Category: World News (Page 1 of 4)

Citadel’s Ken Griffin Warns of Recession in America

March 21, 2023 / Frank Nez / 2 Comments

Citadel’s Ken Griffin warns of a recession in America, though many would be quick to state the nation is already in one.

Bank of America and Wells Fargo were one of the first to warn people in Q4 of last year.

Ken Griffin’s hedge fund Citadel was amongst the very few who turned in profits last year when majority of the industry lost $208 Billion for clients.

This marked the biggest single-year decline since 2008, when they lost $565 billion, LCH data showed.

Citadel’s gain of $16 billion last year was the largest annual gain ever made by a hedge fund manager, LCH said.

Retail investors grow weary of the hedge funds gains, comparing Ken Griffin to Bernie Madoff, who also never posted losses despite the industry crashing.

“The game is not fair and it never has been. Individual investors, even when operating in a swarm, are destined to lose. How do I know? I helped design the game,” says ex-Citadel Data Scientist Patrick McConlogue.

But Ken Griffin says he sees a setup for a US recession primarily due to people’s savings accounts being tarnished.

Here’s what the Citadel CEO had to say.

Ken Griffin Sees Setup for a US Recession

(Bloomberg) Ken Griffin said the setup for a US recession is unfolding, with the Federal Reserve needing to raise interest rates further after Americans were stung with “traumatic” levels of inflation.

The founder of Citadel and Citadel Securities said the Fed is limited in how much it can fight inflation with interest-rate increases, likening the tool to “having surgery with a dull knife.”

“We have the setup for a recession unfolding,” he said in an interview with Bloomberg in Palm Beach, Florida.

Ken Griffin said he would advise Powell to say “less” on inflation.

“Every time they take the foot off the brake, or the market perceives they’re taking their foot off the brake, and the job’s not done, they make their work even harder.”

Ken predicted in 2020 that US markets would struggle with rampant inflation.

He said his firm is not far away from current market consensus on price growth.

“Americans are burning through their pandemic savings, and soaring interest rates are threatening the housing market and other parts of the economy.

That’s a recipe for a downturn, Ken Griffin told Bloomberg.”

Ken Griffin News: Citadel’s Ken Griffin talks recession, inflation, + more.

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Credit Suisse Receives New $17 Billion in Write-offs

March 20, 2023 / Frank Nez / 4 Comments

Market News Daily: Credit Suisse receives news $17 Billion in write-offs.

(Reuters) Credit Suisse said 16 billion Swiss francs ($17.24 billion) of its Additional Tier 1 debt will be written down to zero on the orders of the Swiss regulator as part of its rescue merger with UBS, angering bondholders.

FINMA, the Swiss regulator, said the decision would bolster the bank’s capital.

The central bank also helped by providing 100 billion Swiss francs ($108 billion) in liquidity assistance.

The move reflects authorities’ desire to see private investors share the pain from Credit Suisse’s troubles.

Chair Marlene Amstad said FINMA had stuck to the country’s “too-big-to-fail” banking framework in making the decision.

It means bondholders appear to be left with nothing while shareholders, who sit below bonds in the priority ladder for repayment in a bankruptcy process, will receive $3.23 billion under the UBS deal.

“It’s stunning and hard to understand how they can reverse the hierarchy between AT1 holders and shareholders,” said Jerome Legras, head of research at Axiom Alternative Investments, an investor in Credit Suisse’s AT1 debt.

Reuters reported earlier on Sunday that Swiss authorities were considering imposing losses on bondholders as part of the rescue deal.

UBS’ CEO Ralph Hamers told analysts that the decision to write down the AT1 bonds to zero was taken by FINMA, so it would not create a liability for the bank.

How Did Credit Suisse Collapse?

Credit Suisse (NYSE:CS) has gone through financial difficulties many times since its inception but has been bailed throughout its history.

“A string of scandals over many years, top management changes, multi-billion dollar losses and an uninspiring strategy can be blamed for the mess that the 167-year-old Swiss lender now finds itself in”, says Reuters.

Chairman Axel Lehmann is blaming the banks collapse on retail investors.

