Posts Tagged ‘Melvin Capital’

LinkSwarm for May 20, 2022

Friday, May 20th, 2022

Greetings, and welcome to another Friday LinkSwarm! The Biden Administration has done everything it can to worsen inflation, The Ministry of Truth’s Scary Poppins dissolves into a puddle, a whole lot of school groomer news from all across the country, and the world’s longest D&D game.

  • On inflation, Biden’s every move has been wrong.

    The Biden administration’s first response to any problem is to pretend that it isn’t a problem. That’s how inflation went from a minor problem to a major one. Unwilling to take the necessary steps to rein in inflation early — pushing the Fed to raise interest rates and slowing down the torrent of money going out the Treasury’s doors — Biden and congressional Democrats at first insisted that inflation wasn’t a real problem: “Transitory,” they called it.

    And then when inflation turned out not to be transitory, they thought they could just pin it on the Russians. Jen Psaki sniffed smugly at the “Putin price hike,” as though Americans were too stupid to understand that inflation at home had started long before the Russian invasion of Ukraine. That gambit fizzled, too.

    When you don’t have any fresh ideas or real principles — and when your long-term goals are limited by the fact that the president, who was born during the Roosevelt administration, isn’t exactly buying any green bananas — then the easiest thing to do is to throw money at every problem.

    Throwing money at things is how you make inflation worse.

    Washington had already thrown a lot of money at the economy during the COVID-19 emergency, and, predictably, the emergency spending outlasted the emergency. By the time Biden was elected in 2020, Washington had thrown $2.6 trillion in budgetary resources at COVID and had authorized as much as $4 trillion in subsidized federal lending. That was new money amounting to about a third of GDP sloshing around the economy. Biden’s first priority was pushing out another $1 trillion in a phony infrastructure bill (that has little to do with actual infrastructure) and a $1.9 trillion stimulus bill, even though the Consumer Price Index was already rising steeply, according to the Federal Reserve.

    Stimulating an already overstimulated economy is how you make inflation worse.

    Our inflation problem is only partly an issue of dovish monetary policy and reckless spending. There are problems in the real-world physical economy, too, those “supply-chain issues” we hear about. The Biden administration has done extraordinarily dumb things to make these worse, too, keeping in place the worst of the Trump administration’s anti-trade policies. That “Made in the USA” talk sounds good on the stump, but the truth is we need a lot that we don’t make at home and aren’t going to — including much of the steel and other vital inputs for the high-value manufacturing we actually do here.

    The incredible fact is the Biden administration still had punitive tariffs on Ukrainian steel while it was seeking financial aid for the Ukrainians — it wasn’t until the Chamber of Commerce and conservative critics started making a stink that the administration changed its stance.

  • Historically, interest rates are are still too low to fight inflation.
  • Speaking of the Biden Administration spreading light and joy throughout America: “Energy Officials Issue ‘Sobering’ Warning About Widespread Summer Blackouts Triggered by Closure of Fossil Fuel Plants.” (Hat tip: Stephen Green at Instapundit.)
  • More Biden magic: “Dow Suffers Longest Losing Streak In 99 Years.”
  • “Hunter Biden Took In $11 Million Over 5 Years.” I would treat NBC’s number as a floor rather than a ceiling…
  • Scary Poppins resigns from the Ministry of Truth because all those vicious right-wing bullies were mean to her about her gross bias and constant lying.
  • I know you’ll be shocked, shocked to find Taylor Lorenz attempt to ride to her rescue:

  • Democrats vote to create that national gun registry they swore up and down they were never going to create.
  • More and more Democrats are leaving the party over their fanatical treatment of abortion as the holiest of sacraments.

    I live in a manufacturing city with a very strong union voice speaking into the politics of our community. Yet a fascinating and unmistakable phenomenon has been occurring over the course of the last decade or two. Though the percentage of citizens in our area who post their “Proud Union Home” yard signs has likely increased, the percentage of them identifying as, or supporting, the Democratic Party has dropped precipitously during that same time frame.

