Gamers
Jan 26, 2021
–Somehow seems appropriate that the stock garnering all the attention is called Gamestop. The capital infusion by Citadel and Point72 of $2.75 billion into Melvin Capital (who apparently suffered large losses from GME shorts) is a signal that this game might just about be over. There is likely intense lobbying of the Fed to institute some macroprudential tools in the quest to save markets, under the guise of saving Robinhood traders from themselves, when in reality it’s some of the professionals that are close to being carried out. But the latter group owns the lobbying machinery. By the way, according to Bloomberg, the available float on GME is 50.2 million shares. Volume yesterday was 3.5 times that at 177 million!
–ZH has an article showing put positions on some of the most shorted stocks. GME’s move was breathtaking, a range of 61 to 159 yesterday. Late in the day I looked at Feb 19th 77 puts with the stock trading about 77. They were around 30, a breakeven of 47; it would take a decline of nearly 40% to break even. Blackberry’s Feb 18 puts, with stock 18.03, were 5.40, or about 30% lower b/e.
–There appeared to be rebalancing trades occurring yesterday. SPX has gained about 2.6% so far in Jan, while the ten year yield rose from 91.6 on Dec 31 to 1.038 as of yesterday. So modest selling of stocks and buying of bonds shouldn’t be all that surprising going into month end. Yesterday tens fell 5 bps, having closed Friday at 1.087%. Curve flattened with 2/10 falling 4.5 bps to 91.9.
–Five year auction today. MSFT and AMD report are the close.
From Reminiscences. Relief plan…
Then, before half past two in the afternoon, J. P. Morgan sent John T. Atterbury, of Van Emburgh & Atterbury, who was known to have close relations with J. P. Morgan & Co., into the money crowd. My friend said that the old broker walked quickly to the Money Post. He raised his hand like an exhorter at a revival meeting. The crowd, that at first had been calmed down somewhat by President Thomas’ announcement, was beginning to fear that the relief plans had miscarried and the worst was still to come. But when they looked at Mr. Atterbury’s face and saw him raise his hand they promptly petrified themselves. In the dead silence that followed, Mr. Atterbury said, “I am authorized to lend ten million dollars.
Take it easy! There will be enough for everybody!”