In an interview in Switzerland, the Chairman says “last autumn we had a social media storm” and highlights the changing environment in the market.

“Last autumn we had a social media storm and this had huge repercussions, more in the retail sector than in the wholesale sector, and too much becomes too much.

And that’s when we reached this point, it’s an accumulation of various facts that contributed to one another then materialized at some point. And this then caused the situation.”

Woah.

A reporter asks Credit Suisse, $CS, Chairman Axel Lehmann: "Who is responsible for this disaster?

He says: "… last autumn we had a social media storm." pic.twitter.com/7gCy4RLm0k
— unusual_whales (@unusual_whales) March 20, 2023

Axel Lehmann also said they were affected by a model that “no longer works in this market environment.”

Should There Be a Limit to How Many Times a Bank Can Get Bailed Out?

The fed said in 2021 that ‘meme stocks’ pose risks to financial stability, something retail investors voiced as the most absurd thing our body of government could conclude.

Overleveraged hedge funds, infinite capital from banks, and complicit regulators have been the main cause of systemic risk.

We’re beginning to see the retail crowd become a scapegoat for our financial system’s failures — though this isn’t going to last long.

The ‘it’s retail’s fault’ card won’t carry weight in lawful request for accountability.

This card was used during the ‘meme stock’ frenzy as well when Robinhood, Citadel, and other brokerages halted trading.

Retail investors were blamed but the truth is there was a massive liquidity problem and short sellers could not afford to close their naked shorts.

The only solution was to halt trading, take short positions again, and wait for prices to fall in order to make up losses.

Regulators waived billions in collateral, bailing institutions out of a massive mess.

More and more investors are losing trust in the financial system.

Now that Credit Suisse has escaped with $17 billion in write-off, it’s now more evident that certain institutions truly are too big to fail.

But I’d love to hear your thoughts on this – leave a comment down below.

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Credit Suisse Chairman Blames Collapse on Retail Investors

March 20, 2023 / Frank Nez / 2 Comments

Credit Suisse (NYSE:CS) Chairman Axel Lehmann is blaming the banks collapse on retail investors.

In an interview in Switzerland, the Chairman says “last autumn we had a social media storm” and highlights the changing environment in the market.

“Last autumn we had a social media storm and this had huge repercussions, more in the retail sector than in the wholesale sector, and too much becomes too much. And that’s when we reached this point, it’s an accumulation of various facts that contributed to one another then materialized at some point. And this then caused the situation.”

Woah.

A reporter asks Credit Suisse, $CS, Chairman Axel Lehmann: "Who is responsible for this disaster?

He says: "… last autumn we had a social media storm." pic.twitter.com/7gCy4RLm0k
— unusual_whales (@unusual_whales) March 20, 2023

UBS has agreed to buy Credit Suisse, its beleaguered rival, the Swiss government said on Sunday, in a hastily arranged deal meant to shore up the global financial sector after a week of turmoil.

Swiss government leaders and regulators said that the deal was the most effective way of reassuring investors after Credit Suisse’s shares tumbled following the implosion of Silicon Valley Bank earlier this month.

One of the sources cautioned that the talks to resolve the crisis of confidence in Credit Suisse are encountering significant obstacles, and 10,000 jobs may have to be cut if the two banks combine.

In November, the bank had warned investors in a 6-K filing of potential losses due to naked short covering — a topic retail investors have been urging the SEC to look into.

The 167-year-old Credit Suisse is the biggest name involved in the turmoil unleashed by the collapse of US lenders Silicon Valley Bank and Signature Bank over the past week.

During the collapse of SVB, we also saw Wall Street banks lose more than $55 billion in just one day alone.

Retail Investors Mock Credit Suisse

Market News Daily: Credit Suisse Chairman blames collapse on retail investors.

Credit Suisse shares have fallen below AMC’s price target of $0.95 — the share price the bank’s stock is currently trading at.

Retail investors are mocking Credit Suisse for its attempt to short and distort AMC Entertainment just months before its troubles.

Now Credit Suisse Chairman Axel Lehmann is blaming retail investors for the bank’s failures.

