

Fronting the dealing evolution; Head of multi-asset dealing at Aegon Asset Management, Kirstie MacGillivray, tells Hayley McDowell about how her dealing desk has evolved and adopting a brokerage sales trading role for portfolio managers across all asset classes.
Hayley McDowell – The Trade
While juggling a multi-asset dealing desk in dramatic market conditions from her home office in rural South Lanarkshire, Kirstie MacGillivray explains that nobody on her team envisaged the global pandemic would last this length of time

Gambling? In the Stock Market? I’m Shocked; Markets have always attracted gamblers. The trick for the economy is to make sure they aren’t the main movers of the market
James Mackintosh – WSJ
Has Reddit broken the stock market? Fundamentals have never mattered less, yet the wild moves of a bunch of struggling stocks with dated business models could have real-world consequences. The companies can raise capital more easily by issuing new shares at elevated prices to help them survive or restructure, while executives with bonuses tied to the stock price are closer to cashing in fortunes.

When Ted Cruz and A.O.C. Agree: Yes, the Politics of GameStop Are Confusing; From the populist right to the socialist left, the rush by both parties to side with young traders disrupting the markets reflects the broad recognition of the impulses driving American politics.
Lisa Lerer and Astead W. Herndon – NY. Times
It’s Occupy Wall Street, the sequel. It’s elements of the Tea Party, again. It’s Bernie bros and MAGA-maniacs. The hordes of young traders who this week fueled a spectacular surge in the value of the video game retailer GameStop may lack a unified political ideology. But they have forced a reckoning on Wall Street, and caught the attention of leaders in Washington who recognize a populist uprising when they see one.


China reports 42 new COVID-19 cases vs 92 a day earlier
China reported 42 new mainland COVID-19 cases on Jan. 31, down sharply from 92 cases a day earlier, the national health authority said on Monday.

As Others Rush to Vaccinate, Moscow Lures Takers With Ice Cream
Jake Rudnitsky and Stepan Kravchenko – Bloomberg
Demand limited even after Russia opens vaccination to everyone; Russia has stopped giving updates on the number of inoculated
If the offer of immunity against Covid-19 isn’t enough to lure shoppers to get a vaccination at a tony Moscow shopping mall on Red Square, the organizers have sweetened the deal with free ice cream. Even so, there were few takers on a recent snowy afternoon for a city-sponsored Sputnik V injection and anyone looking to receive the free Russian shot could get it without a wait.

Malaysia Reports Record New Coronavirus Cases for Second Day
Anuradha Raghu – Bloomberg
Malaysia added a record number of coronavirus cases for a second day on Saturday, just days before the government decides on whether to prolong or tighten curbs on movement that are set to end next week. The Southeast Asian country registered 5,728 infections on Saturday, after breaching the 5,000 mark for the first time on Friday, according to a tweet by Director General of Health Malaysia Noor Hisham Abdullah. That brings the total tally to 209,661 cases. Malaysia has reported 746 total deaths from the coronavirus pandemic, including 13 on Saturday.

Cuba to Force Travelers to Quarantine as Virus Cases Rise
Ezra Fieser – Bloomberg
Island to limit frequency of flights from U.S., Mexico; Caribbean country has seen sharp rise in new cases in January
Cuba will make travelers quarantine under a new set of restrictions announced Saturday after coronavirus cases surged this month in the Caribbean’s largest island.

Covid Mutations Undercut Optimism Even as More Vaccines Near
Robert Langreth – Bloomberg
Multiple immunizations work, but resistant mutations growing; J&J and Novavax shots less effective versus African variant
We’re tracking the latest on the coronavirus outbreak and the global response. Sign up here for our daily newsletter on what you need to know. The world could be on the verge of having two more vaccines to fight the Covid-19 pandemic, but virus variants popping up worldwide are forcing vaccine makers to develop boosters for a disease that’s constantly changing and could remain active for years.

Faced With a Vaccine Emergency, the EU Made an Enemy of Everyone
Alberto Nardelli, Dara Doyle, Suzi Ring, and Nikos Chrysoloras – Bloomberg
Von der Leyen plan threw delicate Brexit balance into jeopardy; EU convinced it was short-changed by AstraZeneca on vaccines
As soon as the plan was published, senior officials in Brussels could see that their boss had made a terrible mistake. They understood the rationale for vaccine restrictions on shots shipped from the European Union, but they could hardly believe that Ursula von der Leyen had missed the bigger picture and how the proposals would land in Ireland.

U.K. Meets Vaccine Milestone Amid Assurances Supplies Secure
Lucy Meakin – Bloomberg
Truss says nation will stick to rollout after EU export spat; Over 8 million have had first injection after record Saturday
The U.K. is set to confirm that residents at every eligible care home in England have been offered a Covid-19 vaccine, even as a dispute over exports from Europe raises concern over supplies.

Vaccine Trade Wars Have Just One Winner: Covid-19; Europe’s export curbs on life-saving medicines are a slippery slope. We need more global supply, not less.
Lionel Laurent – Bloomberg
Vaccine nationalism is escalating in a world where Covid-19 is everywhere, yet the life-saving medicines needed to fight it are scarce. The temptation to hoard doses is rising, but that would prolong the pandemic by driving an even bigger wedge between leaders and laggards. Without a focus on increasing supply and sharing doses across borders, the virus will be with us longer than we fear.

Israel to Give Some Coronavirus Vaccines to Palestinians
Josef Federman – Associated Press
Israel has agreed to transfer 5,000 doses of the coronavirus vaccine to the Palestinians to immunize front-line medical workers, Israeli Defense Minister Benny Gantz’s office announced Sunday. It was the first time that Israel has confirmed the transfer of vaccines to the Palestinians, who lag far behind Israel’s aggressive vaccination campaign and have not yet received any vaccines.

Covid-19 Vaccines to Stress-Test Grocery Stores and Pharmacies; CVS, Walgreens, Kroger and others will require appointments, hope to avoid logjams as they join national effort
Sharon Terlep and Jaewon Kang – WSJ
Some of America’s biggest retailers are preparing to take a central role in administering Covid-19 shots, hoping to avoid logjams and other complications that have slowed the vaccine rollout’s early days.

