What caught my eye this week.
CThe competition to work for one of the Bulge Bracket Investment Banks is always fierce.
Young graduates from the best universities in the world are competing for the opportunity to make millions of dollars in the market.
Indeed, many spectators – Includes myself – Lamented this brain drain. Finance keeps too many wise people away from science and engineering.
So, especially, striving for academic performance and going to the toes in a tough interview wasn’t enough to stop the bankers of these large institutions, which had lost billions of dollars in the last two weeks. I will bite you.
Some investment banks have made the ambiguous family office Archegos take advantage of its $ 10 billion portfolio. Reportedly Only a handful of companies had more than $ 50 billion in exposure.
As always, this was a bit of a earner until the music stopped.
When stocks began to fall, Arquegos needed to truncate more money that didn’t have to meet margin calls.
This meant a forced sale of a company owned by Arquegos and a fall in stock prices.
This was a problem for banks.
You know what they say: You have a problem when you owe £ 10,000 to a bank. When you owe a million pounds to a bank, the bank is having problems.
Now, when you owe tens of billions to a bank, everyone has a problem.
1 billion here, 1 billion there
Archegos SNAFU was unleashed like the finale of a criminally overlooked movie Margin call:
according to Financial Times [search result]:
… Before trouble at the family office appears publicly on the weekend, representatives of its trading partners Goldman Sachs, Morgan Stanley, Credit Suisse, UBS and Nomura meet with Arquegos to keep the trouble in order. We talked about the resolution. transaction.
Banks have each allowed Arquegos to underwrite billions of dollars of exposure to volatile stocks through swap deals, and fans are struggling to deal with margin claims caused by the plunge in Viacom CBS stocks. I did.
The orderly contraction will minimize the impact on the market and the impact on its balance sheet as Arquegos worked to sell the shares of the company that it had accumulated through its derivative products.
It’s unclear if it’s understood, but some sources say it soon became clear that some banks had begun selling to stop their losses. Trading savvy people said that both Credit Suisse and Morgan Stanley appeared to have dropped a small batch of stock on the market after the meeting.
“It was like a chicken game.” One said.
By Friday morning, all hopes for adjustments had disappeared and the locks were opened when Goldman began selling billions of dollars in Arquegos-related stocks to global investors.
Morgan Stanley joined a few hours later, and people said the two sold about $ 19 billion in a large block trade that day alone.
It was probably a pain for those US banks, but not as much as Credit Suisse (Europe) or Nomura (Japan).
Two banks outside the United States have stalled. Perhaps they are less familiar with the ruthlessness of Wall Street banks than Wall Street bankers.
Nomura says he could have lost as much as $ 2 billion in the deal. Credit Suisse reportedly suffered a loss of $ 3 to $ 4 billion.
And people said Reddit trader There was a problem …
Some readers-even my co-blogger-often ask how I can be arrogant enough to invest Actively When I oppose the smartest financial mindset on the planet.
And that’s the case, we all know the evidence that most active investors are better as passive investors.
But I haven’t seen much over the years suggesting that this is equally not the smartest financial mindset on the planet.
Perhaps I’ll just point them to this article in the future.
For investment bank recruiters, do I need to ask them to check the applicant’s Netflix viewing record along with their resume?
display Margin call Must be mandatory.
Then again, the banks probably promoted trade anyway.
So Bloomberg Note:
… Adopted by Global Bank [Archegos founder Bill Hwang] As a lucrative client, despite a record of insider trading and market manipulation attempts that kicked him out of the hedge fund business 10 years ago.
Sure, why not enable tens of billions of dollars in leveraged exposure with that guy? The banker got the bank!
And I think I had a hard time Get a mortgage..
ps i are together Weekend reading Earlier this week, you can spend a few days in various local gardens. Have a nice Easter weekend, everyone.
