Astounding news!  

Apparently, rich people have been the big winners in the Gamestop story...

Who would have thought it?!

The mania extended to silver yesterday, although no-one seems sure if this is genuinely WSB driven or a strange self-fulfilling feedback loop.

Either way, silver gapped up from ~$27 yesterday, advancing to $30 before retreating back to the $28-$29 band, dipping below $28 this morning.

Silver miners were dragged along for the ride, and physical sellers of bars and coins were overwhelmed by the surge in demand...

Some venues sold out, while others traded at a premium...


All of this led to the CME raising margin requirements to trade silver futures.

An increase of 18% (to $16,500 per contract from $14,000) based on “the normal review of market volatility to ensure adequate collateral coverage,”

Once again, this squeezes out 'the little guy' trading on margin.

There's not been the same backlash though - it's a common response in commodity markets when volatility picks up - no-one is actively stopped from trading, although some may be priced out...

What's the difference?

The FT has a great report on the role of clearing houses - here are the key snippets...

In common with rivals such as Schwab and ETrade, Robinhood clears its own trades and is a member of the main US equities clearing house, run by DTCC.
While self-clearing saves on the fees that would otherwise go to another clearing broker, it also means Robinhood takes on the risk that an executed trade does not settle, and needs to have more cash on hand to cover shortfalls.
It also faces higher costs if the clearing house raises margin requirements in volatile periods to protect against a member default.
Between Wednesday and Thursday, the margin call from DTCC across the US equities market rose from $26bn to $33.5bn, the clearing house confirmed.
DTCC said the frenzied trading in shares such as GameStop and AMC Entertainment “generated substantial risk exposures at firms that clear these trades . . . particularly if the clearing member or its clients are predominantly on one side of the market.”
“The extreme volatility is a big factor behind this,” said Andy Nybo, managing director at Burton-Taylor International Consulting. “They need to make sure they are able to meet cash requirements, whether it is for clearing or to investors that are owed money due to trading activity.”
As Robinhood said in a blog post on Thursday, the requirements “can be substantial in the current environment.”

So substantial that Robinhood have realised they are under-capitalised?

Doubt they would admit it but raising $3.4 billion from investors in the past few days certainly suggest that's the case...

Hanlon's Razor springs to mind

"Never attribute to malice that which can be adequately explained by stupidity or neglect"

Can we stop with the Wall Street conspiracy stories now?

Von Der Leyen Blames EU Trade Chief for Vaccine Export Gaffe

“What I can tell you is that there is one cabinet which was lead on this, that is Executive Vice President Valdis Dombrovskis because he is in charge of trade,” the commission’s chief spokesman Eric Mamer told reporters in Brussels on Monday.
“This regulation falls under the responsibility of Mr. Dombrovskis and his cabinet and of course the services of the commission which respond to him.”

Who needs enemies with friends like these...?

The EU have fumbled the vaccine supply completely, tried to deflect blame and even re-imposed the Irish border before hastily removing it again...

The saddest thing is that all of this could have been avoided...

Back in June, German health minister Spahn forged a vaccine alliance with France, Italy and the Netherlands.

The goal was to secure as many doses as possible, and on June 13, the group signed a preliminary contract with AstraZeneca for 400 million shots.

What could have been good news raised alarm bells in Berlin and Brussels.

Ursula von der Leyen asked the chancellery to stop Spahn’s alliance.

Merkel’s former defense minister made it clear to the chancellor that Spahn’s effort could overshadow Germany’s EU presidency.

As a committed multilateralist, she didn’t want to be remembered for saving Germans at the expense of the rest of the EU.

There is one guaranteed formula for failure: trying to please everybody.

VDL is unlikely to pay the price, even as others reap the benefits of their vaccine success...

On that front, there is reason to be positive...

Over 100 million vaccine doses have been given worldwide...

Israel are leading the way by a distance with 55 doses delivered per 100 people

Say it quietly, but it seems to be working...

Utrust are making crypto payments easy

Whether you want to receive crypto payments for your business or simply spend crypto on everyday items, Utrust is the solution for you...