Infectious Disease Expert Warns ‘Category 5’ COVID-19 Hurricane Is About To Hit
Ed Mazza·Overnight Editor, HuffPost
Infectious disease expert Michael Osterholm said on Sunday that the nation is facing a “Category 5” storm as the new and more infectious coronavirus variant first detected in the United Kingdom spreads in the United States.

Vaccine rollout under Biden struggles to live up to campaign pledge; Administration hands bigger role to federal government amid sluggish inoculation rate
Kiran Stacey – FT
During the election campaign, Joe Biden promised to “move heaven and earth” to improve the distribution of coronavirus vaccines in the US, repeatedly criticising his predecessor for failing to come up with a rollout plan.

Covid-19 Pandemic Motivates Younger People to Buy Life Insurance; Applications for life insurance in the U.S. jumped 4% last year, mostly on demand from those under age 45
Leslie Scism – WSJ
Consumers’ pandemic shopping lists went beyond baking flour and exercise equipment in 2020. They also bought more life insurance. Applications for life-insurance policies jumped 4% in 2020 in the U.S., the highest year-over-year annual growth rate since 2001, when MIB Group Inc., a member-owned organization, began tracking activity.

Why the European Commission failed the vaccine challenge; Brussels bureaucrats lacked the necessary expertise in health and procurement
Gideon Rachman – FT
The EU’s failure to deliver Covid-19 vaccines at pace is a major political scandal. For some leading politicians, it is a potentially career-ending fiasco. Those in the line of fire include Ursula von der Leyen, president of the European Commission; Emmanuel Macron, president of France and Jens Spahn, Germany’s health minister and a potential future chancellor.

Exchanges, OTC and Clearing

UK listings review is about more than the stock market; There is a need to fix the out-of-kilter balance between public and private regulation
Jonathan Ford – FT
At a time of perplexingly exuberant stock indices, with flash mobs prowling the internet seeking to squeeze short-selling hedge funds, it might seem an odd moment to focus on loosening stock market regulation.

ICE Announces Record Activity in TTF and JKM Natural Gas Benchmarks as Participants Seek Transparent Price Discovery to Transfer Risk
Intercontinental Exchange
Liberalization of liquefied natural gas supporting rise of ICE TTF & JKM
Total Natural Gas Futures and Options OI +11% y/y
TTF Futures OI +40% y/y; JKM LNG (Platts) Futures and Options OI +48% y/y
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of mortgage technology, data and listings services, announces record activity across its TTF and JKM LNG (Platts) natural gas benchmarks as participants responded to volatile market conditions set against the ongoing liberalization of liquefied natural gas.

Aker Horizons lists on Euronext Growth Oslo
Aker Horizons has today been admitted to trading on Euronext Growth (ticker code: AKH). Aker Horizons is an investment company dedicated to developing companies within renewable energy and other technologies that reduce emissions or promote sustainable living.

Eurex Exchange’s T7 Disaster Recovery Test on 17 April 2021
On Saturday, 17 April 2021, Eurex Exchange will offer a test scenario according to its T7 disaster recovery concept. This particular DR scenario will simulate a partial outage of the primary data centre facility (the co-location facility will remain up and running).

HKEX Enhances Product Offering with Kuaishou Debut
Kuaishou Futures and Options to be introduced on 5 February; HKEX informed issuers they can list derivative warrants on Kuaishou shares when the shares debut on HKEX’s securities market; Kuaishou shares to be included in Designated Securities Eligible for Short Selling on 5 February
Hong Kong Exchanges and Clearing Limited (HKEX) is pleased to announce today (Monday) that it will offer investors more options on Kuaishou Technology (Kuaishou, stock code: 1024) shares on the debut date (5 February 2021).

Nasdaq Named to 2021 Bloomberg Gender-Equality Index
Nasdaq, Inc.
Nasdaq, Inc. today announced its inclusion in the 2021 Bloomberg Gender-Equality Index (GEI) for the first time. The GEI brings transparency to gender-related practices and policies at publicly listed companies increasing the breadth of environmental, social, governance (ESG) data available to investors.

Declaration of Regularity Renewal for Slaughter Plants for Live Cattle
CME Group
Applications for the declaration of regularity for the delivery of Slaughter Plants for CME Live Cattle Contracts have been reviewed by the Exchange.

Declaration of Regularity Renewal for Livestock Yards for Live Cattle
CME Group
Applications for the declaration of regularity in Live Cattle for approved livestock yards have been reviewed by the Exchange. All applications were approved by the Exchange for the regularity period beginning February 1, 2021.

Trading Overview in January 2021
Japan Exchange Group released Trading Overview in January 2021.
Cash Equity Market – In January 2021, the daily average trading value for the TSE 1st Section (domestic common stocks) was JPY 3.1848 trillion.; The daily average trading value for the ETF market was JPY 238.6 billion.
Derivatives Market – In January 2021, total derivatives trading volume was 25,831,602 contracts; In January 2021, total derivatives trading value was JPY 205 trillion.

The Spanish Stock Market Trades 31 Billion Euros In January, With 30.4% More Trades
The Equity trading volume in January is 14.4% lower;New issues in the Fixed Income markets increase 126.1% in January; The trading volume in IBEX 35 Futures is up 5.7% from December and up 4.8% in Mini IBEX Futures
The Spanish stock market traded 31.1 billion euros in Equities in January, down 14.4% from the same period last year and down 14.4% from the preceding month. The number of trades was 4.4 million, posting a year-on-year increase of 30.4% and a 1.1% decrease compared to December.


Google deletes thousands of negative Robinhood app reviews
Noah Manskar – NY Post
Google appeared to remove nearly 100,000 negative reviews for the Robinhood app after outraged investors bombarded the stock-trading startup with complaints. Amateur traders urged each other online to leave negative reviews for the app in the Google Play Store after Robinhood froze trading on shares of GameStop and other stocks whose prices have exploded this week.

