Thank you Bakers.
Fact Checks; Trending on Snoops Right Now
Robinhood Caps Maximum Holdings In 36 Stocks To Just One Share
by Tyler Durden - Friday, Jan 29, 2021 - 16:59
''Something bad is about to go down at Robinhood.''
One day after the company drew down on its bank lines and obtain a $1 billion rescue capital investment, the company found itself in lockdown mode, allowing just a handful of shares to be bought at a time, effectively shutting down in all but name (it couldn't risk another day of furious public outcry and massive client departures if it blocked trading completely).
However, just before the close, things got downright surreal when in a blog post the broker - which should probably change its name from Robinhood to Suit - made a shocking announcement: going forward, customers will be subject to maximum aggregate limits in 50 securities of which 14 are capped at position limits of just 5 shares, while allowing total holdings in 36 securities to be just one share!
In other words, as of this moment, no client is allowed to one more than 1 share in names like GME, AMC, AG, BBBY, BYND, WKHS and many others. Even boring, low vol names like GM and SBUX are limited to just one share.
This is what the blog post said:
"The table below shows the maximum number of shares and options contracts to which you can increase your positions. Please note that these are aggregate limits for each security and not per-order limits, and include shares and options contracts that you already hold. These limits may be subject to change throughout the day."
Panicked clients who are wondering if this means that their current holdings which exceed 1 laughable share will be forcefully liquidated can breathe for now: the company said that "outside of our standard margin-related sellouts or options assignment procedures, your positions will not be sold for the sole reason that you are currently over the limit. However, you will not be able to open more positions of each of these securities unless you sell enough of your holdings such that you are below the respective limit." (we expect that to change on Monday, if the company is still around.)
In other words, virtually nobody can buy any new securities.
The company also disclosed that no fractional shares can be bought going forward as "fractional shares are currently position closing only for all of the securities listed in the table above. This means you can sell and close your fractional positions, but you can't open new fractional positions. However, you can still open new whole share positions according to the limits listed above."
Why is this happening? The most likely reason is that between DTC, clearinghouses and other regulatory entities, Robinhood was found to be in another capital deficiency position - even with the billions raised overnight - and it is being forced to delever.
This likely means that Robinhood is as of this moment, scrambling to obtain even more capital, although we somehow doubt it will be just as easy to "take from the rich" as it was late last night especially since the client exodus is surely accelerating.
It also means that we may have to have another "Lehman Weekend" situation on our hands, only this time it will be a "Robinhood Weekend", and an urgent acquisition from a strategic buyer may be required to prevent the worst case outcome. We only hope that the billions in funds held in custody for clients is segregated should the company collapse (pinging Jon Corzine here).
In any case, expect a lot of Robinhood related news over the weekend.
https://www.zerohedge.com/markets/robinhood-caps-maximum-holdings-36-stocks-just-one-share
continued
And as a postscript, while we expect that the turmoil will be contained at Robinhood, whether in the form of new capital infusion, a takeover, or bankruptcy, there is the possibility that the liqudity shortfall goes as far as the clearinghouses. What happens then? Below we excerpt from a monthly letter written by Horseman's Russell Clark who had a good recap of "what if":
Pre-financial crisis, banks and clearinghouses were part of one big and messy system. Banks mainly traded with other banks as it was cheaper, but every now and then they would trade through a clearinghouse. There were two types of trades. Circular trades, which are trades where each bank has a position, but the system has a flat position, and directional trades, where the system would match up buyers who wanted to take a view on future movements of financial markets. Directional trades are more dangerous; risk will be less evenly distributed as it will have no offsetting trades.
When Lehman went bust, LCH, the biggest interest rate derivative clearinghouse, found they only needed one third of the initial margin to cover losses. This encouraged regulators to move clearinghouses to the center of the financial system. However, this has caused two big problems.
