Category: zerohedge

The already lengthy and continuing election deadlock drama in Israeli politics has once again pushed Prime Minister Benjamin Netanyahu to the side, leaving his political future in extreme doubt. His mandate to form a new government has failed for the third time in two years, with the Likud leader’s appointed window for doing so having expired on Tuesday night.

The Israeli leader who was been prime minister since 2009 and has consistently focused on a national security platform was unable to strike an agreement with his main rival Naftali Bennett, chairman of the right wing Yamina party, which now shifts the mandate to his rivals in the centrist Yesh Atid party. On Wednesday Israeli’s president formally tapped Yair Lapid – party leader of Yesh Atid – to forge a new government. The clock now starts on his 28 days. 

“President Reuven Rivlin, in a televised address announcing his choice of Lapid, said the former finance minister had the pledged support of 56 of parliament’s 120 members, still short of a majority,” Reuters reports.

Rivlin was quoted as saying: “It is clear that parliament member Yair Lapid could form a government that has the confidence of the Knesset, despite there being many difficulties.”

If Lapid fails to secure the required backing of 61 out of 120 Knesset lawmakers, then the country could be headed toward yet another national election, following four prior Knesset elections in under a mere two years. Such an election would present Netanyahu’s only chance of political survival. 

BREAKING: #Israel Opposition Leader Yair Lapid Gets Nod to Form New Gov, following Netanyahu’s Failure.

He has 28 days. If he succeeds, Israel enters post-Netanyahu era. If not, back to elections/ballot box.

— Joyce Karam (@Joyce_Karam) May 5, 2021

Axios notes the importance of these next 28 days for the prime minister both politically and personally: “For Netanyahu, this is a desperate moment. In addition to watching the mandate pass to his rivals, he’s also facing an ongoing corruption trial that could eventually land him in prison.”

The criminal conviction is only possible if he doesn’t have the immunity that comes with being current prime minister, which has long involved an assortment of accusations ranging from fraud to bribery to breach of trust. 

Here’s a review of the extreme lengths Netanyahu has gone to over the past two weeks to secure a political majority, which clearly remained out of reach, via Axios:

• He has focused instead on trying to drive a wedge between Lapid and Naftali Bennett, the leader of a right-wing party. The two have been negotiating toward an alternative government.
• Netanyahu considered unprecedented steps to try to sabotage the transfer of the mandate to Lapid, Tal Shalev reported for Walla News, including falsely notifying Rivlin that he formed a government. After his plans were exposed, he backed off.
• Netanyahu has also considered ordering his right-wing bloc to recommend to Rivlin that he give the mandate to Bennett, rather than Lapid. Netanyahu could then pressure Bennett to negotiate only with his fellow conservatives. But that plan too fell apart after Bennett refused to rule out negotiations with Lapid.

President Rivlin awards Yair Lapid the mandate to form a government after he gains 11 recommendations more than he did last time. pic.twitter.com/InesmCZN30

— Eylon Levy (@EylonALevy) May 5, 2021

It remains however, often against seemingly insurmountable odds that Netanyahu has over the years faced many near-misses in terms of being booted out, which has made him Israel’s longest serving prime minister in history.

In the past four years, Uber generated over $48BN in revenue by burning $10BN in cash. It has never been profitable, and this is not the quarter it will change that.

One day after its its biggest competitor Lyft reported impressive numbers only to see its stock tumble today, moments ago the world’s biggest ridesharing company reported Q1 earnings which beat on the top and bottom line yet which will likely lead to more selling now that even solid beats are punished by the market.

For Q1, Uber reported the following results:

• Revenue revenue Ex-UK Accrual $3.50B beating exp. of $3.28BN (net revenue was $2.90 billion)

• Adjusted EBITDA loss $359 million, beating the exp. loss $450.4 million

Of note, the company reported that it has hit positive EBITDA margins in its “profitable” markets in Q1 (hardly a shock as the name implied). It is the “investment markets” that remain challenging

Loss per share of 6c, beating the exp loss/share 60c; the net loss benefited from a USD 1.6bln gain from divestiture of ATG, partly offset by a $600MM UK accrual made for the resolution of historical claims in the UK relating to the classification of drivers. Said accrual also reduced Uber Revenues and Mobility Revenues by $600 million.

CFO Nelson Chai said that “Uber is very well positioned to drive long-term value, with improving EBITDA performance, significant liquidity, and increasingly valuable minority investments,” and judging by the following summary, he may be right, especially now that the world is exiting covid lockdowns:

How did the company get these results? Here are some more details:

• Gross Bookings 19.54b, beating exp. 18.07bln)

Delivery Bookings 12.46bln, beating exp. 11.09bln.

Mobility Bookings 6.77bln, beating exp. 6.74bln)

The one miss for the quarter, was the number of Monthly Active Platform Consumers which at 98MM missed exp. of 100.2MM.

Some other details: cash, cash equivalents and short-term investments were $5.7 billion at the end of the first quarter, giving Uber a solid cash buffer, excluding its $12.9BN in equity stakes in companies like Didi, Grab and Aurora.