Eastspring Investments selects SimCorp Coric to improve client reporting; SimCorp said the integration of its Coric solution would allow Eastspring to minimise the amount of coordination and manual intervention required across its business.
Annabel Smith – The Trade
Eastspring Investments, the $220 billion Asian asset management business of Prudential, has deployed SimCorp Coric to enhance its client reporting capabilities. The pair signed a license agreement in 2019 confirming that Eastspring Investments would integrate the Coric solution to deliver an enhanced reporting platform for the business.


India’s Proposed Crypto Ban Has Investors Nervous, May Feed Anti-Bitcoin Narrative
Tanzeel Akhtar – Coindesk
India’s cryptocurrency investors were caught off-guard and left confused after news broke Friday that the country’s Parliament will be considering a government-backed bill that would ban “private” cryptocurrencies. Given the ruling party controls both houses of Parliament, the bill’s chances of becoming law are good.

XRP Posted Biggest Single-Day Gain in 3 Years in a Coordinated Buying Attack
Omkar Godbole – Coindesk
XRP rallied hard on Saturday in a move similar to a crowd pump recently observed in out-of-favor stocks such as GameStop. The cryptocurrency jumped 56% to $0.50944 to hit the highest level since Dec. 22, according to CoinDesk 20 data. That was the biggest single-day percentage gain since Dec. 21, 2017.

To see eye-to-eye? Crypto industry should start embracing regulation; Now it’s up to the crypto industry itself to start engaging with and accepting regulations.
Benjamin Pirus – Cointelegraph
Since the exuberant crypto bull run of 2017, regulators have increased their activity in the industry. United States governing bodies such as the Securities and Exchange Commission, the Department of Justice and the Commodity Futures Trading Commission have all pursued various types of legal enforcement.

Robinhood Pauses Use of Instant Deposits For Crypto Trades
Dave Liedtka – Bloomberg
Robinhood is temporarily preventing customers from using funds deposited in accounts today for purchasing cryptocurrencies. “Due to extraordinary market conditions, we’ve temporarily turned off Instant buying power for crypto. Customers can still use settled funds to buy crypto. We’ll keep monitoring market conditions and communicating with our customers.” according to a Robinhood spokesperson.

Crypto Entrepreneurs Seize on Reddit Revolt Ethos to Sway Users
Olivia Raimonde and Olga Kharif – Bloomberg
FTX, Bittrex among those offering stock exposure to traders; Tron CEO Justin Sun to buy $10 million in GameStop shares
Crypto entrepreneurs are moving quickly to launch products to emulate the adrenaline-charged rush that lured many in the WallStreetBets crowd to stock markets. FTX Cryptocurrency Derivatives Exchange announced in a blog post that they have launched trading for a basket of WallStreetBets favorites. Companies included in the index are some of Reddit crowd’s most-beloved stocks, including GameStop Corp., AMC Entertainment Holdings Inc., Nokia Oyj and BlackBerry Ltd. The exchange will also offer exposure to iShares Silver Trust.

Dogecoin Plunges After Rally, Sparking Outcry by Reddit Holdouts
Yueqi Yang – Bloomberg
Dogecoin, a Shiba Inu-themed digital coin started as a joke that became the latest obsession for retail traders late this week, plunged almost by half Saturday, sparking a flurry of posts on Reddit and Twitter begging coin holders not to panic sell. The digital coin is down 46% in the last 24 hours and was at $0.02582 as of 4:35 p.m. in New York on Saturday, according to CoinMarketCap data. The plunge came after a blistering sevenfold surge on Friday, when the coin reached over $0.07.

Bitcoin Investors May Lose Everything, Central Banker Warns
Peter Flanagan and Francine Lacqua – Bloomberg
Bitcoin investors need to be prepared to “lose all their money,” European Central Bank governing council member Gabriel Makhlouf said, the latest warning from a central banker on the cryptocurrency. “Personally, I’m not sure why people invest in those sorts of assets, but they see them as assets clearly,” Makhlouf, who is also governor of Ireland’s central bank, told Bloomberg TV on Friday. “Our role is to make sure that consumers are protected.”

Musk Says He’s a Bitcoin ‘Supporter,’ Buffeting Price Again
Eric Lam and Gearoid Reidy – Bloomberg
Tesla chief describes himself as ‘late’ to the Bitcoin ‘party’; He sparked rally Friday after adding ‘bitcoin’ to Twitter page
Elon Musk once again sent ripples through the price of Bitcoin after declaring that he’s a supporter of the largest cryptocurrency. Speaking on social audio app Clubhouse, the billionaire said at this point he thinks “Bitcoin is a good thing,” adding he’s “late to the party” and should have bought the cryptocurrency eight years ago.

Swiss Crypto Broker Targets Large Investors as Demand Jumps
Leonard Kehnscherper – Bloomberg
Crypto Broker AG received a securities house license from Swiss financial regulator Finma that will allow the company to offer services to more institutional investors. “With this license, Finma has made it easier for institutional clients to trade crypto assets,” a representative of the firm said. The broker can now also hold funds on behalf of clients, which is “highly relevant for institutional clients, as many do not have their own capability,” according to the spokesperson.

Kraken Exchange Brings Its Spot Price Data to DeFi Via New Chainlink Node
Tanzeel Akhtar – Coindesk
Kraken, the fourth largest cryptocurrency exchange by trading volume, is making its spot price data available for use by decentralized finance (DeFi) applications and developers.

XRP Erases SEC-Led Drop as Supporters Pump Price Over $0.60
Omkar Godbole – Coindesk
Payments-focused cryptocurrency XRP jumped to over two-month highs on Monday. The move more than reversed the late-December price slide triggered by legal troubles at the San Francisco-based payment protocol developer Ripple Labs, which has close ties to the digital asset.

Behind the Bitcoin Bubble; Manipulative actors have been known to take advantage of the madness of crowds.
Andy Kessler – WSJ
To figure out if you’re in a bubble, you need to find the source of the hot air. Obvious for GameStop, but for bitcoin, not so much. In July 2018, we wrote about the cryptocurrency company Tether, which issues tokens called tethers that trade under the symbol USDT and should be valued at $1—making the currency a “stablecoin.” Tether’s creators might have manipulated bitcoin, a University of Texas paper suggests, by issuing tokens willy-nilly unbacked by real dollars and then buying bitcoin to jack up its price. (The company claims the research is flawed.)