    For the first time in my city’s history, Republicans swept all municipal offices in the last election. So what is happening, and is it a microcosm of some larger trend?

    I can’t offer any scientific study or analysis; I can only tell you what I have been told. Though former President Trump attempted overtures towards the “made in America” union mentality, that isn’t the most often cited rationale among Democrat dropouts. Instead, their disillusionment seems to stem from the prevailing belief that the party has been hijacked by single-issue ideologues that are willing to destroy party cohesion and solidarity if it means advancing their singular cause. More and more of these ex-party members now consider the Democrats the “Abortion First” party.

    Again, that may be just the frustrated sentiments of disgruntled Dems in rural Indiana who feel as though the once big tent that embraced them has become far more rigid and dogmatic in who they welcome under the awning. Gone seem to be the days of the party’s Rust Belt/Union Grit identity, replaced today with a coalition that obsesses over white guilt, pronoun pandering, and legal feticide.

  • “Tucson high school counselor accused of sexual misconduct with a 15-year-old student…police officials in the Southern Arizona city said Zobella Brazil Vinik turned herself in to detectives on May 11.”
  • I know you’ll be shocked to find out that Vinik is “a radical queer nonbinary leftist” who put on drag shows.
  • Speaking of public school administrators sexually grooming students, Washington state school board director Jenn Mason tried to throw a party for children in her sex shop.

  • Speaking of sexual predators after your children, this is pretty horrifying: “Texas Teen Goes to Bathroom at NBA Game, Is Found 10 Days Later Sold for Sex in Oklahoma Hotel.”
  • A parent-filed lawsuit comes for the president of McKinney Independent School District’s board of trustees.

    In another action-packed school board meeting in McKinney, the board president was served with a lawsuit for suppressing the free speech rights of citizens who disagree with her policies.

    Civil rights attorney Paul Davis served Amy Dankel, president of McKinney Independent School District’s board of trustees, during the public comments portion of Tuesday night’s meeting.

    “Your outrageous display of tyranny in how you trampled on the rights of the public at the last meeting was shocking,” he said. “I’ve never seen anything like it.”

    In recent months, McKinney ISD’s school board meetings have featured a heavy police presence.

    On several occasions, police officers have ejected citizens, at Dankel’s direction, for failing to observe her rules of decorum during public comments.

    Davis said Tuesday that Dankel’s rules “placed an unconstitutional restraint on First Amendment rights by disallowing signs, clapping, and comments.”

    He also says Dankel enforced her rules unequally.

    She directed police to physically remove people who were wearing green—supporters of conservative trustee Chad Green, who Dankel is trying to oust from the board.

    “Those same rules were not applied to people wearing blue,” Davis said, referring to Dankel supporters. “For that, we have filed a civil rights lawsuit against you.”

    Kevin Whitt is one of the plaintiffs in the lawsuit.

    During last month’s school board meeting, the pro-family activist spoke against the district’s failure to proactively identify and remove sexually explicit books found in students’ libraries—a contentious topic in McKinney and other districts across the state since last year.

    Later in that meeting, Whitt was dragged out by City of McKinney police officers for uttering a single word—“disgusting”—after a local mom finished comments that included excerpts from one of the explicit books.

  • Speaking of Texas school boards getting sued parents, Round Rock ISD is being sued over violating parent’s rights.

    The contentious saga in Round Rock ISD continues after two parents filed a federal lawsuit last week against five school board trustees, the district superintendent, and several district police officers.

    Last year, the Williamson County Sheriff’s Office arrested Jeremy Story and Dustin Clark on charges of “hindering proceedings by disorderly conduct” following a September school board meeting. Both men were released the next day.

    The lawsuit claims the defendants violated Story’s and Clark’s rights under the First Amendment and the 14th Amendment. Additionally, the suit accuses the defendants of violating 42 U.S. Code 1983, or misusing their power to deny their constitutional rights.

    The two men attended last September’s school board meeting to protest Superintendent Dr. Hafedh Azaiez’s continued employment and a proposed tax increase.

