What if David had a few Goliaths in his corner?
WSB are back in the headlines after switching their focus to the silver market...
The silver short squeeze is ON, with the frenzy pushing silver prices up ~10% in the first hour of London trade.
But who's actually behind it?
Amongst all of the mania, everyone has played right into Citadel's hands
The WSJ reports that Citadel handled 29% of GameStop trading volumes Monday through Thursday last week.
“We witnessed an extraordinary level of retail trading last week,” a Citadel Securities spokesperson said. “At many times over the course of the week, the large brokerage firms depended upon our capabilities to handle the deluge of orders.”
This is not 'sticking it to the man'...
Melvin Capital DID lose 53% in January, but it looks like Gabe Plotkin will scrape by...
S3 partners report that short interest in $GME has declined to $30B 'as short sellers trim and liquidate their holdings'...
The volatility in memestocks is likely to remain, although the scales are re-balancing and the 'easy' money has been made.
There are still big questions over the scale of WSB involvement in this.
The David vs Goliath narrative is compelling, but it's hard to shake the suspicion that they are mere pawns in a bigger game...
Ah yes. Chamath.
He made a lot of noise about Robinhood and their integrity on Twitter and his podcast, and criticized their practice of using payment for order flow to make money...
Chamath is looking to take a Robinhood rival (SoFi) public so his interests aren't exactly neutral...
And there's this too...
Hedge Fund Positioning
Goldman are worried - JP Morgan see an opportunity to BTFD...
“Despite this active deleveraging, hedge fund net and gross exposures on a mark-to-market basis both remain close to the highest levels on record, indicating ongoing risk of positioning-driven sell-offs.” - Goldman Sachs
“Although the short squeeze started with GME, it appears to be spreading to a wider range of stocks. While we expect some more deleveraging, ultimately the scale of the problem appears quite limited.”
“We remain optimistic that it is likely to remain localized... The bottom line is that while the pain could continue in the short term, the risk of a full-fledged contagion remains low.”- Barclays
“While Russell 2000 stocks, where many companies with high short interest are included, saw a sharp decline in their short interest in recent days, at an aggregate level of all U.S. stocks there was little change in short interest"
“In other words, the short squeeze reflects a narrow universe of smaller U.S. stocks rather than a broader market shift.” - JP Morgan
A “short-lived technical tumble.” - Also JP Morgan
China's Growth Slows - Credit Tightens
Latest PMI data was slightly disappointing - growth in services and manufacturing came in below expectations and prior readings.
“The recent localised epidemic has had a certain impact on the production and operation of some enterprises, and the overall expansion of the manufacturing industry has slowed,” said Zhao Qinghe, an official at the statistics bureau.
This is perhaps expected, with new coronavirus restrictions both in China and abroad, it would be hard to maintain the previous growth rate.
However, it comes as China's central bank tries to de-lever the economy, alongside a recent spike in overnight lending rates...
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Eurozone Will Never Hike Rates Again
“I can’t say when a rate increase will come, but what I can say is that a hike in the current environment would have a devastating impact and nobody should want that,” ECB's Schnabel
How long will the 'current environment' last and what can they do to change it?
“The ECB and the Eurosystem have many excellent monetary economists, so everything is considered at some level,”
“But these measures are not part of our current toolbox. Our active toolbox is a combination of our short term rates, asset purchases, targeted lending and our forward guidance.” - ECB's Lane
It's working wonderfully so far Philip.
Will Italy follow the U.S' lead and bring a former central banker into government?
Reuters report that Draghi could return to the spotlight by leading an Italian coalition...
UK Recovery Plans
The UK is set to formally apply for trans-Pacific trade bloc membership this week.
The government said joining CPTPP would remove tariffs on food and drink and cars, while helping to boost the technology and services sectors.
“Applying to be the first new country to join the CPTPP demonstrates our ambition to do business on the best terms with our friends and partners all over the world and be an enthusiastic champion of global free trade,” Johnson said.
The FT also reports that Johnson and Sunak are drawing up plans for the post-Covid recovery
The plan will be published in the week starting February 22, said government officials, as the prime minister releases a “road map” out of the current Covid-19 lockdown in England and starts to set out proposals to rebuild the economy.
Mr Sunak will use his March 3 Budget to provide more details of his medium term strategy and what he hopes will be the final phase of the emergency government support for the economy that has so far cost £280bn.
State support programmes for companies and households are currently due to expire at the end of March or — in the case of the furlough scheme the end of April — and Mr Sunak is expected to use his Budget to extend them until the economy is able to reopen.
“Rishi is expecting this to be the last time he talks about the immediate term support package,” said one of the chancellor’s allies.
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.”
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