Banks Brace for Tougher Rules Under Biden on Consumer Protection, Fair Lending; Obama-era focus on financial stability gives way to concerns about racial equity, climate change
Andrew Ackerman and Orla McCaffrey – WSJ
After the 2008 financial crisis, regulatory reform efforts sought to make the system safer. This time, the goal will be to make it fairer. In keeping with President Biden’s focus on helping minorities and people with low and moderate incomes—groups hit hardest by the coronavirus-induced downturn—financial regulators are expected to emphasize racial equity as they focus on consumer protection and expanding access to financial services.

Jim Chanos laments politicisation of ‘surreal’ GameStop saga; Kynikos Associates founder says short-sellers have been ‘beat up and left for dead’ but are still being blamed
Ortenca Aliaj and Robin Wigglesworth – FT
Renowned short-seller Jim Chanos says the GameStop saga has been the most “surreal” episode in his career, and worries that things are going “completely off the rails” with populist politicians looking to capitalise on the situation.

Xiaomi Sues U.S. Seeking to Reverse Investment Ban
Bloomberg News
Pentagon had called it a ‘Communist Chinese military company’; The move prohibits U.S. investors from buying Xiaomi’s shares
Xiaomi Corp. sued the U.S. Defense and Treasury departments, challenging a blacklisting that blocks American investors from buying the Chinese smartphone giant’s securities.

Dalio Says GameStop Drama Reflects Growing Intolerance in U.S.
Alan Mirabella – Bloomberg
The GameStop Corp. saga is another sign of the growing intolerance among those with opposing views that’s roiling the U.S., according to Bridgewater Associates’ founder Ray Dalio. “What concerns me more is the general anger — and almost hate — and the view of bringing people down that now is pervasive in almost all aspects of the country,” Dalio said in an interview with the Washington Post. “That general desire to hurt one another” is of concern, he said.

Loneliness Is What Drives Some People to the Right Wing; An interview with Noreena Hertz, author of The Lonely Century: How to Restore Human Connection in a World That’s Pulling Apart.
By Peter Coy – Bloomberg
A few years ago the English economist and author Noreena Hertz started interviewing right-wing voters in the United Kingdom, France, and the U.S. “What kept coming across, time and time again, was how lonely they felt,” she says.

Reddit traders eye silver, Republicans float smaller relief bill, Mance talks to Bellingcat founder
FT Podcast
A rundown of the most important global business stories you need to know for the coming day, from the newsroom of the Financial Times. Available every weekday morning.

Robinhood posts help wanted ad for lobbyist
Thornton McEnery – NY Post
Good news, job seekers! One of the most vilified companies in America at the moment is hiring a lobbyist. Trading app Robinhood posted a listing for a manager of federal affairs position to a variety of job sites on Friday, giving some lucky applicant a chance to promote a company that has managed to unify Ted Cruz, AOC, Elizabeth Warren, and Steve Cohen in public outrage over its decision to stop its users from trading stocks like GameStop in the middle of the so-called “Reddit Rally.”


SEC to Review Brokers’ Restrictions on GameStop, AMC Trading; Securities regulators say they are on the lookout for potentially manipulative trading
Dave Michaels – WSJ
Securities regulators said Friday they plan to closely review the actions of some brokerage firms that restricted investors’ ability to trade volatile stocks such as GameStop Corp. GME 67.87% this week.

ASIC succeeds in winding-up Mayfair 101 debenture issuer
Following an application by ASIC, the Federal Court has ordered the winding up of M101 Nominees Pty Ltd, which issued secured debentures promoted by Mayfair 101 known as M Core Fixed Income Notes.

GameStop mania exposes SEC’s failure as regulator; Redditors’ squeeze of hedge fund shorts ushers in new era of market manipulation
Steven Pearlstein – Washington Post
Twenty years ago, Michael Lewis, the Boswell of Wall Street, profiled a 15-year-old from New Jersey, Jonathan Lebed, who had been sanctioned by the Securities and Exchange Commission for using what was then new technology — Internet bulletin boards and online trading platforms — to manipulate the market in penny stocks. The pump-and-dump schemes had earned at least $800,000 for Lebed, his friends and some very grateful teachers at his high school.

GameStop’s final boss: Washington
Michael Grunwald with help from Renuka Rayasam
The GameStop mess has reached its Do Something moment, the point in any messy news cycle when politicians start clamoring for Washington to Take Action. But it’s always useful to ask: What exactly is the problem? And to quote Vladimir Lenin, who might be stirring up a Reddit mob to buy $GME call options if he were alive: What is to be done?

What’s Next for Crypto Regulation; The rules are in flux as a new U.S. administration takes over.
Ephrat Livni – NYTimes
Stock market mania has made the headlines in recent days, but recall that a run-up in crypto prices to new highs a few weeks ago raised all of the questions about investor protections and regulations now vexing policymakers coming to grips with GameStop. In fact, crypto prices are starting to go haywire again. Yesterday, Robinhood imposed restrictions on crypto trading, as it did for the stocks at the center of the market mayhem.

Germany’s Top Finance Watchdogs Resign Over Wirecard Scandal
Nicholas Comfort and Birgit Jennen – Bloomberg
BaFin President Hufeld, Vice President Roegele step down; Latest scandal was suspected insider trading at the regulator
Germany’s top financial regulator is stepping down after repeated scandals surrounding the collapse of payments company Wirecard AG highlighted the watchdog’s failure to prevent the country’s biggest corporate scandal in years.

New rules can help to reboot the UK stock market; Policymakers must also foster a pro-business climate to attract new flotations
The editorial board – FT
Unloved, undervalued and behind the times — there seems little to recommend the UK stock market. The coronavirus crisis and uncertainty over Brexit have fuelled a sell-off in London-listed stocks in the past 12 months. The heavy weighting of the flagship FTSE 100 index towards the shares of companies hit hard by the pandemic — financial services, energy and travel — has compounded the pain for investors. The index fell more than 14 per cent last year, its biggest decline since 2008, making it the worst performer of the large international stock indices.

