Market News: Credit Suisse warns investors of naked short covering.
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 hints at occurring losses in an upturn in markets.
The bank recently called out AMC Entertainment predicting shares to fall to $0.95 despite the bank’s shares trading below the movie theatre chain company.
Now Credit Suisse is hiring 20 banks for a $4 billion injection in effort to pivot from Q3’s disaster.
Here’s the latest market news.
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Credit Suisse Naked Short Covering
Credit Suisse short covering news.
In this 6-K filing, Credit Suisse warns investors of potential losses due to the high possibility of naked short covering.
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 would send affected securities soaring as buying momentum compounds.
Heavily shorted stocks may squeeze in the process, but the results would be disastrous to short sellers.
Credit Suisse shares are now worth less than AMC shares and mainstream media is nowhere in sight urging investors to sell the bank’s stock.
On the contrary, the bank is predicting AMC shares are headed towards 95 cents per share and claims shareholders of the movie theatre chain company should sell.
Credit Suisse (CS) is currently trading at $3.95, AMC Entertainment (AMC) at $6.50, or $8.59 combined with APE.
Retail investors are baffled by the claims and by the lack of media coverage surrounding the bank’s recent decline in share prices.
Now the beloved movie theatre chain is being used as a scapegoat and target to what many investors are suggesting could be a conflict of interest between the declining bank and mainstream media.
The bank had a massive loss in Q3 of $4.09 billion and is scurrying for ways to revive their lost fortunes, per Investopedia.
AMC Entertainment on the other hand has beat earnings expectations every quarter since the beginning of 2021 when retail investors backed the company in an attempt to squeeze short sellers.
The company has been reducing its debt and increasing its value through a series of innovative and fundamental strategies such as the acquisition of several new movie theatre locations, the introduction of NFTs and cryptocurrency payment, and now the collaboration with online streaming platform giant Netflix.
The movie theatre chain recently partnered with Disney to offer Disney+ customers with exclusive perks such as special screenings at AMC movie theatres.
Is AMC Entertainment a sell?
Value investors would tell you otherwise.
InvestorPlace says now is the time to buy AMC stock as the company has come down dramatically from its all-time high.
Investors invested in great companies are losing money not because of business fundamentals, but because of the lack of regulation in the financial system.
Crypto developers say crypto crash was coordinated
LUNA and UST developers said this week’s crash was caused by a coordinated attack from hedge funds and big banks.
It comes as no surprise since hedge funds and big banks have been colluding to short specific stocks in the market.
The fed has opened investigations looking into these serious issues.
Word is spreading on Twitter and Reddit and BlackRock and Citadel are responsible for the massive selloffs in the crypto market too.
Deeper due diligence is being done on this matter.
Citadel or not, coordinated attacks on securities is something the government should be taking seriously.
Will stocks and crypto bounce back?
It’s difficult to look ahead when the markets are bleeding, after all you are seeing your net worth drop quicker than it took for it to reach new heights.
If you’re worried about today’s markets, you might have been introduced to a short-term way of investing.
While certain plays could be short-term trades, majority of the market tends to be a long-term speculative game.
We bet that the companies we’re investing in will do great over the span of 10 years or so and let the markets go through the ups and downs, at least in the case of the stock market.
Crypto has and will always have greater potential than it has previously seen.
And crypto heads know this.
Is this the end of the stock and crypto markets?
Absolutely not.
What we’re seeing today has happened several times over the course of both markets.
After a climb, there’s always some setback that scares investors momentarily.
But if there’s something we can always learn from historic patterns, it’s that stocks and crypto have always gone right back up and set even bigger all-time highs.
Is now the perfect time to buy?
Is now the perfect time to buy stocks and crypto?
It seems both stocks and crypto are having a difficult time finding a bottom.
And trying to time it has always proven that no one can time the markets perfectly.
Searching for a good entry point could just as likely end up hurting you if the markets were to suddenly go through a reversal.
Skilled long-term investors know that when the markets are red, you buy and hold.