“We were affected by a model that no longer works in this market environment, and many clients have been very loyal for a very long time.

Last Autum we had a social media storm, and this had huge repercussions.”

But credit Suisse clients have been withdrawing billions of dollars in the past months.

“The unusual intervention by the U.S regulator is the latest blow to Credit Suisse as it attempts to rebuild investor confidence after a series of scandals and setbacks that have sent its shares plunging and led clients to withdraw billions” says Reuters.

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Credit Suisse Was Bailed but Clients Keep Pulling Out Money

March 16, 2023 / Frank Nez / 1 Comment

Market News Daily: Credit Suisse Bank News Today.

Credit Suisse is trying to lure investments from wealthy clients in Asia by offering higher deposit rates than its competitors, Reuters has reported citing people familiar with the development.

Sources said the offers are valid until the end of this quarter and only apply to new cash deposits, not to existing portfolios.

The Swiss National Bank and Finma, the top financial regulator in Switzerland, said Credit Suisse “meets the higher capital and liquidity requirements applicable to systemically important banks.”

The regulators didn’t provide details of what type of liquidity they would offer, but said they are in very close contact with the bank.

“If regulators do not handle the Credit Suisse situation well, this will send shock waves through the whole sector,” said Joost Beaumont, head of bank research at Dutch lender ABN Amro.

Credit Suisse has been the problem child of European banking for several years.

Repeated scandals and financial losses have hammered the 166-year-old bank, which combines a wealth-management business catering to the world’s elite rich with a Wall Street investment bank.

The bank is classified as a “systemically important financial institution” under international banking rules created after the collapse of Lehman Brothers.

Such designations require the bank to hold higher amounts of capital and to maintain plans for an orderly unwinding of its operations in case it gets into trouble.

Like Silicon Valley Bank, Credit Suisse has suffered large deposit outflows in recent quarters.

Some local units briefly breached regulatory liquidity coverage ratios last fall.

That means they weren’t holding enough easy-to-sell assets, such as bonds, to safely cover customer withdrawals.

Top 4 Wall Street Banks See Big Losses

Wall Street’s 4 top banks just had $55 billion wiped off their market value in a single day.

Four of America’s biggest banks lost a combined $55 billion of market value in a single day as financial stocks plunged.

US bank shares took a beating amid fears of contagion effects from the turmoil at Silicon Valley Bank and Silvergate.

JPMorgan Chase, Bank of America, Wells Fargo and Morgan Stanley – the four most valued US lenders – saw $55 billion wiped off their combined market capitalization last Thursday, Refinitiv data show.

JPMorgan, the biggest US bank, alone saw a $22 billion tumble in its market value as its stock slid 5.41% to $130.34.

Wall Street’s Bank of America lost $16.16 billion as its share price fell 6.20% to $30.54.

Wells Fargo and Morgan Stanley saw their market capitalization drop by $10.3 billion and $6.2 billion, respectively.

Among other major US banks, Goldman Sachs and Citi also witnessed significant declines in their share prices.

Credit Suisse Warned Investors of Potential Losses in Q4 of 2022

The SEC released Credit Suisse’s 6-K filing where the bank warns investors of potential losses due to naked short covering, more on that below.

Credit Suisse (CS) took a massive hit of $4.09 billion in Q3 and hinted at occurring losses in an upturn in markets — something we saw at the start of 2023.

The bank proceeded to hire 20 banks for a $4 billion injection in effort to pivot from Q3’s disaster.

In a statement, the bank says, “Conversely, to the extent that we have sold assets that we do not own, or have net short positions, in any of those markets, an upturn in those markets could expose us to potentially significant losses as we attempt to cover our net short positions by acquiring assets in a rising market.“

“Market fluctuations, downturns and volatility can adversely affect the fair value of our positions and our results of operations.

Adverse market or economic conditions or trends have caused, and in the future may cause, a significant decline in our net revenues and profitability.”

The closing of naked shorts this year would send affected securities soaring as buying momentum compounds.

Credit Suisse recently postponed publication of its annual report after a last-minute call from the United States Securities and Exchange Commission (SEC), which raised questions about its earlier financial statements.