GameStop mania: why Reddit traders are unlikely to face prosecution; Regulators would need to find evidence of deception to prove market manipulation, say lawyers
Kiran Stacey – FT
Last week’s stock market turmoil sparked a probe by US financial regulators into whether market manipulation was involved, but lawyers doubt it will lead to prosecutions.

Former JPMorgan Banker Acquitted in ‘Sons and Daughters’ Bribery Trial; Hong Kong judge acquits Catherine Leung Kar-cheung of bribing a potential client by offering his son a job at the bank
Joanne Chiu – WSJ
A former senior banker at JPMorgan Chase JPM -1.11% & Co. was acquitted of bribing a potential client by hiring his son, in a defeat for Hong Kong’s antigraft agency. Deputy District Judge Emily Cheung on Monday ruled that Catherine Leung Kar-cheung, a former vice chairwoman of JPMorgan’s JPM -1.11% Asia-Pacific investment banking business, wasn’t guilty of two counts of bribery.

ESMA publishes report on proposed fees for Benchmarks Administrators
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has published today the Final Report on its Technical Advice regarding supervisory fees for benchmarks administrators under the BMR.

ESMA finalises rules on standardised information to facilitate cross-border distribution of funds
The European Securities and Markets Authority (ESMA), the EU’s securities regulator, has today published a final report on implementing technical standards (ITS) under the Regulation on cross-border distribution of funds. The ITS focus on the publication of information by national competent authorities (NCAs) on their websites, the notification of information by NCAs to ESMA and the publication of information by ESMA on its website.

ESMA launches a Common Supervisory Action with NCAs on MiFID II product governance rules
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, is launching a common supervisory action (CSA) with national competent authorities (NCAs) on the application of MiFID II product governance rules across the European Union (EU). The CSA will be conducted during 2021.

Following the Crowd: Investing and Social Media
With zero commissions on trades and online trading platforms at our fingertips wherever we go, many investors are making investing and saving part of their routine. Investors have access to a variety of online sources to gather information to make investment decisions, from the news media to independent social media platforms to platforms associated with investment firms, among many others. No matter where you get your trading insights, and whether you are following a recommendation to buy stocks, bonds, options or something else, know this: where there is opportunity, there is also risk.

Statement of Acting Chair Lee and Commissioners Peirce, Roisman, and Crenshaw Regarding Recent Market Volatility
The Commission is closely monitoring and evaluating the extreme price volatility of certain stocks’ trading prices over the past several days. Our core market infrastructure has proven resilient under the weight of this week’s extraordinary trading volumes. Nevertheless, extreme stock price volatility has the potential to expose investors to rapid and severe losses and undermine market confidence.

Remarks at Meeting of SEC Small Business Capital Formation Advisory Committee
Commissioner Hester Peirce – SEC
Thank you Carla [Garrett] and members of the Committee for putting together an agenda that touches on a variety of important subjects. It is encouraging to see the Committee back to work in 2021. Now let us hope that we will be able to meet in person sometime later this year. Of course, that will depend on vaccination efforts against COVID-19, which continues to have a devastating impact on small businesses across America. The recently published Annual Report[1] from our Office of the Advocate for Small Business Capital Formation provides a sobering snapshot of the harmful effects of COVID-19 in the first three quarters of 2020: a 27% decrease in the number of small businesses, drastic reductions in revenue of up to 70% in certain industries over the same time period, and a reduction in headcount for nearly half of all small businesses.

Investing and Trading

Silver Coin Sites Grind to a Halt as Reddit Horde Takes Aim
Yvonne Yue Li – Bloomberg
Retail sites were overwhelmed with demand for silver bars and coins on Sunday, suggesting the Reddit-inspired frenzy that roiled commodities markets last week is spilling over into physical assets. Sites from Money Metals and SD Bullion to JM Bullion and Apmex, the Walmart of precious metals products in North America, said they were unable to process orders until Asian markets open because of unprecedented demand for silver.

Some GameStop Investors Got In With One Goal—to Pay Off Debt; Now with the stock price dipping, the focus turns to when to sell
Julia Carpenter – WSJ
Some investors took a flier on GameStop Corp. GME 67.87% stock in hopes they would make enough money to pay down debt. Now, after a wild January featuring a 1,625% rise, comes the hard part: deciding when to sell. With the hot stock dipping on Thursday, the question has become more urgent.

Opinion: Why we cannot and will not stop with GameStop
Amber Petrovich – Washington Post
Step aside, Wall Street. The GameStop stock market battle has proved the power of retail investors. Now the question is: What are we going to do with it? The GameStop play started on the social media platform Reddit with the now well-known subreddit wallstreetbets, where I’ve been lurking for a few years but rarely posting because it’s not always the most welcoming forum for women (or maybe for anyone). It can be hostile.

Treasury Market Set for a Respite From Record Supply Onslaught
Liz McCormick and Christopher Condon – Bloomberg
Most dealers see note, bond auctions steady, TIPS increasing; ‘Treasury is pretty well funded now,’ says NatWest’s Gwinn
The world’s biggest bond market is set to get a reprieve from the past year’s torrid onslaught of ever-increasing auction sizes. Most Wall Street dealers predict Treasury Secretary Janet Yellen’s debt managers will hit the pause button for the next few months, after the department hoisted long-term auctions to unprecedented sizes the last three quarters to finance pandemic relief. Officials will announce their issuance plans on Feb. 3.

SPAC Listing Boom Drives Record $63 Billion January for IPOs
Julia Fioretti, Swetha Gopinath, and Crystal Tse – Bloomberg
Deal surge comes as soaring markets trigger bubble fears; Over 200 companies complete IPOs in record-breaking January
A record month for SPAC listings is helping power the busiest-ever start to a year for initial public offerings, in another sign of the investor frenzy that’s led to overheated markets around the globe. Special purpose acquisition companies have completed nearly $26 billion of share sales in January, surpassing the previous monthly record set in October, according to data compiled by Bloomberg. That’s helped fuel the $63 billion of IPO fundraising worldwide this year, more than five times the proceeds from the same period a year earlier.