Firstly, clearinghouses have no real "skin in the game". They act like a bookie, that takes bets from punters, and transfers money from winners to losers. But how much risk should they take? What is the correct level of initial margin? Clearinghouses used to piggyback on bank's risk measures, but without banks to guide them, how should they set risk? Clearing houses and regulators chose to use a backward-looking model, with risks set from market data from between 3 and 10 years in the past. This has caused the markets to have a built-in momentum model which amplifies cycle both ways. Hence, many of the normal trading rules don't apply. There will be no signs of problems in the market until right at the last moment. Markets are no longer discounting mechanisms and have become more akin to momentum models.
Secondly, banks are now deeply capital constrained, and at the start were very reluctant to move old trades to a centrally cleared model. This problem was resolved through a carrot and stick approach. The stick is uncleared trades carry a capital charge, and the carrot is that the exchanges offer very attractive "netting". What netting means is that banks can give details of all their trades to a third party, and any circular trades can then be netted off thus requiring less margin. LCH claim to have done a quadrillion of compression trades or netting in the last year, this is more than twice the notional of all outstanding interest rate derivatives.
The problem should be apparent. Clearinghouses were safe because, if there was a problem, the circular trades netted off on settlement. But by aggressively netting off at the margin stage they are no longer as safe. In fact they are very risky. This was highlighted by the near failure of a small clearinghouse in Europe last year. Using BIS data on the penetration of central clearing, and pricing of interest rate derivatives as a proxy of initial margins, I would say that initial margin in the system needs to rise by about 6 times to make the system "safe". Looking at previous periods of rising initial margins in 2000-2002 and 2007-2009, the pro-cyclicality of claringhouses should be obvious.
Finally, cash hoarding and repo market problems could be a sign of counterparties beginning to worry about clearinghouses. If initial margins rise significantly, the only assets that will see a bid will be cash, US treasuries, JGBs, Bunds, Yen and Swiss Franc. Everything else will likely face selling pressure. If a major clearinghouse should fail due to two counterparties failing, then many centrally cleared hedges will also fail. If this happens, you will not receive the cash from your bearish hedge, as the counterparty has gone bust, and the clearinghouse needs to pay from its own capital or even get be recapitalised itself. One way to think about it is that the financial crisis only metastasized when MG failed, because at that point, everyone suddenly became un-hedged, and everyone needed to sell.
https://www.zerohedge.com/markets/robinhood-caps-maximum-holdings-36-stocks-just-one-share
Could #WallStreetBets Be The Early Innings Of A Financial Arab Spring?
Authored by Mark Jeftovic via BombThrower.com,
WSB’s “Army” plan to target “Silver suppression” next
It’s been mere hours since Charles Hugh Smith, Jesse and I finished off our AxisOfEasy Salon 36: Democratizing Stonk Market Manipulation covering the #WallStreetBets situation and things have already morphed in a direction along one of the lines that we speculated was possible: ''a generalized revolt against financial repression and asymmetric rulesets'' (a.k.a “rules are for thee, but not for me”).
This is about more than a bunch of weaponized autists (self-described as such) end-running the Wall St. establishment for fun and profit.
Charles called it a “rebellion” at one point. Once it appeared as the the establishment was trying to step into Robinhood and get the hedgies off the hook, as that line in the old classic The Usual Suspects went…
“Then, the whole thing turned political…”
I was busy most of the day yesterday, but I kept getting email alerts that my various silver positions were up 10%, trading up on excessive volume, etc. When I did check the precious metals I noted that gold was down, not by a lot, while silver was making a sizeable move. Not unheard of for this to happen, but it’s not common.
Almost didn’t notice this comment on the Hackernews thread on my WallStreetBets proves the System is Rigged article:
It proves something anyway.I’m a moderator of /r/silverbugs and we’ve been getting slammed all morning with either accounts from wallstreetbets or accounts trying to make them look bad, with dozens of brand spanking new or barely used accounts spamming to buy various silver related stocks/funds.
I’ve banned more accounts this morning than I have in 2 years.
Then a couple hours ago I saw this:
ATTENTION!