The unusual intervention by the U.S regulator is the latest blow to Credit Suisse as it attempts to rebuild investor confidence after a series of scandals and setbacks that have sent its shares plunging and led clients to withdraw billions, per Reuters.

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Citadel Has a Long History of Market Manipulation

March 13, 2023 / Frank Nez / 2 Comments

Citadel Market Manipulation — Market News: Citadel and friends are entering the crypto space | Ken Griffin.

Ken Griffin and friends are entering the crypto world very soon — investors are concerned as Citadel has a history of several violations and fines.

EDX Markets plans to bring ‘traditional finance’ to the crypto space, a not so ‘traditional’ space to begin with.

The exchange made up of Citadel, Sequoia, Paradigm, Virtu, Charles Schwab, and Fidelity is debuting in November.

EDX Markets will start trading a limited number of spot, crypto tokens starting with a November trial period, with the official launch in January, per Bloomberg.

Similar to trading equities and options, EDX will allow investors to buy and sell digital assets through their existing broker dealer, rather than an outside venue or directly through a crypto-native exchange.

“We’re taking some of the best features of traditional finance and bringing it to the digital markets to make it more efficient, and bring that cost saving to investors,” Nazarali said.

Nazarali is the former global head of business development at Citadel Securities.

But as many are aware, these financial institutions have a long history of playing unfair.

Will these sharks taint the crypto space too?

Let’s look at Citadel’s market manipulation history as well as other Citadel violations and fines in the past.

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Citadel Market Manipulation

Citadel Fines and market manipulation. — Citadel violation and fines – market manipulation.

2015

In 2015, an account operated in China by the brokerage arm of US hedge fund Citadel was suspended.

It was the latest casualty of regulators’ hunt for market manipulators and short sellers at the time.

The China Securities Regulatory Commission said that the Shanghai and Shenzhen stock exchanges had suspended 24 accounts as part of a probe into high-frequency trading.

The investigation focused on a practice known as “spoofing” in which an investor submits a buy or sell order but then withdraws it before a sale is completed — a practice that can mislead investors by creating the false impression that a stock is trading at a particular price.

Citadel confirmed that one of its accounts managed by Guosen Futures was among those suspended.

2017

In 2017 Citadel was fined by the SEC $22.6 million to settle charges of misleading conduct.

The hedge fund misled customers about the way it priced trades.

The SEC found that between 2007 and 2010, Citadel used two algorithms to execute stock trades on customers’ behalf that gave investors a worse price for their trades, even when Citadel knew better prices existed elsewhere.

“This affected millions of retail orders,” said Stephanie Avakian, the acting director of enforcement at the SEC at the time.

Citadel neither admitted nor denied the findings.

2021

Citadel violations and fines. — Citadel violations and fines – market manipulation.

In 2021, Failure-to-Delivers (FTDs) rose dramatically in the period leading up to January 28th, 2021, a phenomenon consistent with increasing short interest by market makers such as Citadel Securities.

FTDs are indictive of naked short selling, which occurs when a short seller does not actually possess the security it is supposed to borrow.

This practice is largely inaccessible to individual investors but accessible to market makers.

At the time, Citadel, Robinhood, and others restricted retail investors from buying ‘meme stocks’ in order to prevent escalating institutional losses.

Citadel eventually lost billions after betting against AMC Entertainment in 2021.

But the entire system needs a refresh – The DTCC waived a total of $9.7 billion of collateral deposit requirements on January 28, 2021, saving brokers, and screwing up retail investors.

2022

The Chicago Tribune published a piece explaining exactly what retail investors have been warning the SEC about.

Citadel Securities’ dark pool dominates a big part of the financial world, accounting for as much as half of U.S. stock market activity.

The Chicago Tribune says this prominent dark pool is run by Chicago Billionaire Ken Griffin’s Citadel Securities and has been targeting small scale retail investors.

And they’re not wrong.

Dark pools are typically involved in payment for order flow (PFOF), where they pay broker firms to receive retail order flow.

Brokers such as Robinhood and TD Ameritrade accept payment for order flow.