Bond Market Is Jettisoning U.K. Negative-Rate Bets Ahead of BOE
James Hirai – Bloomberg
January 29, 2021, 11:00 PM CST
Money markets have priced out chance of sub-zero rates in 2021; Vaccine progress, Brexit deal have tempered economic pessimism
Traders are scrapping bets that the U.K. will implement negative rates this year, calling time on one of the most popular wagers of 2020 ahead of a Bank of England meeting that’s expected to address the debate.

Rogue Captain’s Mid-Ocean Detour Tips Investors to Crisis at Sea; How cargo ships turned almost overnight from the engines of global commerce into floating prisons.
Alastair Marsh – Bloomberg
Terence Tsai started hearing about the growing labor crisis in shipping in a roundabout way. First, in March, an official at a ship management company in Hong Kong let slip that a captain had purposefully diverted a vessel under its control into the middle of the ocean to protest the treatment of himself and his crew.

GameStop Short Nightmare Shows Few Signs of Becoming a Contagion
Lu Wang – Bloomberg
Barclays says short sales are too small to sway the market; JPMorgan calls pullback likely ‘short-lived technical tumble’
GameStop Corp.’s surge has struck fear into anyone caught on the wrong side of its ascent. But those bearish positions probably aren’t big enough to lay low the larger universe of investment funds. That’s the view of Barclays Plc strategists led by Maneesh Deshpande. By plotting the value of bearish equity bets versus the whole market’s capitalization, they found that short sales have actually dwindled during the past year to the lowest level since at least 2008. Moreover, those most-heavily shorted companies targeted by day traders this year had bearish wagers amounting to less than 0.001% of the $43 trillion market.

Short-Covering Frenzy More Concentrated Than Stock Moves Suggest
Cormac Mullen – Bloomberg
There’s been modest short-covering in least-loved small caps; JPMorgan strategist says short squeeze affects narrow universe
The bout of short-covering that roiled global markets last week looks highly concentrated in just a handful of small-cap stocks rather than a more extensive phenomenon.

Robinhood Narrows Trading Restrictions to Eight Companies
Yueqi Yang – Bloomberg
GameStop, AMC still among stocks with maximum holding limits; Robinhood has been under fire for its decision to limit trades
Robinhood Markets Inc. reduced the number of companies with trading restrictions to eight from 50, ahead of Monday’s trading session, according to an update on its website. The current list includes GameStop Corp., AMC Entertainment Holdings Inc., BlackBerry Ltd., Express Inc., Genius Brands International Inc., Koss Corp., Naked Brand Group Ltd. and Nokia Oyj.

GameStop is just latest sorry case of misallocated capital; Price-insensitive investors are driving an increasing disconnect within economies and markets
John Plender – FT
The trading frenzy in GameStop shares over the past week has provided further evidence of a yawning disconnect in markets. It is one more instance of a gap between Alice in Wonderland equity market valuations and the deeply uncertain outlook for profits and economies arising from the coronavirus

How the Stock Market’s Relentless Rise Saved Companies; When the pandemic hit, banks cut credit to businesses that suddenly looked risky. Investors happily stepped in, buying their stocks and bonds.
Emily Flitter, Matt Phillips and Peter Eavis – NY Times
Last spring, just as Denny’s was shutting down its nationwide chain of 24-hour diners for weeks of pandemic-induced lockdowns, its lenders were warning it to quickly pay down its debt — or else. With banks demanding prohibitively high interest rates, Denny’s leaders turned to the last clean, well-lighted place in corporate America: the stock market.

Wheels Up set to go public via Spac merger; Deal would give private jet charter start-up an enterprise value of $2.1bn
Stefania Palma – FT
A private jet charter start-up backed by investors including Serena Williams and Lance Armstrong plans to go public via a merger with a “blank cheque” company launched by the former head of the Asian division of a private equity firm co-founded by LVMH.

Environmental, Social and Corporate Governance

U.S. Oil Pushes ‘Clean Shale’ as Biden Mounts Climate Attack
Kevin Crowley, Rachel Adams-Heard, and Alix Steel – Bloomberg
Chevron, Pioneer say U.S. restrictions would boost oil imports; Shale’s carbon footprint better than peers but gas a concern
American oil executives began a pushback against some of President Joe Biden’s climate policies by making the case that fossil fuels from U.S. shale have a lower carbon footprint than imports.

The Hidden Gauge of U.K.’s Zero-Carbon Drive Is Sitting in Your Cellar; Boris Johnson will have to convince millions of people to switch to heat pumps—a technology most people haven’t heard of and many can’t afford.
Jess Shankleman – Bloomberg
Tired of the crowds and air pollution in London, Amy Willis bought an 18th century house in a Suffolk village two and a half hours away from the city and immediately started renovations. Two years later, she’s stuck on modernizing the heating system—and so is, in some sense, climate progress for the entire U.K.

The Benchmarks Countries Must Hit to Reach Net-Zero Emissions; Introducing a Bloomberg Green series that analyzes how countries plan to reach their carbon neutrality targets decades from now.
Laura Millan Lombrana – Bloomberg
Five years after French Foreign Minister Laurent Fabius gaveled the landmark Paris climate accord into force, the year 2050 looms large. That’s the deadline many countries have set to zero out the greenhouse gases they’re adding to the atmosphere.


Letter to Pimco Execs Alleges Discrimination Toward Women Employees; Former, current female employees request better pay and promotions for women
Justin Baer – WSJ
Current and former employees of Pacific Investment Management Co. wrote to the investment firm’s senior executives alleging a pattern of abusive and discriminatory behavior toward women and urging them to take steps to fix gaps in pay and promotions. The letter, which was signed by 21 women, was sent Thursday to Pimco’s top leaders, including its chief executive, Emmanuel Roman, and the firm’s investment chief, Dan Ivascyn. Three of the women who cosigned the document have filed lawsuits against Pimco in the past two years, alleging gender or racial discrimination. Pimco is fighting the lawsuits.