Tomorrow our army of retards is going to fight the Suits who have been manipulating the Silvermarket for years!
JPmorgan doesn’t give a shit about 1.26 billion fines nor do other fraudulent banks. This has to stop!
Today was only a test!
RT and let the world know👇 pic.twitter.com/JAKuoS4Yfu
— 🦁Coach of the SILVER-ARMY🦁 (@vtrading3) January 28, 2021
and that’s when I realized that this thing could get real. A “reverse bear raid” on the $SLV could quite possibly upset more than a few apple carts, and here are the WallStreetBets crew laying out exactly what it entails [archived], and how their self-professed “AoR” could go about it [archived].
Can they do it? Time will tell. Silver up almost 2% on the day and silver stocks are screaming higher.
https://bombthrower.com/articles/could-wallstreetbets-be-the-early-innings-of-a-financial-arab-spring/
continued
Meanwhile, the battle lines are clearly drawn. Rumours abound that RobinHood slammed the breaks on Gamestop under pressure from their upstream clearing houses or even the SEC. CNBC is trotting out hedgies that even tried to float a “foreign meddling” narrative and the mainstream media hit pieces are starting to drop ''(TL,DR Trumpism and White Supremacy, what else?)''
To be fair, Ali Breland did clarify in a subsequent tweet that he didn’t think /r/WSB were Nazis
Big Tech also showing their true colours as usual, deplatforming and canceling right on cue with Facebook putting the kibosh on a large Robin Hood trader group while Discord shut down WallStreetBets
What makes this interesting is where the battle lines are drawn.
When somebody like @AOC tweets this
This is unacceptable.
We now need to know more about @RobinhoodApp’s decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit.
As a member of the Financial Services Cmte, I’d support a hearing if necessary. https://t.co/4Qyrolgzyt
— Alexandria Ocasio-Cortez (@AOC) January 28, 2021
and then a @DonaldTrumpJr this:
Hedge funders should really just “Learn To Code” or to “install solar panels”
Am I doing this right??? I’m told those are the rules. 🚀🚀🚀 #wallstreetbets @stoolpresidente
— Donald Trump Jr. (@DonaldJTrumpJr) January 28, 2021
It indicates that this is not between left vs right, conservative vs liberal thing. This time it’s political along the class line that separates The Cantillionaires from the masses that I’ve been writing about on my mailing list for years.. The underclass, the rabble – the people who were never supposed to win may suddenly have at least a few billionaires on the run.
(When you think about it, both AOC and mini-Donald are establishment outsiders albeit for very different reasons. They are even alienated from very different establishment factions).
Something about this feels like we could be in the opening rounds of some weird morph between the Occupy Wall Street movement of yore, and the Arab Spring. Only this time played out over smartphones, using exotic options spreads …and memes.
As I sat down to write this, #EatTheRich was trending on Twitter.
If you thought 2020 was off the hook, how do you like 2021 so far?
Here’s that Salon we did on the idea of this being the beginning of (as Tom Woods called it) The Gamestop Rebellion, and don’t forget to join my mailing list to get updates as they happen.
https://bombthrower.com/articles/could-wallstreetbets-be-the-early-innings-of-a-financial-arab-spring/
WELCOME TO NIGHTSHIFT!
Is The Establishment Still Terrified Of Trump?
Friday, Jan 29, 2021 - 18:00
Authored by Pat Buchanan via Buchanan.org,
As soon as the Senate received the lone article of impeachment accusing President Donald Trump of “incitement of insurrection” in the Jan. 6 mob assault on the Capitol, Rand Paul rose to object.
The Senate, he said, has no right to try a private citizen, which Trump now is. Thus, what we are about to do is flatly unconstitutional.
Forty-five of 50 Republican members agreed with Paul’s motion.
“This vote indicates it’s over. The trial is all over,” said Paul.
“If you voted that (the Senate trial is) … unconstitutional, how in the world would you ever vote to convict somebody for this?”
Consistency says you would not.