But retail investors have been bringing these nefarious practices in the market to light.

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Citadel, Charles Schwab Team Up to Destroy SEC Proposals

March 7, 2023 / Frank Nez / 4 Comments

Citadel, Charles Schwab Team Up to Fight SEC Proposals — Market News Daily: Wall Street Pushes Back Against SEC Stock Market Reforms 2023.

(Reuters) The New York Stock Exchange teamed up with retail broker Charles Schwab Corp and market maker Citadel Securities on Monday to ask the U.S. Securities and Exchange Commission to withdraw two recently proposed rules aimed at revamping how stocks trade.

The move represents a coordinated industry push back against what are potentially the most impactful proposals in the SEC’s biggest attempt to reform stock market rules in nearly 20 years.

“We are deeply concerned that the Commission has simultaneously issued multiple far-reaching proposals that would dramatically overhaul current market structure without adequately assessing the cumulative impact on the market or the potential for unintended consequences,” the companies said in an SEC comment letter.

The SEC in December proposed requiring nearly all retail stock orders to be sent to auctions, as well as a new standard for brokers to show they get the best possible executions for their clients’ orders.

The SEC also proposed lower trading increments and access fees on exchanges, and more robust retail order execution disclosures.

And now Citadel, Charles Schwab, and the New York Stock Exchange are fighting against these proposals that will help level the playing field for retail investors.

Payment for order flow has annihilated competition and reserved market maker Citadel Securities the right to buy retail orders from brokers such as Robinhood and TD Ameritrade.

During an interview with SEC Chairman Gary Gensler, the Chairman tells ‘We The Investors‘ that he believes the SEC should have the ‘Best Execution Rule‘, not the self-regulatory organization, FINRA.

Citadel Said in 2004 PFOF Should Be Banned

New York Stock Exchange News | Citadel SEC News Today.

Citadel pushed back on the possibility of a payment for order flow (PFOF) ban in June of 2022.

But Citadel said in 2004 that payment for order flow “creates conflicts of interest and should be banned”, according to an SEC file.

Gary Gensler said there may be a conflict of interest for brokers and that too much power is concentrated in a handful of market makers.

The SEC Chairman plans to reroute retail investors into an automated system that would provide a deep pool of liquidity.

The aim of the proposed rules is to improve market quality and efficiency, by boosting competition for retail stock orders and reducing unnecessary intermediation, SEC Chair Gary Gensler has said.

However, the NYSE, along with Schwab and Citadel Securities, asked the SEC to indefinitely withdraw the auction and best execution proposals, saying they could lead to less market liquidity and create confusing regulatory overlap.

“We believe that this more targeted approach will result in significant benefits for U.S. equity market participants, while meaningfully reducing the risk of negative outcomes for markets and investors, including the risk of firms retreating from being liquidity providers – which would be particularly detrimental to retail investors,” they said.

Market News Published Daily

Market News Today - Citadel News Today. — Market News Today – Wall Street Pushes Back Against SEC Stock Market Reforms | Citadel against SEC Proposals 2023.

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Investors Say CEOs Should Fight Naked Short Selling Like GNS

February 20, 2023 / Frank Nez

“They’re predators. They’re doing something illegal, and we want it to stop”, says GNS CEO Roger Hamilton.

The Board of Directors (the “Board”) of Genius Group Limited (NYSE American: GNS), a leading entrepreneur edtech and education group, approved at a meeting of the Board held on Wednesday 18^th January 2023, an action plan to address illegal short selling of its stock.

This action plan includes creating a Board-led ‘Illegal Trading Task Force’ to actively pursue all possible actions together with the regulators in their discovery and prosecution of persons engaging in market manipulation involving the ordinary shares of Genius Group.

This Task Force will be led by Timothy Murphy, a Genius Group Director and former Deputy Director of the F.B.I., Richard Berman, also a Genius Group Director and chair of the Company’s Audit Committee, and Roger Hamilton, the CEO of Genius Group.

The Company has been in communication with government regulatory authorities and is sharing information with these authorities to assist them.

Retail investors on social media are supporting Genius Group’s CEO Roger Hamilton in his efforts to expose and bring down manipulative short selling.