Loeb’s Third Point Made Money in January Amid Hedge Fund Turmoil
Katia Porzecanski – Bloomberg
Third Point’s flagship fund gained 1.9% in month, update shows; Hedge funds hit with losses betting against GameStop, AMC
Hedge fund titan Dan Loeb managed to make money in January, despite the tumult caused by amateur traders that imposed bruising losses on several of his industry peers. Loeb’s Third Point Offshore Offshore Fund gained 1.9% this month, according to an investor update seen by Bloomberg. His Third Point Partners LP fund gained the same amount, the update showed. A spokeswoman for the firm declined to comment.

Steve Cohen Shuts Down Twitter Account After Receiving Threats
Yueqi Yang – Bloomberg
Billionaire caught up in hedge fund tussle with Reddit traders; Joined Twitter to engage with Mets fans after buying team
Steve Cohen, the billionaire founder of investment firm Point72 Asset Management and owner of the New York Mets, said he closed his Twitter account after his family received personal threats this week. “I’ve really enjoyed the back and forth with Mets fans on Twitter which was unfortunately overtaken this week by misinformation unrelated to the Mets that led to our family getting personal threats,” Cohen said in a statement Saturday. “So I’m going to take a break for now. We have other ways to listen to your suggestions and remain committed to doing that.”

Julius Baer CEO Hints at Search for Megadeals to Boost Scale
Patrick Winters and Marion Halftermeyer – Bloomberg
Purchase that adds 100 billion francs of assets is possible; Baer to focus on organic growth this year and next, CEO says
Julius Baer Group Ltd. Chief Executive Officer Philipp Rickenbacher gave his strongest hint yet that the Swiss bank is seeking a deal big enough to rival its 2012 acquisition of Bank of America Merrill Lynch’s international wealth management operations.

Hargreaves Lansdown benefits from wave of young retail traders; Average age for users on UK’s largest investment platform falls to 37, from 45 in 2012
Harry Dempsey – Ft
Hargreaves Lansdown reported a jump in first-half profits, helped by a rush of younger users joining the UK’s largest investment platform while under tight coronavirus restrictions.

What is a buffered ETF? The products use derivatives to insure against losses but also feature a cap on potential gains
Steve Johnson – FT
Buffered, or defined outcome, ETFs, which aim to protect investors from the worst stock market ravages, do not own any underlying shares. Instead they build a package of derivatives of “flexible exchange”, or flex, options.

Melvin Capital Lost 53% in January, Hurt by GameStop and Other Bets; Citadel, its partners and Point72 took losses from their investment in the hedge fund
Juliet Chung – WSJ
Melvin Capital Management, the hedge fund that has borne the brunt of losses from the soaring stock prices of heavily shorted stocks recently, lost 53% on its investments in January, according to people familiar with the firm.


Bubble fears grow as China fund launches attract huge inflows; Growth opportunities leave asset managers struggling to satisfy demand for new products
Chris Flood – FT
China’s mutual fund industry assets surged 48 per cent to a record $3.1tn (Rmb20tn) in 2020 but huge demand for new funds is stoking fears that volatile investor inflows could spur a stock market bubble.

Dubai Demands Joint Stock Firms List on Local Exchanges
Filipe Pacheco and Abeer Abu Omar – Bloomberg
Public joint stock companies established in Dubai, including those set up in special economic zones or free zones like the Dubai International Financial Centre, must list their stocks on local exchanges, the city’s media office said, citing a royal decree.

SNB Raises Government Payout to $6.7 Billion After Bumper Profit
Catherine Bosley – Bloomberg
The Swiss National Bank will pay the government as much as 6 billion francs ($6.7 billion) a year, as part of a revised agreement regarding the profit it generates on its vast foreign exchange reserves. The SNB said that the base amount for the federal government and the cantons will be 2 billion francs per annum. It can distribute up to 4 billion francs additionally, if its profit for a given year is high enough.

Erdogan Removes Two Deputy Finance Ministers, Appoints Adviser
Inci Ozbek – Bloomberg
Turkish President Recep Tayyip Erdogan replaced two deputy finance ministers in another reshuffle of policy makers. Deputy finance ministers Osman Dincbas and Bulent Aksu were removed, and will be replaced by Cengiz Yavilioglu and Sakir Ercan Gul, according to a presidential decree published in the official gazette on Saturday.

London IPOs Drive Europe’s Listings Boom With New Crop of Deals
Swetha Gopinath – Bloomberg
MGC Pharmaceuticals readies LSE’s first medical cannabis float; Auction Technology Group, Digital 9, NextEnergy line up IPOs
February is shaping up to be another busy month for London listings, building on its best start to a year since the global financial crisis as four firms laid out plans Monday for U.K. initial public offerings.

India Cuts Gold Import Tax to Curb Price Surge, Illegal Inflows
Swansy Afonso – Bloomberg
Import duty on gold and silver reduced to 7.5% from 12.5%; India imports almost all of the gold that it consumes
India cut an import tax on gold as prices rallied to record highs last year and to curb inflows of illegal supplies in the world’s second-largest consumer. Prices have run up sharply since the tax was last raised in 2019, Finance Minister Nirmala Sitharaman said in her annual budget speech in New Delhi on Monday, while cutting the basic customs duty on bullion imports to 7.5% and imposing an additional tax of 2.5% to support agriculture.

India’s reversal of markets-based policies will hinder recovery; Higher tariffs and looser bankruptcy rules will not help the post-Covid economy
Urjit Patel – FT
India’s economy is experiencing the worst contraction in decades as a result of coronavirus. But even if the threat of the virus fades, India’s medium-term growth prospects will be hindered by two policy reversals that predate the pandemic. Both have systemic consequences.

S Korea politicians back short-selling ban to help retail investors; Thousands sign petition calling for permanent bar on bets against stocks
Song Jung-a Tabby Kinder and Hudson Lockett – FT
South Korean politicians are pressuring financial regulators to extend a ban on short selling in a bid to win the votes of retail investors, who have piled into markets ahead of important by-elections in April.

China to Widen Fight Against Monopolies to the Giant Gig Economy
Bloomberg News
It’s unclear which sectors targeted in top-level action plan; Beijing is stepping up a campaign to rein in private firms
China pledged to deepen antitrust enforcement across emergent sectors including on-demand internet services, broadening a campaign to rein in the growing power of private firms. China “resolutely” opposes monopolies and unfair competition and will step up regulation in sectors such as platform businesses, according to a plan released by the general offices of the powerful Communist Party Central Committee and the State Council, the cabinet.