Slow and steady passive portfolio update: Q1 2021 – Monevator
From the archiver: Mortgages are money borrowed from banks – Monevator
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boom! Liverpool home prices have risen 16.7% since the first blockade, and Oldham has risen 15.7% … – Oldham Times
… While London fell UK home prices in March – Guardian
Will the law amendment ease the plight of thousands of mortgage prisoners? – – ThisIsMoney
Rising Minimum Wages for 2 Million British Workers – BBC
The pound-the first high in a year against the euro, as the previous UK growth rate was revised up very slightly. ThisIsMoney
How EU migration over 20 years has reversed [Search result] – – FT
Committee on Racial and Ethnic Disparities: Report [PDF] – – British government
According to New Zealand, Zoom and other telecommuting technicians will suffer as developed countries return to normal. Yahoo finance
Products and services
Going for a walk can reduce your fees Stock ISA – which one
PayPal Launches Cryptographic Checkout Service – Reuters
Currently, three major banks offer lottery-style savings accounts – ThisIsMoney
Sign up Free trade Through my link we can both get a worthy free share between £ 3 and £ 200 – Free trade
Beware of fake Royal Mail text message scams – ThisIsMoney
Taxes levied on holding cryptocurrencies [Search result] – – FT
Growth House de jour Ark Invest [US-listed] Space Exploration ETF – CNBC
Comments and opinions
Don’t get burned when playing with FIRE – Of dollars and data
Rethink your retirement plan, says Vanguard [Search result] – – FT
Will the Treasury bond rout continue? – – Lucifer
Watch out for bubbles – Mr. Mana Stash
A warning story from a coiled spring, or a strange year – Simple life in Suffolk
Will UK Home Prices Really Soar For Another Five Years? – – Simon Lambert
Not wanting something is as good as having it – Escape artist
How to be a good example for your child when you are wealthy – Humble dollar
NFT oversupply is trying to kill golden geese – marker
Can the stock market crash during the business cycle? – – Richness of common sense
For “Fundspiracy” – Evidence-based investor
Cannot be taken with a mini special
Enjoy life as much as you can – Unusual return
Sell your hot dog at a loss – Secret money scribe
Revenge spending money to regain life – Financial Samurai
Naughty Corner: Active Antic
Dive into data on dividend alternative decumulation – Get mint
No more buying: Revival of active trading – Andres Senhorowitz
When a trustee dismisses a manager – IT investor
ABC of my investment [preceded by a brief portfolio review] – – Maynard Paton
Earnings forecasts for US companies are skyrocketing – Dr. Ed’s Blog
Eco-friendly active portfolio review – DIY Investor UK
Germany suspends AstraZeneca jab under the age of 60 with a rare blood clot … – Sky
… Is there a risk of blood clots? – – BBC
Sudbury Street where neighbors eat, dance and party together – BBC
Kindle Book Bargains
Don’t have a Kindle? Buy one – They are great and save a lot of space!
New Corner Office: How Most Successful People Work at Home – Laura Van der Cam – £ 0.99 on Kindle
Business Adventure: 12 Classic Stories from the World of Wall Street – John Brooks – £ 2.99 on Kindle
[Sorry: dearth of very low price money and investing options this week!]
Sewage discharged 400,000 times into British rivers in 2020 – BBC
India has a net zero carbon goal “Empty pie” – – BBC
From our beat
Message in the bottle- surely
Mr. Brightside: A hit that never dies – BBC
Mapping of the world’s major maritime chokepoints [Graphic] – – Visual capitalist
“I tried an iPhone app that makes you travel” – – Deputy
This is a sign of a great thinker – Co., Ltd.
John Stuart Mill’s Philosophy of Equality – Farnam Street
“At the age of 80, if you are neither crippled nor sick, if you are healthy, but still enjoy a good walk, a good diet (including all trimmings), you can sleep without taking tablets first. If, in the case of birds, flowers, mountains and seas still inspire you. You are the luckiest individual. You must kneel in the morning and night and thank the good Lord for the salvation and sustainability. No. If you’re young for years, but you’re already mentally tired and already on your way to becoming an automaton, of course, it might be good to be out of breath and tell your boss. “Stop, Jack! You don’t own me!“”
– Henry Miller, About turning 80
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Weekend Reading: From Wall Street to Reddit – Bringing Beer
https://monevator.com/weekend-reading-archegos/ Weekend Reading: From Wall Street to Reddit – Bringing Beer