Despite the blowout earnings, Uber stock was barely changed after hours, having slumped earlier following the news that Biden would end the Trump-era gig worker rule which made life for Uber and Lyft so much easier.

 

Authored by Michael Snyder via TheMostImportantNews.com,

Every dollar that the federal government borrows and spends puts us even closer to a day of reckoning. 

Many Americans (especially those on the left) seem to think that we can endlessly spend trillions upon trillions of dollars without ever suffering any consequences.  If that was true, why hasn’t any other society in all of human history ever been able to do such a thing?  Unfortunately, the truth is that the United States is not immune to the laws of economics.  Wildly creating money and driving up our national debt to absurd heights is inevitably going to crush our economic system.  And at this point, our debt-to-GDP ratio is already higher than Greece’s debt-to-GDP ratio was when the economy of that country finally collapsed…

But it’s worth noting that the US debt-to-GDP ratio—essentially a country’s debt compared to its annual economic output—was 129 percent at the end of 2020. In other words, the official US debt was nearly a third larger than the entire US economy.

That is considerably higher than Greece’s debt-to-GDP ratio in 2010, when it received a bailout from the International Monetary Fund to avoid defaulting on its obligations.

Even though we are already at such a dangerous level, the Biden administration wants Congress to pass another four trillion dollar spending package…

Senate Minority Leader Mitch McConnell, R-Ky., said Monday that he did not expect any Republican senator to support President Biden’s push for a $4 trillion spending package on infrastructure and other projects.

Biden has outlined a two-part tax and spend proposal with funding for physical infrastructure projects as well as initiatives favored by his administration, such jobs training, elderly care and universal preschool. McConnell reiterated that the $4 trillion price tag was a nonstarter for Republicans, as well as some Democrats, who favor a smaller plan directly tied to infrastructure projects such as roads and bridges.

We simply don’t have the money to do what Biden wants.

In fact, we didn’t have the money for any of the “stimulus packages” that have been passed since the start of the pandemic.

We had to borrow every single dollar that went out in the “stimulus checks”, and now Democratic lawmakers are “clamoring” for a fourth round of those checks…

Democratic lawmakers in both chambers of Congress are clamoring for a fourth round of stimulus checks to help Americans who are still struggling financially during the coronavirus pandemic.

Such a move could lift more than 7 million people out of poverty, according to a recent analysis from the Urban-Brookings Tax Policy Center, a nonpartisan think tank.

If more money is the solution, then why don’t we send out five billion dollars to every American citizen?

That would certainly fix all of our problems, right?

Everyone would be a “billionaire”, and then life in American would be glorious.

Or not.

Sadly, the truth is that our “leaders” are systematically destroying the value of our currency and are plunging us into an abyss of debt from which our nation will never recover.

I warned that once the government started sending checks directly to the American people that it would never be enough.

At this point, people are begging for more checks even though 34 percent of all U.S. income now comes directly from the federal government…

Putting that number in perspective, in the 1950s and 1960s, transfer payment were around 7%. This number rose in the low teens starting in the mid-1970s (right after the Nixon Shock ended Bretton-Woods and closed the gold window). The number then jumped again after the financial crisis, spiking to the high teens. And now, the coronavirus has officially sent this number to a record 34%!

And that’s how creeping banana republic socialism comes at you: first slowly, then fast.

We are not on the road to socialism.

We are already there.

In fact, the U.S. has been a socialist country for quite a while now.  We may not use the term “socialist” to describe ourselves, but that is precisely what we have become.

As our system melts down right in front of our eyes, many in the financial community are trying to figure out how to protect themselves.

For example, legendary investor Sam Zell has never been very enthusiastic about gold, but now he is suddenly changing his tune…

“Obviously one of the natural reactions is to buy gold…It feels very funny because I’ve spent my career talking about why would you want to own gold? It has no income, it costs to store. And yet, when you see the debasement of the currency, you say, what am I going to hold on to?”

Other Americans are preparing for the coming meltdown in other ways.  As crime rates in our cities continue to spike, more Americans than ever before are buying guns…

The FBI conducted more than 3.5 million gun-related background checks last month, a 20% year-over-year increase from April 2020, according to the latest FBI figures released Monday.

Nearly 1.7 million of those gun background checks were specifically for gun purchases, according to the National Shooting Sports Foundation, a firearms industry trade group that cross references FBI data with actual sales figures provided by gun merchants to determine how many guns are sold monthly.

NSSF spokesman Mark Oliva said the firearms industry sold more guns last month than in any April on record.

Deep in their guts, most people can feel that our society is rapidly approaching a “tipping point”.

Nobody knows the exact moment when we will have passed the point of no return, but just about everyone can sense that it is coming.

Every single day, U.S. consumers go into even more debt.

And every single day, U.S. corporations continue to binge on debt as if tomorrow is never going to arrive.

State and local governments continue to pile up record levels of debt, and the federal government is literally stealing more than 100 million dollars from future generations of Americans every single hour of every single day.