The retail community has voiced their concerns with dark pool trading, OTC trading, and naked short selling in prominent companies such as AMC Entertainment, GameStop, Mullen Automotive, Biora Therapeutics, Meta Materials, and many more.

“It’s like being robbed in a library, but you can’t shout ‘Thief!’ because there are ‘Silence, please’ signs everywhere.” – Roger Hamilton, CEO of Genius Group Limited.

Speaking Out on Naked Short Selling

Overstock CEO Patrick Byrne spoke out against naked short selling in 2007 but was ridiculed and eventually investigated himself by the Securities and Exchange Commission (SEC).

Elon Musk has commented on not just the SEC but has said at one point Tesla was the most shorted company in the market.

In a CNBC exclusive, Elon Musk says hedge funds have used short selling and complex derivatives to take advantage of retail investors.

Something retail investors who purchased so called ‘meme stocks’ in 2021 found out very easily.

“Hedge funds tank stocks using ‘short and distort’“, says the Tesla CEO.

A tactic where hedge funds impose their influence on corporate media such as The Fool, Wall Street Journal, and MarketWatch to scare people out of their money, then short the stock to capitalize on selloffs.

John Brda (Torchlight, MMTLP) talks naked short selling with GNS CEO Roger Hamilton.

Is Roger Hamilton the new voice for retail?

The retail community certainly seems to think so.

Unlike Patrick Byrne, who unfortunately didn’t have the massive support he deserved, Roger Hamilton has many large retail communities made up of millions of people supporting the cause.

Social media has allowed retail investors to voice their opinions and concerns regarding the manipulation of their favorite companies.

Citizen journalism platforms, such as FrankNez and Rebel News have helped spread awareness surrounding people’s concerns.

Should New Regulators Be Put in Place?

Retail investors are convinced FINRA, the DTCC, and the SEC are complicit in the market manipulation that occurs in these companies.

Citadel’s Global Head of Operations, David Inggs, has a board seat at the DTCC.

On January 28th, 2021, The DTCC waived $9.7 billion of collateral deposit, limiting institutional losses and limiting retail profits during the ‘meme stock’ frenzy.

The organization allowed several naked shares to flood the market prior to the massive jump in share prices only to help financial institutions in the end.

On the other end, out of the four commissioners in the SEC who voted, Hester Peirce was the only one who voted no on market transparency.

Hester Peirce is tied to a lobbyist group of anti-regulators.

The Intercept wrote a piece on Hester Peirce in 2015 titled, “SEC Nominee To Oversee Wall Street Works At Think Tank Dedicated To Blocking Regulation.”

And according to the research, Hester Peirce received 98% of her salary from the Mercatus Center, a “think tank” that provides an academic façade to a radical anti-regulatory agenda.

What does the GNS CEO have to say about our regulators?

The company is fighting back “because we want this to stop,” Hamilton told MarketWatch. “They’re taking value away from our shareholders. They’re predators. They’re doing something illegal, and we want it to stop, whether that means getting regulators to enforce existing regulations or put new ones in place.”

Should more companies fight naked short selling like GNS CEO Roger Hamilton?

Wall Street Naked Shorts – Franknez.com.

GNS CEO Roger Hamilton is bringing the fight to Wall Street and regulators.

The retail community has his back, the question is, will other CEOs step in?

Many shareholders in the AMC community have urged the company’s CEO Adam Aron to speak out against the illicit activities occurring in the company stock.

The CEO has mocked short sellers but hasn’t taken an activist stance, yet.

Should more companies fight naked short selling?

I’d love to hear your thoughts on this.

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Goldman Says Bigger Short Squeezes Coming Since Meme Stock Frenzy

February 6, 2023 / Frank Nez

Goldman Sachs Short Squeeze — Market News Today: Goldman Sachs talks short squeezes in 2023.

Goldman Sachs (NYSE:GS) is reporting hedge funds betting against stocks globally abandoned those short positions last week at the fastest pace since 2015, surpassing the speed of exits during the ‘meme stock’ frenzy in 2021.

