Tag: JP Morgan (Page 3 of 3)

Chinese Tycoon Gets Bailed Out From $8 Billion Margin Call

March 21, 2022 / Frank Nez

Chinese tycoon Xiang Guangda has been bailed out by JP Morgan after receiving a whopping $8 billion margin call.

The margin call came about as he was shorting Nickel.

The commodity short squeezed leaving the Chinese tycoon with an $8 billion margin call.

Xiang told banks he wanted to keep shorting Nickel and shrugged off suggestions to reduce his short positions, Bloomberg.

Should this even be allowed?

Let’s discuss it.

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Chinese tycoon gets away with $8 billion margin call

The tycoon whose big short bet on nickel helped trigger one of the most dramatic price spikes in history has told his banks and brokers that he doesn’t intend to reduce his position, according to Bloomberg.

The London Metal Exchange halted trading in nickel after prices spiked as much as 250% in two days.

Xiang has told the roughly 10 banks that he still believes prices will fall and that he would like to keep his short position.

The LME acknowledged that short sellers weren’t going to voluntarily reduce their short positions.

It said there were “considerable differences in view on the appropriate price.”

Apparently big net worth short sellers make the rules.

They Chinese Tycoon secured a deal with JP Morgan and China Construction Bank that would allow it to avoid defaulting on its $8 billion margin call.

LME halts Nickel trades

The LME cancelled $4 billion in transactions as Nickel prices began to surge.

The exchange said: “Nickel will be deemed a disrupted session and all agreed trades during this session will be null and void.”

In other words, they took away the ‘buy’ button and are allowing short sellers to either close their positions or profit on the way down.

Apparently the LME has decided to bust all Nickel trades in the "second ring session" today.

This is really nuts. They are ruining their exchange's credibility to protect some very wealthy/powerful people/firms. You can't run a market like this, busting trades at someone's whim.
— Dave Lauer (@dlauer) March 21, 2022

Dave Lauer says the exchange is ruining their credibility by protecting very wealthy and powerful people/firms.

“You can’t run a market like this, busting trades at someone’s whim.”

The halts are similar to those that occurred last year during the ‘meme stock’ frenzy when Robinhood froze the purchasing of GameStop, AMC, and other heavily shorted stock.

At some point, the people will cause an uproar.

What are your thoughts on the matter?

Big banks are beginning to bail out wealthy people and firms.

What can be done about it and what should be done about it?

The Chinese tycoon is only one example, but what will happen when heavily shorted stock begin to squeeze again?

Leave your thoughts in the comment section below and share this article to raise awareness to the injustices in the markets.

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Peabody Receives a $534 Million Margin Call: Goldman Steps In

March 16, 2022 / Frank Nez

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.

Credit Suisse News: Margin call tension rises

The Swiss bank Credit Suisse is also imposing margin calls on investors exposed to Russia.

The invasion of Ukraine has left wealthy individuals invested in Russian assets with frozen accounts and demands for more collateral.

Tension really began to pick up when Russia was removed from SWIFT.

Banks in the United States are losing cash quick.

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

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.

Senior VP for coal markets at Rystad Energy Steve Hulton says prices could reach $500 per ton.

Peabody arranged a $150 million credit line with Goldman Sachs although the bank announced in 2019 that it would phase out financing for coal.

Peabody’s margin call is only a glimpse of what’s coming to various institutions in the markets worldwide.

And in the states, retail investors are waiting for hedge funds’ number to be called.

Will banks be able to inject liquidity into hedge funds?

As banks and hedge funds’ assets continue to lose their value, will banks be able to inject liquidity into hedge funds when they need it?

Leave a comment below with your thoughts.

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Are Hedge Funds About To Get Margin Called by JP Morgan?

July 14, 2021 / Frank Nez

JP Morgan Margin Call AMC — JP Morgan Margin Call

According to RISK.net JP Morgan warns hedge funds of intraday margin calls. This sounds very similar to proposal 002. The U.S bank may demand margins up to “7 times per day” according to sources.

The tough love comes from the fear of losing money and covering hedge fund positions like global banks did with Archegos Capital earlier this year. It seems like they’ve started to notice a pattern here.

As always, I’ll give you my take on what this means for us retail investors and how it plays into AMC’s short squeeze news.

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Ladies and gentlemen banks have had enough. They’re tired of getting screwed over by hedge funds overleveraging their short positions. When hedge funds cannot cover the entire hit, brokers have to cover the rest.

JP Morgan is trying to prevent from becoming like one of the affected brokers that suffered significant losses due to Archegos shorting Viacom and Discovery earlier this year.

Although the SEC might be oblivious to what’s going on, this bank sure isn’t. And if you remember, Charles Schwab has also raised margin requirements for short sellers shorting both AMC and GME stock.

Archegos meltdown resulted in billion dollar losses for global banks

Banks to massive losses due to Archegos Capital overleveraging their positions in highly shorted stock such as Viacom and Discovery.

Wells Fargo was one of the banks that did not suffer any losses. “We had a prime brokerage relationship with Archegos,” the bank said. “We were well collateralized at all times over the last week and no longer have any exposure.”

According the Reuters, Morgan Stanley lost nearly $1 billion dollars from the collapse of Archegos. Other banks hit were Credit Suisse Group and Nomura Holdings which were affected the most.

Global banks were expected to lose between $5-$10 billion dollars according JP Morgan. And now it seems JP Morgan is taking the precautions necessary to avoid enormous losses too. By issuing intraday margins, they make sure short sellers have enough cash at hand as collateral. This could possibly be the catalyst for what we’ve been waiting for.

If margin accounts cannot keep up with the daily demand for new cash in its accounts, JP Morgan may instantaneously close out overleveraged positions. This will cause AMC stock to soar.

Hedge funds and family offices are affected

Archegos was technically a family office managing billions in assets, not a hedge fund. Well now JP Morgan is demanding both hedge funds and family offices post more cash during the day if their trades loses value.

The news was provided to Risk.net by three people who are familiar with the matter. No further information aside from these intraday margin requirements were relayed by the publication.

If JP Morgan sees too much risk within some accounts, and they will, they have the power to liquidate margin accounts short selling both AMC and GME stock. The results would drive these stocks high enough to force all shorts out of their positions.

Managing margin call news expectations

It’s important for the community to take into consideration that most news regarding margin calls have merely been neutral, so far.

If this JP Morgan margin call news plays in our favor then excellent! We could very well begin seeing some short covering. But if it doesn’t, another catalyst will end up squeezing shorts out of their positions. This may be a new wave of volume or other brokers who do not want to risk their investments through these overleveraged hedge funds.

However, positive news like this should feed your conviction. When you’re in need of strength, borrow mine.

I personally believe were getting closer to this chapter coming to an end as hedge funds continue to face serious scrutiny. Think about this for a second, the cards are against them.

Retail investors, banks, whales, and the public are all against them. I’m interested to know your thoughts, leave me a comment below. Are you ready for this short squeeze? And when do you personally think this will liftoff?

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