    Texas Scorecard chronicled multiple scandals involving Round Rock ISD in a special report and a podcast series, Exposed, which included investigations into the school district and Azaiez. Five of the district’s seven trustees, dubbed the “Bad Faith Five,” were also brought under scrutiny for allegedly covering up domestic violence allegations against Azaiez.

    At the August 16 board meeting, Round Rock ISD officers removed Story after he referenced the investigation into Azaiez. Amy Weir, president of the school board, instructed district officers to escort Story from the building, claiming his concerns about Azaiez did not follow the meeting’s agenda.

    At the same meeting, trustees Mary Bone and Danielle Weston walked out after accusing the district of intentionally limiting seating under the guise of following COVID-19 safety guidelines. Clark then demanded the board let more citizens in to witness the meeting, and Weir subsequently instructed district officers to escort him out.

    Three days later, Williamson County officers arrested Story and Clark. Although Story’s charges pertained to the August 16 meeting, Clark’s charges dated back to a September meeting of the school board. Their lawsuit, filed May 11, accuses all defendants of suppressing Story’s and Clark’s constitutional rights and claims they were arrested illegally.

    If successful, the lawsuit would void Azaiez’s contract and prevent Round Rock ISD from restricting attendance at school board meetings due to COVID-19.

  • Groomer teachers are even popping up in Ohio:

  • But the school Social Justice bullshit doesn’t stop there: “Fairfax, Virginia Schools May Expel Elementary Students For ‘Misgendering’ People.”

    Tar.

    Feathers.

  • Michigan Businesses Sue Whitmer For Losses Due To COVID Lockdowns.”
  • Speaking of Michigan lawsuits over gross abuse of state power, a couple is suing Highland Park after the police seized their building and legal marijuana business, charged them with no crime, and then offered to give it back if they bought the police department two cars.
  • Speaking of crooked Democratic politicians, you would think that all that graft Bill De Blasio’s wife raked off would allow him to retire in style, but evidently that festering bucket of crooked failure just can’t stay out of the spotlight, and is now running for congress.
  • Texas counties ranks, from most Democratic to most republican.
  • Melvin Capital, the hedge fund that got clobbered when they were caught performing naked shorts of Gamestop stock, is shutting down.
  • Citadel head Ken Griffin threatens to leave Chicago over the spiraling crime rate.
  • People magazine may cease its print version. Bonus: “Sources told The Post that under Wakeford, People had been selling more than 200,000 copies at the newsstand a week. Since then, newsstand sales have been uneven, with a May 2 Prince Harry cover dipping to about 160,000 copies sold, and a March 14 Lizzo cover cratering to between 125,000- 150,000 copies sold, which is said to be one of the worst selling issues in People’s half-century history.” Funny how no one gives a rat’s ass about woke royals and the morbidly obese…
  • Larry Correia gives a deserved royal fisking to an article by a leftwing feminist who wonders why her boyfriend reads that primitive “science fiction” stuff rather than modern literary fiction that checks all the required Victimhood Identity boxes.
  • Archeologists in southern Turkey continue to uncover an 11,000 year old pre-agriculture civilization of six-fingered men protecting their penises.
  • Inside a D&D game that’s been running for more than 40 years. Including a truly jaw-dropping amount of painted miniatures and constructed terrain.
  • Good for a smile:

  • Followup: Is The Silver Squeeze A Ruse?

    Tuesday, February 2nd, 2021

    Following yesterday’s story, I got pushback from readers that asserted the supposed WallStreetsBets silver squeeze was, in fact, a ruse from hedge funds to distract retailer investors from the GameStop and AMC squeezes.

    That does in fact seem to be the consensus at WallStreetBets.

    If you haven’t been browsing WSB or doing your own research, you’d probably think that the people on Twitter are correct in saying there is a silver squeeze happening and we should all get in on it. There are quite a few wsb-logo Twitter accounts pushing this. This is BS & the straight up the ANTITHESIS of who we are.

    By buying silver/going long on silver, you would be directly putting money into the pockets of the EXACT HEDGE FUNDS ON THE OTHER SIDE OF $GME 🚀 🚀 🚀 💎 🙌 The hedge funds are LONG silver NOT short silver.

