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The Economy

Discussion in 'Sports and News' started by TigerVols, May 14, 2020.

Page 23 of 462
  1. Baron Scicluna

    Baron Scicluna Well-Known Member

    Just don't bring up the topic of Laura Loomer.
     
    Baron Scicluna, Aug 14, 2020
    #265
    maumann likes this.
  2. The Big Ragu

    The Big Ragu Moderator Staff Member

    The Big Ragu, Aug 24, 2020
    #266
  3. The Big Ragu

    The Big Ragu Moderator Staff Member

    Leon Cooperman, come on down.

     
    The Big Ragu, Aug 25, 2020
    #267
    TigerVols likes this.
  4. 2muchcoffeeman

    2muchcoffeeman Well-Known Member

    That answers that question.

    Japan's SoftBank was reportedly the "Nasdaq whale," that bought billions of dollars in individual stock options in big tech companies over the past month, driving up volumes and contributing to a trading frenzy.

    Softbank declined comment on a Financial Times story that quoted unnamed sources who said it was buying equity derivatives on a massive scale. Rumors had circulated in the market that there were large players behind the frenzied activity in the options market for big tech and internet stocks, and SoftBank was one named mentioned in connection with extreme volumes in some out-of-the-money calls.


    SoftBank, through its $100 billion Vision Fund, has made big investments on privately held technology start ups. The big investments in the options market is new territory for the investment firm.

    Investors have been watching extraordinary activity in out-of-the-money calls which some analysts had seen as a contrarian warning about a pending Nasdaq sell off. Some of the names with high amounts of activity, include Apple, Tesla, Zoom, and Nvidia.

    According to the Wall Street Journal, SoftBank had made regulatory filings showing it bought nearly $4 billion in shares of Amazon, Microsoft, and Netflix, plus a stake in Tesla. The paper quoted a source saying that SoftBank spent roughly $4 billion buying call options tied to its stock holdings, but also in other names. It then could profit from the run up in stocks and subsequently unload its position to other parties.

    SoftBank was trading in names that are among the key drivers of the stock market. Apple, Amazon , Microsoft, Facebook and Google equal about a quarter of the S&P 500, and they have been drivers of a big chunk of its gains. One options trader explained that those names can be proxies for the market, and can be hedged against the S&P 500 and vice versa.
    …
    "It's just a trip to the casino," said Peter Boockvar, chief investment officer at Bleakley Advisory Group. "If they're supposed to be an investment company taking a long-term horizon, then trying to juice your short-term return through options, you've turned into a hedge fund."

    Boockvar said the question now is whether SoftBank unloaded its positions. "We'll see if they're reversing it. A lot of the call buying was an upward lift to the market. The sellers of those calls, then had to buy stocks and hedge and it becomes a self-fulfilling prophecy on the upside," he said.

    The Financial Times said the trading volumes in single stocks had surged beyond the average daily volumes of calls on the broader stock market indices.

    Traders had been monitoring the unusual activity, which may help explain why the stock market had been climbing at the same time the VIX was rising. …

    Tech investor Roger McNamee said the SoftBank report was disturbing. "If it's true that SoftBank is doing that, it would be more signs that the fundamental picture here is decoupled from stock prices," he said on CNBC.​

    Softbank identified as the 'Nasdaq whale' that bought billions in stock options, betting on higher prices for the biggest names in tech
     
    2muchcoffeeman, Sep 5, 2020
    #268
    maumann likes this.
  5. DanOregon

    DanOregon Well-Known Member

    DanOregon, Sep 5, 2020
    #269
    maumann likes this.
  6. maumann

    maumann Well-Known Member

    maumann, Sep 5, 2020
    #270
  7. wicked

    wicked Well-Known Member

    I think SoftBank also owns a sizable chunk of Gannett/Gatehouse.
     
    wicked, Sep 5, 2020
    #271
    maumann likes this.
  8. The Big Ragu

    The Big Ragu Moderator Staff Member

    This can not possibly end well. You are talking about billions of dollars of a reckless leveraged, gamma momentum derivatives trade that they are still not (likely) out of. And now the whole world knows what the gamma strategy was. When the books get written about this later, it is going to have several legs to it. 1) The money manager who is in charge of Softbank's new "asset management" team who came up with this genius gamma strategy. 2) The high frequency trading operations that are simply monkey see, monkey do operations, and 3) The retail investors who piled into the market with their "stimulus checks."

    This guy at Softbank, apparently lit the fire by using billions of dollars (of "cheap money" -- this is what central banks create) to stoke a feeding frenzy among the high frequency traders (which create momentum). That created the gamma short squeeze that started stocks moving relentlessly higher -- a panic buying melt up. Namely Tesla, Amazon, Apple and some other tech names. Then retail investors piled in, because. ... well that is what they do. Everyone was getting rich. ... on paper.

    To answer Peter Boockvar's question about whether Softbank has unloaded its derivatives. ... the evidence is that the answer is no. According to to the FT story, they are still sitting on a (for the time being) hugely profitable position -- something like $4 billion in profits, which is roughly what they risked on call premiums over the last few months. Implied volatility hasn't moved an inch, which does suggest that they are probably still in their trades and have no booked their profit.

    But. ... now that everyone knows what the deal was, and what exactly (other than all of the cheap money that created the unhinged speculation) caused the stock market nuttiness, it's only a matter of time until Mr. Market imposes maxium pain on them. The way that plays out. ... the dealers who were counterparties to all of that call option buying had to buy the corresponding stocks (what sent the stock market into orbit). As they dump those stocks -- and it is more likely to be all at once, in a disorderly way -- you are going to get the mirror image of the melt up. Softbank knows this -- with this story now public-- so if they are still in the trade, as it seems likely, they will be thinking that unless they book their profit (which is only on paper) ASAP, they lose the profit, eat the option premium and get hammered as the inflated stock prices fall.

    The bogey in all of this, is that Softbank is a creation of the Japanese Central Bank -- I have posted about them and Masa San on here over the last several years and all of the misallocated capital those idiots were responsible (the idiots being the Bank of Japan and the Federal Reserve) -- and this is so huge, and is going to be such a mess that the central banks are likely now to do a "Too big to fail" and intervene, so they can save the world once again from financial ruin. ... If that happens, once again, the arsonists will ride in on the fire truck to put out the fire (with the same results yet again), as they put the real economy further into a coma.
     
    The Big Ragu, Sep 6, 2020
    #272
    maumann and TigerVols like this.
  9. maumann

    maumann Well-Known Member

    Just like 2020 to throw a stock market crisis on top of everything else.
     
    maumann, Sep 6, 2020
    #273
  10. Michael_ Gee

    Michael_ Gee Well-Known Member

    Autumn is the traditional time for Wall St. problems. Doesn't mean it'll happen this year, but it's like hurricane season, this is when you have to pay attention.
     
    Michael_ Gee, Sep 6, 2020
    #274
    maumann and MileHigh like this.
  11. MileHigh

    MileHigh Moderator Staff Member

    On top of the stock market crisis we already had and the market rebounded. This year is not even three-fourths over and there is more turmoil to come.
     
    MileHigh, Sep 6, 2020
    #275
    maumann likes this.
  12. Twirling Time

    Twirling Time Well-Known Member

    I'm sorry, but any publication with triple gamma references better have a Big Ass Explosion™ attached to it.
     
    Twirling Time, Sep 6, 2020
    #276
    maumann likes this.
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