The latest short squeeze, implying that stock prices rose so much that bearish bets become too expensive to hold, saw hedge funds caught out by a sharp rally in equities on Feb. 2 after the U.S. Federal Reserve slowed the pace of interest rate hikes and markets anticipated that rates would peak soon, per Reuters.

According to the Goldman note, the speed at which hedge funds exited bearish positions surpassed that seen in January 2021 when retail traders managed to squeeze short sellers out of stocks such as videogame retailer Gamestop (NYSE:GME) and movie theatre operator AMC Entertainment Holdings (NYSE:AMC).

During the ‘meme stock’ frenzy in 2021, GameStop shares rose to nearly $500 per share, or +1,500% that year.

AMC shares rose from $2 early that year to an all-time high of $72 per share, more than +3,000%.

Today, both AMC and GameStop remain heavily shorted with AMC Entertainment having a higher-than-ever cost to borrow fee.

Experts say hedge funds remain bearish

Despite the massive short covering, hedge fund managers do not seem to be more upbeat about markets.

“Positioning isn’t ‘high’ and it doesn’t seem like many investors are bullish, per se,” JPMorgan’s Positioning Intelligence said in a note reviewed by Reuters, adding it has also seen hedge funds adding some shorts in highly shorted stocks.

It seems institutional investors are not entirely switching sides yet but are continuing to add to their short positions on already heavily shorted stocks.

Still, short interest in both AMC and GameStop has both risen and fluctuated, signaling few shorts closing.

AMC Entertainment stock is up more than +60% this year-to-date, GME stock more than +34%.

The movie theatre chain has a high short interest of 22.84% with an extremely high cost to borrow of 239.91%.

Hedge funds will need to determine whether it’s worth paying millions of dollars per month in fees just to short AMC stock.

A short squeeze may be triggered at any moment as this weight gets too heavy.

Industrials and Information Technology Companies

The largest short positions held by hedge funds were in industrials and information technology companies, the Goldman note said.

It added that hedge funds also exited many long positions in Asian developing markets and Chinese equities last week.

Resurgent risk appetite among some investors has also fueled rallies in the shares of so-called meme stocks since the start of this year, though many analysts are skeptical the recent moves will last, said Reuters.

But I disagree.

AMC Entertainment may have bottomed out as we see the stock price bounce and retest major levels of support.

The company’s high short interest and cost to borrow has grown substantially over the past two years.

Major price action may trigger short sellers to close their positions, initiating a chain reaction that will lead to a short squeeze.

The short thesis for AMC Entertainment is getting weaker as new developments surface in the entertainment industry.

Goldman Sachs is right, massive short squeezes are coming.

And the retail investor is about to put Wall Street upside down again, just like they did during the ‘meme stock’ frenzy of 2021.

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Market News Today - Goldman Sachs talks short squeezes in 2023. — Market News Today – Goldman Sachs talks short squeezes in 2023.

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Short Sellers Are Down $81 Billion This Year

February 2, 2023 / Frank Nez

Short sellers feel the pain in the stock market’s 2023 rally, says the Wall Street Journal.

The market’s comeback in 2023 has been difficult news for one group of investors: short sellers.

Short sellers profit from the declines in the market, which we saw much of in 2022.

However, the stock market has been performing surprisingly well this year despite talks of a looming recession.

The Wall Street Journal reports that short sellers are down $81 billion this year alone as the markets begin to bounce back.

“Short sellers who have incurred hefty losses are actively trimming their positions”, said Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners.

“Investors betting against stocks have racked up $81 billion of mark-to-market losses on short positions this month through Thursday after accumulating $300 billion in gains in 2022”, Mr. Dusaniwsky said.

Experts are expecting heavily shorted stocks to squeeze as more short sellers begin to close their positions.

Is short squeeze season here?

Investors and analysts say the rally appears to be driven by a few things.

Signs that inflation is cooling have stoked bets among investors that the Federal Reserve will pivot from raising interest rates to cutting them as soon as the second half of the year.

That has helped risky assets across the board rise.

Especially risky corners of the market, such as stocks with high short interest, have rallied even more.