    The media, Wall Street, normies, and every other non-WSB autist are trying to push you to buy silver. This would be a tragic, irreversible decision that not only will most likely not make you any money because the squeeze is fake, it will put you on the sidelines from this righteous and glorious war we are in.

    Another sign it’s a ruse: Citadel Securities, one of the primary hedge funds backers, evidently holds shares in 17 different silver companies.

    That’s one of the problems with a decentralized swarm attack: If nobody’s in charge, then it’s much harder to filter out the noise to determine the true direction of the swarm. That can be a strength, but it also makes the swarm vulnerable to ruses like this. Extracting a signal from the huge wave of noise in everyday financial transactions is a daunting problem under the best of circumstances even when giant hedge funds aren’t baiting friendly MSM outlets with elaborate ruses. (Or, I should say, when giant hedge funds aren’t baiting friendly MSM outlets with elaborate ruses even more than they usually are.)

    Whatever the source, many bullion dealers were reporting a huge run on silver due to a spike in demand, though physical silvere seemed to be doing much better than “paper silver” (i.e., the futures market). Today spot silver prices are back down in early trading.

    Remember, I said yesterday that a silver squeeze was unlikely to work.

    With that out of the way, here are some other WallStreetBets/GameStop/etc. news:

  • Adam Ford with Not The Bee explains the GameStop short squeeze, including more background detail on the origins of the squeeze than was in my original post:

  • Glenn Greenwald goes into more detail on the GameStop squeeze and Melvin Capital:

    The usual Greenwald leftwing caveats apply. (Hat tip: Zero Hedge.)

  • GameStop stock is back up this morning after Robinhood lifted restrictions on buying shares.
  • Texas Attorney General Ken Paxton has launched an investigation into “Robinhood, Discord, Citadel and other trading apps that put curbs on stock trading” in GameStop.
  • Noon Update: And now GameStop, AMC and Silver are all way down right now. Never invest what you can’t afford to lose…

    GameStop Short Sellers Refusing To Fold?

    Saturday, January 30th, 2021

    You might think that, having suffered billions in losses, hedge funds would want to get out of the GameStop short-selling game.

    You’d be wrong.

    The astronomical rally in GameStop has imposed huge losses of nearly $20 billion for short sellers this month, but they are not budging.

    Short-selling hedge funds have suffered a mark-to-market loss of $19.75 billion year to date in the brick-and-mortar video game retailer, including a nearly $8 billion loss on Friday as the stock kept ripping higher, according to data from S3 Partners.

    Still, short sellers mostly are holding onto their bearish positions or they are being replaced by new hedge funds willing to bet against the stock. GameStop shares that have been borrowed and sold short have declined by just about 5 million over the last week, marking an 8% dip in the short interest, according to S3. Most of the short covering occurred on Thursday, when the stock fell for the first time in six days.

    “I keep hearing that ‘most of the GME shorts have covered’ — totally untrue,” said Ihor Dusaniwsky, S3 managing director of predictive analytics. “In actuality the data shows that total net shares shorted hasn’t moved all that much.”

    “While the ‘value shorts’ that were in GME earlier have been squeezed, most of the borrowed shares that were returned on the back of the buy to covers were shorted by new momentum shorts in the name,” Dusaniwsky added in an email.

    Shares of GameStop were back up Friday after Robinhood and other retail brokers allowed trading to resume.

    The borrow fee on GameStop’s stock — or the cost-to-borrow shares for the purpose of selling them short — jumped to 29.32% on existing shorts and 50% on new short positions, S3 said.

    “If most of the shorts had covered, we would not be seeing stock borrow rates at these high levels — by now you would be able to borrow GME stock at single digit levels due to an increase in the lendable stock loan supply due to borrowed shares being returned after all the ‘supposed’ buy-to-covers,” Dusaniwsky said.

    GameStop remained the most-shorted name in the market as short interest as a percentage of shares available for trading stands at 113.31%, S3 said.