EU regulators flexible but want to see progress on staff moves; Banks keep options open as talks for EU access continue
Stefania Spezzati and Steven Arons – Bloomberg
Young bankers waiting to learn when or whether they might be relocated to the European Union can take some solace from the fact that oftentimes, their bosses also don’t know their own fate. A senior banker hired to work in London last year was asked just weeks later to pack his bags and move to Europe. Some trading managers at one U.S. bank still don’t know whether they’ll be able to stay in the U.K., while a young trader starting a new job at a European lender this month is waiting to learn just where that job will be.

Brexit one month on: what has changed? The FT looks at five areas of disruption since Britain left the bloc’s single market
Peter Foster, Judith Evans and Daniel Thomas – FT
It is now a month since Britain departed the EU single market and customs union, marking a once in a generation shift in the UK’s trading relations with the bloc.

Brexit: EU introduces controls on vaccines to NI
John Campbell – BBC News
The EU is introducing controls on vaccines made in the bloc, including to Northern Ireland, amid a row about delivery shortfalls. Under the Brexit deal, all products should be exported from the EU to Northern Ireland without checks. But the EU believed this could be used to circumvent export controls, with NI becoming a backdoor to the wider UK. NI First Minister Arlene Foster described the move as “an incredible act of hostility” by the EU. The EU invoked Article 16 of the Northern Ireland Protocol which allows parts of the deal to be unilaterally overridden.

EU Reopens Brexit Wounds With Irish Border Vaccine Curbs
Ian Wishart, Alberto Nardelli, and Dara Doyle – Bloomberg
Less than a month after the U.K.’s deal with the European Union took effect, the bloc considered invoking its emergency clause as part of its plan to control the export of Covid-19 vaccines and tempers have flared. The EU’s action may tamper with one of the most sensitive part of a divorce deal that took 3 1/2 years of painful negotiation: The Irish border. By ushering in temporary export vaccine controls between the EU and Northern Ireland, it would stop doses produced in the bloc arriving in mainland Britain via Belfast.

‘The best advert for Brexit’: European press reacts to EU Covid vaccine row
Sam Jones – The Guardian
Many EU countries may have more than enough to deal with domestically – from surging Covid cases in Portugal to forthcoming regional elections in Spain and political turmoil in Italy – but the events of Friday night, and of the preceding few days, have not gone unremarked in the European press. Fears over delays in receiving vaccines and questions over procurement and investment were all brought into uncomfortably sharp focus over the weekend after the EU’s messy announcement of potential export controls on vaccines produced within the bloc. Germany’s Die Zeit said the European commission had unwittingly provided “the best advertisement for Brexit: it is acting slowly, bureaucratically and in a protectionist manner. And if something goes wrong, it’s everyone else’s fault.”

UK manufacturing ‘close to stalling’ as Brexit and Covid hit supplies; Delivery times in January were among the longest in 30 years, according to purchasing managers’ index
Valentina Romei – FT
Supplier delivery times for UK manufacturers grew to one of the longest levels in the past three decades in January as Covid-19 restrictions and Brexit disruptions constrained factory production. The IHS Markit/Cips purchasing managers’ index, a weighted average of businesses’ assessment on output, new orders, employment, suppliers’ delivery times and stocks of purchases, fell to a three-month low of 54.1 in January, down from December’s three-year high of 57.5. The reading was higher than initial estimates of 52.9 and well above the 50 mark, which indicates a majority of businesses reporting improvement. However, the headline figure was distorted by the lengthening of supplier lead times, which apart from April 2020 was the highest registered in the survey’s near 30-year history.


Bellingcat’s Eliot Higgins: ‘We’re on the precipice of the misinformation age’; The internet investigator on his ‘people’s intelligence agency’, unmasking Navalny’s poisoners — and why he isn’t another Assange
Henry Mance – FT
“Ten years ago I would have found a call like this unbearable,” Eliot Higgins tells me. It’s not the most promising basis for a relaxed lunch. When Higgins was young, he felt everyone was watching him. He was too nervous to speak up, too self-conscious to go to the pub. Even now, aged 42, he struggles to stress how extreme his anxiety was: “really terrible”, “really severe”, “tremendous”.

Man City’s Big Winter Signing Is a Former Hedge Fund Brain; The Premier League club is escalating the analytical arms race in Europe’s richest soccer competition.
David Hellier and Adam Blenford – Bloomberg
English Premier League soccer club Manchester City are well-known for spending big in their pursuit of trophies. Yet this winter’s key signing is not a new striker or a commanding defender, it’s a hedge fund veteran with a doctorate in astrophysics.

The Religious Roots of Our Free Enterprise System
Alan Wolfe – NY Times
By Benjamin M. Friedman
What does an esoteric concept like Calvinist soteriology have to do with the rise of modern economics? Does laissez-faire have its roots in the arcane Quinquarticular Controversy? Can one find the origins of the welfare state in postmillennialist eschatology?

Hedge fund manager hit in GameStop frenzy is developing $44M Miami mega-mansion
Lee Brown – NY Post
The hedge fund manager hit hardest by the GameStop trading frenzy is in the middle of a major redevelopment of a $44 million mega-mansion in Miami — despite his company losing $4.5 billion in the mania, according to a report.

Steve Mnuchin’s wife stars as hedge fund manager, serial killer in new movie
Jon Levine – NY Post
Louise Linton, the wife of former Treasury Secretary Steve Mnuchin, will star as a psychotic hedge fund manager and serial killer in a new flick that she also wrote and directed. “Me You Madness” tells the deliciously wicked tale about a beautiful, ruthlessly ambitious, intelligent, and successful businesswoman,” reads an official movie synopsis.

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CME to permanently close most trading pits

CME to permanently close most trading pits

First Read $40,626/$300,000 (13.5%) Anonymous ++++ Hits & Takes John Lothian & JLN Staff Without fanfare or amplification from its executives, the CME Group shut the books on most -- but not all -- of its floor trading history Tuesday afternoon with the...

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