Susan Collins of Maine, one of five Republicans who voted against Paul’s motion, agreed that the vote portends the final vote on conviction.
“Do the math,” Collins said. “It’s extraordinarily unlikely the president will be convicted.”
Rand Paul may have just derailed the second impeachment of Donald Trump.
Chief Justice John Roberts, the constitutional officer designated to preside over Senate impeachment trials, has said he will not preside over this latest trial of the ex-president. With Roberts seeing no constitutional duty, and declining the honor, his replacement as the presiding officer will be Patrick Leahy of Vermont, the longest-serving Democrat and the president pro tempore of the Senate.
''But Leahy is viscerally hostile to Trump and one of a Democratic bloc that voted twice last January to convict Trump of high crimes and misdemeanors. How will it look to the world if this partisan is installed as both judge and juror at the trial of his political enemy?''
Welcome to Zimbabwe.
Does the liberal establishment, now back in power and controlling the House, Senate and presidency, not see how this is all going to look in the history books, generations hence?
Blinded by hatred of Trump, enraged by the mob that stormed the Capitol, Nancy Pelosi’s House, in a rush to judgment, without hearing a single Trump witness and without letting his lawyer offer a defense, impeached, i.e., indicted, Donald Trump for “incitement of insurrection.”
But how could Trump have incited the riot and the attack on the Capitol when the mob swept up the stairs before Trump finished speaking a mile away?
https://buchanan.org/blog/is-the-establishment-still-terrified-of-trump-142759
continued
And he would end his rally remarks by urging the crowd to march to the Hill “peacefully and patriotically.”
We have subsequently learned that plans and plots were being hatched days before the assault on the Capitol began.
Was the Trump White House, or Trump, privy to those plots?
In August 1974, it was a near certainty that the House would vote to impeach Richard Nixon. But after the president resigned, the House did not impeach, and Ford pardoned Nixon so the country could move on.
The rage of the establishment at being deprived of its revenge against Nixon who had turned the Silent Majority against it, not unlike today, knew no bounds. And, though history has vindicated Ford, his pardon of Nixon precipitated a plunge in his poll numbers.
Half a century on, however, history says Ford did the right thing.
Why then are the Democrats continuing with this exercise in vengeance?
''They want Trump convicted so that he will be prohibited from ever again holding public office. The establishment fears that Trump could make a comeback, win the Republican primaries in 2024, become the nominee, and return in triumph as president.''
They are determined to abort that possibility. Many openly admit it.
What does that say about the liberal establishment’s love of democracy when they would disqualify, in advance, the largest vote-getter their opposition party ever had, out of fear he might come back to win the presidency as he did in 2016?
“Trust the people!” was a campaign slogan made famous by George Wallace. Our national establishment prattles endlessly on about its devotion to democracy, but it does not trust the people.
But the establishment is going to pay a price for trying to squeeze the last ounces of juice out of this rotting fruit. President Joe Biden’s call to unity are being drowned out by Democratic howls for a trial, conviction and banishment.
This effort to convict and disqualify Trump from running again tells us more about the people behind it than it does about Trump.
For the odds are slim at best that Trump would or could, at 78, win the nomination and the presidency a second time, as Grover Cleveland did in 1892.
Yet, a fearful establishment does not want to take the chance.
For all the babbling about “democracy” we have heard in recent days, the establishment wants to eliminate the possibility that the people could rise up, and, horror of horrors, elect Trump once more.
You can smell the fear.
https://buchanan.org/blog/is-the-establishment-still-terrified-of-trump-142759
China Rejects British Overseas Passports Ahead Of UK's New Program To Welcome Millions Of Hong Kongers
by Tyler Durden - Friday, Jan 29, 2021 - 16:40
Any Britons who have vacation (or business) plans in China in the immediate future might have a new problem on their hands.
Beijing announced Friday that it would no longer recognize British National Overseas (BNO) passports as travel documents in China from Jan. 31. The statement from the Chinese came as Britain prepares to offer a new visa program to millions of Hong Kongers, according to AP News.