    (Supposedly Melvin Capital and Citron are out of their GameStop short positions. So who is still in?)

    Assuming all the above is true, the remaining hedge funds and their allies are still shorting more than 100% of the stock, despite the theoretically infinite risk involved. I can think of several theories to explain what appears to be apparently irrational behavior:

    1. Short sellers fully expect their friends in the Biden Administration and/or the financial regulatory apparatus to come to their aid and extricate them from the bind they’ve put themselves into by suspending or changing the rules. Huh. I wonder why they could possibly think that?

    2. Short sellers expect to use their power to force trading companies to bend to their will by forcing retail investors to sell their shares (as Robinhood was reportedly doing on Thursday).
    3. Short sellers expect one or more “whales” (i.e., rich individual investors) to flip and either sell their shares or lend them out to cover shorts once the temptation to take profits is too great.
    4. Deeper-pocketed short sellers expect the squeeze to force weaker rivals out of the game, either taking huge losses to liquidate their positions or going bankrupt. In either case, they expect this winnowing to drop shorted shares below the 100% threshold, relieving the pressure on the shorts for the remaining short sellers.

    Obviously, it could also be a combination of all these. (Or something else; feel free to float other theories in the comments.)

    It’s the first two possibilities that should worry us from a policy position: If the big players can break the rules at will to reverse their fortunes when they’ve been beaten at their own game by the little players, then it’s not a free market. And if it’s not a free market, what’s to keep ordinary Americans from getting out of the game entirely?

    (Hat tip: Director Blue.)

    The Great GameStop Short Squeeze

    Thursday, January 28th, 2021

    Here’s a Wall Street story that has everything to do with the current political moment.

    GameStop is the video game retailer that almost went out of business last year. This year, a whole bunch of powerful hedge funds bet on GameStop stock going by selling the stock short.

    Tiny problem:

    For those unfamiliar, a short squeeze happens when a rising stock price forces short-sellers out of their position. When panic strikes and those sellers buy back stock, they send shares even higher. Here, you have what InvestorPlace Markets Analyst Tom Yeung calls a powerful feedback loop.

    Yeung also sees GME stock as being a particularly relevant candidate for a short squeeze. Right now, 71.2 million of its shares are being sold short. That is even more than its total outstanding share count!

    This tweet thread explains what that means:

    So the short selling bear hedge funds are totally screwed. The result? Carnage:

    Across most of America, GameStop is just a place to buy a video game. On Wall Street, though, it’s become a battleground where swarms of smaller investors see themselves making an epic stand against the 1%.

    The funds serving the financial elite are starting to walk away in defeat. Big bets they made that GameStop’s stock would fall went wrong, leaving them facing billions of dollars in collective losses. All the wild action pushed GameStop’s stock as high as $380 on Wednesday, up from $18 just a few weeks ago.

    The stunning seizure of power gives some validation to smaller-pocketed investors, many of whom are encouraging each other on Reddit and are trading stocks for the first time thanks to brokerages offering free-trading apps. It’s also left more investors on Wall Street asking if the stock market is in a dangerous bubble about to pop, as AMC Entertainment, Bed Bath & Beyond and other downtrodden stocks suddenly soar as well. The S&P 500 set a record high earlier this week, though it fell Wednesday.

    Two investment firms that had placed bets for money-losing GameStop’s stock to fall have essentially thrown in the towel. One, Citron Research, acknowledged Wednesday in a YouTube video that it unwound the majority of its bet and took “a loss, 100%” to do so.

    Snip.

    Melvin Capital is also exiting GameStop, with manager Gabe Plotkin telling CNBC that the hedge fund was taking a significant loss. He denied rumors that the hedge fund will fail. The size of the losses taken by Citron and Melvin are unknown.

    Before its recent explosion, GameStop’s stock had been struggling for a long time. The company has been losing money for years as sales of video games increasingly go online, and its stock fell for six straight years before rebounding in 2020.

    That pushed many professional investors to make bets that GameStop’s stock will decline even further. In such bets, called “short sales,” investors borrow a share and sell it in hopes of buying it back later at a lower price and pocketing the difference. GameStop is one of the most shorted stocks on Wall Street.

