Yesterday we wrote about over levered hedge funds getting in some BIG trouble as the WSB crowd bid up highly shorted names like GME and AMC. And probably more than one hedge fund was on the brink of insolvency...Queue the panic at financial institutions and their benefactors at the Fed...
...So retail brokers, like Robinhood and TD Ameritrade, came to the rescue. Trading in GME, AMC, BB, BBY, EXPR, etc. (you get the idea) was halted this morning! The hedgies and institutional investors could still trade them, of course. Whether Robinhood meant to or not, by closing the gate on its users, it arbitrarily called the top (at least for today) and precipated heavy losses for those customers and saved the hedge funds, who were able to close out their shorts in relative peace without losing their firms. (The most shorted stocks-HF VIP long basket dynamic effectively flipped today)
The condemations was justifiably swift and widespread:
And Ted Cruz agreed with AOC!
CNBC tried its best to defend its institutional backers but got embrassingly called out by the Winkelvie for not doing their jobs...
This evening Robinhood lamely reinstated trading on the above names...so now the same hedge funds can go super long those stocks. Thanks Robinhood!
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