"From Jan. 31, China will no longer recognize the so-called BNO passport as a travel document and ID document, and reserves the right to take further actions," Chinese foreign ministry spokesman Zhao Lijian told reporters.
Lijian reiterated China's opposition to Britain's interference in Beijing's political affairs. He said the UK must come to terms that Hong Kong belongs to China.
"The policy of residence and naturalization in the UK has been repeatedly expanded. Britain's attempt to turn a large number of Hong Kong people into second-class British citizens has completely changed the BNO nature of the original Sino-British understanding," he said.
Lijian stressed that Britain's move violates their agreement with China making the current BNO invalid.
Last year, Beijing's passage of the national security law prompted the UK government to offer refuge for eligible Hong Kongers via BNO passports. But now the new BNO program is opening up to 5.4 million Hong Kongers.
Under the BNO policy, Hong Kongers can live and work in the UK for five years with an eventual citizenship path.
"I am immensely proud that we have brought in this new route for Hong Kong BNOs to live, work and make their home in our country," British Prime Minister Boris Johnson said in a statement.
"In doing so we have honored our profound ties of history and friendship with the people of Hong Kong, and we have stood up for freedom and autonomy — values both the UK and Hong Kong hold dear."
The UK government estimates around 300,000 Hong Kongers could migrate to the UK over the next five years, which would be beneficial for the British economy.
CNN points out anti-government protests across Hong Kong, in conjunction with Beijing's passage of the national security law, has resulted in an increased issuance of BNO passports among Hong Kongers
BNO Passports Printed, Monthly
Time will tell if the new BNO program will result in a mass exodus of Hong Kongers to the UK as China's communist government clamps down on the city.
https://www.zerohedge.com/geopolitical/china-rejects-british-overseas-passports-ahead-uks-new-program-welcome-millions-hong
BOMBSHELL:Robinhood employee says the White ☭ House pressured HALT of GameStop Trading
The Washington Standard / January 29, 2021
''Screwing the little guy, the individual, that is the mission by objective of the Democrat party of treason and destruction. Crush the individual.''
Class-action suit filed against Robinhood app for blocking trading of GameStop, other stocks
BOMBSHELL ALLEGATION:Man Claims To Be Robinhood Employee & Says The White House Pressured Halt of GameStop Trading
By T. Grant Benson, Breaking News, January 28, 2021:
Fueled by the “WallStreetBets” Reddit forum, GameStop’s market value has risen over 466% this week.
Thursday morning, Robinhood, one of the top free trading apps, put restrictions on trading $GME (GameStopCorp.) This action was immediately met with backlash across the internet. One Reddit user, Odin19199, claiming to be an employee of Robinhood, stated that the company was pressured to halt GameStop trading by Sequoia Capital and the White House. These allegations have not been independently confirmed by Breaking911.
In the post, he alleges that he overheard that “Vladimir, yes founder Vladimir [Tenev], and the C-Suite, received calls from Sequoia Capital and the White House that pressured into closing trading on GME.”
The user then goes on to state that he has information and documentation regarding the situation that he is planning to provide to Project Veritas and lawyer Glen Greenwald.
The newly-confirmed Treasury Secretary, Janice Yellen, has financial ties to one of the hedge funds that came to the aid of Melvin Capital, one of the companies that saw large losses after GameStop’s market surge. Yellen’s financial disclosure shows her receiving around $800,000 from Citadel for speaking fees.
White House Press Secretary, Jen Psaki, stated on Wednesday that Yellen is ‘monitoring’ the GameStop stock situation.
New York Attorney General, Letitia James, released a statement Thursday announcing that “we are aware of concerns raised regarding activity on the Robinhood app,” and that “we are reviewing the matter.”
https://thewashingtonstandard.com/bombshell-robinhood-employee-says-the-white-%e2%98%ad-house-pressured-halt-of-gamestop-trading/
well, evening irl calls
see you patriots in the later late