    But its stock began rising sharply earlier this month after a co-founder of Chewy, the online seller of pet supplies, joined the company’s board. The thought is that he could help in the company’s transformation as it focuses more on digital sales and closes brick-and-mortar stores. Its shares jumped to $19.94 from less than $18 on Jan. 11. At the time, it seemed like a huge move for the stock.

    Smaller investors were meanwhile exhorting each other online to keep GameStop’s stock rolling higher.

    The raucous discussions are full of sarcasm, self deprecation and emojis of rocket ships signifying belief that GameStop’s stock will fly to the moon.

    Snip.

    There is no overriding reason why GameStop has attracted this cavalcade of smaller and first-time investors, but there is a distinct component of revenge against Wall Street in communications online.

    “The same rich people that caused the market crash in 2007/08 are still in power and continue to manipulate the market to get even richer, we are just taking back our fair share,” one user wrote on Reddit.

    “hey mom i can’t come up for dinner,” another user wrote. “i’m bankrupting a 10 figure hedge fund with the boys.”

    Beyond personal attacks, the battle has also created big financial losses for Wall Street players who shorted GameStop’s stock.

    As GameStop’s gains grew and short sellers scrambled to get out of their bets, they had to buy shares to do so. That accelerated the momentum even more, creating a feedback loop. As of Tuesday, short sellers of GameStop were already down more than $5 billion in 2021, according to S3 Partners.

    Much of professional Wall Street remains pessimistic that GameStop’s stock can hold onto its immense gains. The company is unlikely to start making big enough profits to justify its $22.2 billion market valuation anytime soon, analysts say. The stock closed Wednesday at $347.51. Analysts at BofA Global Research raised their price target Wednesday — to $10.

    All the mania is raising some concern that investors are taking excessive risks, and reporters asked Federal Reserve Chair Jerome Powell on Wednesday whether the Fed’s moves to support markets through the pandemic is helping to push stock prices too high.

    In short, the hedge funds suffered a serious bloodletting:

    Did the Wall Street titans laid low by retail investors shrug their shoulders over the loss and slink off quietly into the night to lick their wounds? They did not. Instead, our elites staged a fullbore freakout over being beaten at their own game(stop).

    Perhaps the most flagrant example was where noted CNN tool Chris Cillizza declared the GameStop short squeeze an example of Trumpism. Because how dare ordinary people think they can beat the elite at their own games?

    There was the “white supremacy” canard.

    (Babylon Bee: “Merriam-Webster Changes Definition Of ‘White Supremacist’ To ‘Anyone Who Wins In The Stock Market When They’re Not Supposed To’.)

    There’s even the “Russia! Russia! Russia!” cliche:

    And finally, a Berkeley professor wants you know they’re investing in GameStop because they’re not having sex:

    Secretary of the Commonwealth of Massachusetts William Galvin wants a 30-day trading suspension of GameStop, because retail investors can’t be allowed to make money off the mistakes of their betters.

    Likewise, NASDAQ head Adena Friedman says that they’ll halt trading in a stock if mere mortals are making money off it.

    And trading platforms Robinhood and Ameritrade halted trading in GameStop And AMC.

    Here’s Tucker Carlson:

    Here’s a Saagar Enjeti clip from The Hill:

    There are valid reasons for hedge funds and short sellers to exist. But no one, least of all our corrupt political establishment, should let them get away with the classic “I keep my profits private but force the government to underwrite my losses” con game.

    The memes and Tweets are something to behold:

    And this morning?

    This may all seem extremely irrational. But thanks to the Federal Reserve’s endless money pump, the market has been irrational for a long time. And the biggest irrationality was short-sellers shorting more stock than actually existed.

    I should point out that I have no money in GameStop, AMC, or Nokia stock (unless there’s some tucked away in one of my various 401K funds, which I rather doubt). Though honestly, as weird as this year is already going, I’m tempted to put a few hundred dollars in Dogecoin…