Chinese diplomat calls for China, U.S. to mend relations

Yang Jiechi, director of the Central Foreign Affairs Commission of the Chinese Communist Party, is the highest ranking Chinese leader to speak on China-U.S. relations since President Joe Biden took office.

“The United States should stop interfering in Hong Kong, Tibet, Xinjiang and other issues regarding China’s territorial integrity and sovereignty,”
“We in China hope that the United States will rise above the outdated mentality of zero-sum, major-power rivalry and work with China to keep the relationship on the right track,”
“no conflict, no confrontation, mutual respect and win-win cooperation.”

Nothing new in the comments - perhaps coming from a senior diplomat will ratchet up the pressure on Biden to take a defined stance.

Stimulus negotations will arguably take precedent, as Democrats push on with their $1.9 trillion budget proposal.

Yesterday's meeting with 10 Republicans was described as productive, without yielding a breakthrough.

Biden “reiterated that while he is hopeful that the Rescue Plan can pass with bipartisan support, a reconciliation package is a path to achieve that end,”

Reuters report that the Republican plan offers no assistance to state and local governments, one of the items that a Biden adviser described as “must-haves” for Democrats in Congress.

According to details released by the lawmakers, the Republican proposal also falls short on another must-have by offering only $1,000 in direct payments to Americans, compared with the $1,400 sought by Biden.

While we're on politicians and budgets, the FT report that Sunak agrees to tie own hands and stick with Tory ‘triple tax lock’

The Chancellor will not raise rates of income tax, national insurance or VAT...

However, he does want to address the deficit which suggests he will seek increases in other taxes, including corporation tax and possibly capital gains tax.

Little is expected at the March budget with more focus on the recovery, so the November budget is likely the one to watch.

Many Tory MP's are not in favour of increasing CGT, claiming it would be “a tax on entrepreneurs”....

RBA Expands QE- Doesn't Expect To Raise Rates Until At Least 2024

The RBA will extend the bond-buying program by another A$100 billion when the current program ends in April.

These additional purchases will be at the current rate of $5 billion a week.

Targets of 0.1% for the cash rate and the yield on the 3-year Australian Government bond, as well as the parameters of the Term Funding Facility will also be maintained.  

Whilst GDP is expected to return to its end-2019 level by the middle of this year and grow by 3.5 per cent over both 2021 and 2022, the RBA note that the economy will operate with 'considerable spare capacity for some time to come'.

Both inflation and wages growth are expected to pick up, but to do so only gradually, with both remaining below 2% over the next couple of years.

In underlying terms, inflation is expected to be 1.25 per cent over 2021 and 1.5 per cent over 2022.

The unemployment rate remains higher than it has been for the past 2 decades and while it is expected to decline, the central scenario is for unemployment to be around 6 per cent at the end of this year and 5.5 per cent at the end of 2022.

The RBA has previously indicated that it sees the NAIRU (Non-accelerating inflation rate of unemployment) at ~4.5%.

  • The Board will not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range.
  • For this to occur, wages growth will have to be materially higher than it is currently.
  • This will require significant gains in employment and a return to a tight labour market.
  • The Board does not expect these conditions to be met until 2024 at the earliest.

Diginex Enters into Strategic Partnership with GSR Markets

Excellent news for crypto traders!

As part of the strategic partnership, GSR will become a shareholder in Diginex and one of the main liquidity providers for EQUOS, Diginex’s crypto exchange.

Richard Byworth, CEO of Diginex, commented:

“As an exchange that avoids the conflict of interest of making markets against its own participants, the partnership with GSR is key to growing the depth and liquidity in all our trading pairs.
GSR are one of the largest market makers in crypto and crypto derivatives, so longer term the partnership will evolve more broadly into liquidity provision around key offerings like options, structured products and borrowing and lending.
“Since the launch of our BTC Perpetual product, we have seen a meaningful increase in activity on EQUOS, with overall volumes increasing over 2.5 times on an average daily basis, compared to December levels.
We anticipate that with GSR onboard and the additional depth they will bring to our books, we will continue to see volumes increase meaningfully as liquidity and spreads improve.”

Looking like another positive day for Bitcoin, and risk markets in general...