Because the price of securities always goes up after a dreadful period of nonstop downtrend.
The upcoming reversal will have you wishing you’d have stocked up on stocks and crypto today.
Peabody Margin Call – Global margin calls will happen in every corner of the financial sector
Leading global pure-play and Fortune 500 company Peabody received a $534 million margin call.
The Australian benchmark coal price is up more than 400% in the past 12 months, hitting $425.
Peabody was not prepared and got slammed with a $534 million margin call.
The sum is more than half the cash the company had at the end of December 2021.
Margin calls are beginning to happen left and right and we’re going to discuss it.
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Margin calls in the coming weeks
The Russian-Ukraine conflict is affecting global markets sparking margin calls in every corner of the finance sector.
Russia’s war in Ukraine has further fueled a rally in coal driven by a squeeze on global energy supplies.
Chinese tycoon Xiang Guangda is currently facing an $8 billion margin call after Nickel prices skyrocketed to $100,000 per ton.
Xiang Guangda tells banks he has no intention in reducing his positions.
The short seller is requiring a coordinated bank bailout including the participation of JP Morgan.
The London Metal Exchange halted trading in nickel on Tuesday morning after prices spiked as much as 250% in two days, driven by brokers rushing to close out short positions after holders of bearish bets struggled to make margin calls.
Citigroup disclosed in its annual report that it has nearly $10 billion in exposures to Russian counterparties, including loans, reverse repo agreements and cash deposits.
Morgan Stanley’s next gen emerging markets fund (MFMIX) has also been exposed to Russia with nearly $16.6 million frozen due to Russian sanctions.
Schwab’s fundamental emerging markets large company index ETF (FNDE) has also been affected with 12.7% being exposed to the Russian stock market.
Peabody receives a 10% loan from Goldman
Goldman Sachs steps in with 10% loan – Peabody Margin Call
Peabody shares plunged 17% after announcing the margin call, taking a chunk out of the gains they had made in recent months as the coal market boomed.
Margin calls could increase if the coal market moves higher.
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Wealthy individuals face frozen accounts
The invasion of Ukraine has left wealthy individuals invested in Russian assets with frozen accounts and demands for more collateral.
In a margin call, banks ask investors to add cash or securities to a portfolio that typically includes borrowed funds when the market value drops below margin requirement.
The bank can forcibly liquidate clients’ holdings if they are unable to deposit the funds.
Credit Suisse told PBI that its position in the matter remains unchanged.
“Credit Suisse serves its clients while complying with all applicable laws and regulations, including any sanctions from relevant authorities,” the firm said.
This isn’t affecting just Europeans; Credit Suisse is imposing margin calls in the U.S. too.
How is this affecting investors in the U.S.?
Getting rid of Russian assets is a big problem for hedge fund managers in the U.S.
Russia’s central bank retaliated by banning Russian brokers from selling securities held by foreigners.
Furthermore, Russian Prime Minister Mikhail Mishustin said the country will temporarily stop foreign investors from selling Russian assets.
Hedge funds in the U.S. holding Russian assets are in a big mess right now.
Margin call tension is causing liquidation in many areas of the market.
U.S. hedge funds will be forced to liquidate positions or hedge their plays, further overleveraging short positions.
Financial institutions in the U.S. exposed to Russia
Morgan Stanley – Credit Suisse AMC Margin Calls – Credit Suisse News Bloomberg
Citigroup disclosed in its annual report that it has nearly $10 billion in exposures to Russian counterparties, including loans, reverse repo agreements and cash deposits.
Citigroup stock is down more than 11% year-to-date.
Morgan Stanley’s next gen emerging markets fund (MFMIX) has also been exposed to Russia.
Nearly $16.6 million is frozen due to Russian sanctions.
That’s 13.6% of the total net assets of $122 million in the fund.
Schwab’s fundamental emerging markets large company index ETF (FNDE) has also been affected.
Out of the $4.8 billion in assets, 12.7% have been exposed to the Russian stock market.