Analysts say that has likely forced short sellers to close out bearish positions to cut their losses — resulting in what is known on Wall Street as a short squeeze.

Retail favorites such as AMC stock, MULN, and others seem to have bottomed out earlier this year.

It’s very possible heavily shorted stocks such as AMC entertainment squeeze short sellers again this year.

“We’re seeing a mirror image of the performance within the equity market. The worst performers last year have been leading this year,” said David Lefkowitz, head of Americas equities at UBS Global Wealth Management. “It does look like some re-risking and short covering.”

“A lot of these stocks rallying were highly shorted, long duration names with earnings way out in the future. With a significant decline in the discount rate, those earnings are now worth more,” said Sameer Bhasin, principal at Value Point Capital, a New York-based family office.

Source(s): BlackBullMarket

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Market News Today: Short sellers feel the pain in stock market's 2023 rally. — *Market News Today: Short sellers feel the pain in stock market’s 2023 rally.*

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Citadel High Frequency Trading: Fined by Korea’s Regulators

February 2, 2023 / Frank Nez

Citadel High Frequency Trading: Fined $9 Million by Korea's Financial Regulators — Market News: Citadel Securities is fined $9 million by South Korea’s financial regulators.

(Reuters) South Korea’s financial regulator has imposed a fine of 11.88 billion won ($9.66 million) on U.S.-based Citadel Securities, saying it disturbed the local stock market with high-frequency algorithm trading.

The Financial Services Commission (FSC) said in a statement released on Thursday the firm had distorted stock prices with artificial factors, such as orders on the condition of “immediate or cancel” and by filling gaps in bid prices.

The firm carried out such trading on an average of 1,422 stocks per day from Oct. 2017 to May 2018, totaling more than 500 billion won worth of trades, according to the statement.

The Commission said it was the first time it had imposed fines on such high-frequency trading on the South Korean stock market, which has a high proportion of retail investors and little competition among algorithmic traders.

It added the firm did not provide algorithm source codes in the consultation process.

The regulator declined to identify the brokerage in violation but Citadel Securities confirmed it had been awaiting a decision, although it had yet to hear directly from the Commission.

“Citadel Securities works diligently to follow all applicable laws, regulations, and rules in jurisdictions in which we trade,” it said in a statement. “We strongly believe our trading complied with both Korean laws and global norms. We disagree with the FSC’s decision relating to our trading activity more than five years ago and will be seeking to appeal the decision.”

Citadel Securities was surprised and concerned to see that the regulator’s findings include references to a number of hearings the firm itself was not invited to participate in and supposed expert evidence that was never shared with the company and that it never had an opportunity to respond to, a source familiar with the situation said.

Citadel High Frequency Trading

CNN: Citadel high frequency trading in action – live.

High frequency trading takes advantage of investors and of the market itself.

One of the biggest manipulations in the market conducted by high frequency trading is spoofing.

Spoofing is a disruptive algorithmic trading practice that involves placing bids to buy or offers to sell futures contracts and canceling the bids or offers prior to the deal’s execution.

In December, Northwest Biotherapeutics sued Citadel Securities for spoofing their company stock.

The company is accused Citadel Securities LLC, Susquehanna, Virtu, and other Wall Street firms of driving its stock price down through the use of various illicit trading activities.

But this isn’t Citadel Securities first rodeo.

The hedge fund is under intense scrutiny from retail investors who say the company has too much power, allowing it to take advantage of retail trades through its payment for order flow and other manipulative tactics.

In 2015, an account operated in China by the brokerage arm of US hedge fund Citadel was suspended.

It was the latest casualty of regulators’ hunt for market manipulators and short sellers at the time.

The China Securities Regulatory Commission said that the Shanghai and Shenzhen stock exchanges had suspended 24 accounts as part of a probe into high-frequency trading.

But Citadel has a long history of market manipulation.

This was only an earlier incident where Citadel and high frequency trading have been an issue in the past.

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Market News Today: Citadel Securities gets fined $9 million by Korea's financial regulators. — *Market News Today:* Citadel Securities gets fined $9 million by Korea’s financial regulators.

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