We should be thankful that this unprecedented debt bubble has been able to persist for as long as it has, but there is no way that this party can go on forever.

Soon it will end, and that means that our current way of life will soon come to an end as well.

*  *  *

Michael’s new book entitled “Lost Prophecies Of The Future Of America” is now available in paperback and for the Kindle on Amazon.

While bonds, crypto, and the dollar largely trod water today, Commodities rose for a record 16th straight day today…

Source: Bloomberg

That is the highest for that index since July 2015…

Source: Bloomberg

After Janet Yellen shit the bed yesterday, today’s bounce was barely noticeable (and non-existent in most cases)…

The Dow outperformed on the day with Big-Tech and Small Caps the laggards…

At 1400ET a major sell program slammed stocks – around the same time as the Biden admin supported the waiver on COVID vaccine-patents at the WTO.

Source: Bloomberg

Get back to work Mrs.Yellen…

Peloton puked as it recalled its child-eating Treadmill…

 

Treasuries were modestly bid today, improving late on as stocks slumped. The belly is outperforming this week with 7Y down 6bps…

Source: Bloomberg

The 10Y tested above 1.60% once again but could not hold it…

Source: Bloomberg

The dollar oscillated around in a tight range today ending unchanged…

Source: Bloomberg

Loonie at 4 year highs…

Source: Bloomberg

Crypto was modestly higher today, but ETH traded in a narrow range, unable to make a new record high… for a change…

Source: Bloomberg

Oil prices hit a new cycle high before WTI tumbled back below $65 (despite a big surprise crude draw) as perhaps weaker than expected product demand raises red flags. Also on a technical note, today saw the stops run from OPEC’s spike…

Lumber surged above $1600 today – a new record high – and is rapidly heading towards surpassing gold (for the first time since 2004)…

Source: Bloomberg

And while Commodities continue to charge higher (Spot Ag at its highest since Oct 2012), Cocoa is bucking the trend amid a period of oversupply at a time when the pandemic is hurting global chocolate demand…

Source: Bloomberg

Gold managed to hold on to gains today with futures hovering around $1780 (unable to break $1800 once again)…

And while LME Copper nears $10,000 (and its record highs from 2011), Zambia – which relies on the metal for 70% of its export earnings – is not seeing the benefits as the Kwacha collapses to a new record low (against the USD)…

Source: Bloomberg

Finally, we note that 5Y Breakevens pushed to their highest since 2006 today…

Source: Bloomberg

But, of course, this is all just transitory.

The Pentagon and US Space Command are said to be tracking a large Chinese rocket which is set to reenter Earth’s atmosphere at some point this coming weekend, likely “around May 8th” according to the latest DoD statement. Crucially, the concern is that the falling rocket’s debris could land on inhabited places and pose a danger to people below, given that it is among the largest ever launces to make an uncontrolled and high speed re-entry into earth’s atmosphere. 

It’s also the Chinese Long March 5B rocket’s size – at 30 meters in length and weighing 22 tons – that poses the likelihood that an immense amount of debris could fall down to Earth’s surface as opposed to be being burned up upon re-entry, as is typical with smaller rockets.

US Defense Department spokesman Mike Howard issued to following details in a Tuesday statement:

The rocket’s “exact entry point into the Earth’s atmosphere” can’t be pinpointed until within hours of reentry, Howard said, but the 18th Space Control Squadron will provide daily updates on the rocket’s location through the Space Track website. The rocket was used by the Chinese to launch part of their space station last week. While most space debris objects burn up in the atmosphere, the rocket’s size — 22 tons — has prompted concern that large parts could reenter and cause damage if they hit inhabited areas.

This is something which, though very rare, has happened in the recent past. In May of 2020 a Chinese Long March 5B made a similarly uncontrolled re-entry which resulted in debris raining down on inhabited areas of the Ivory Coast. 

At one point during that 2020 incident it was feared the debris could fall over the North American mainland, but it had re-entered over the Atlantic with debris reaching the African coast, as photos at the time showing pieces of internal rocket components scattered across a village confirmed…

Reports of a 12-m-long object crashing into the village of Mahounou in Cote d’Ivoire. It’s directly on the CZ-5B reentry track, 2100 km downrange from the Space-Track reentry location. Possible that part of the stage could have sliced through the atmo that far (photo: Aminata24) pic.twitter.com/yMuyMFLfsv

— Jonathan McDowell (@planet4589) May 12, 2020

Currently Long March 5B rocket, which was launched on April 28 in order to send key components to China’s new next-generation space station, is orbiting the globe about 15 times a day at up to 18,000mph. This means any tiny change in trajectory can drastically alter its final re-entry point.

One Harvard astrophysicist, Jonathan McDowell, has been widely quoted as saying there’s very minimal risk that rocket parts could actually fall on people.

“I don’t think people should take precautions. The risk that there will be some damage or that it would hit someone is pretty small — not negligible, it could happen — but the risk that it will hit you is incredibly tiny. And so I would not lose one second of sleep over this on a personal threat basis,” he said. The scientist added: “There are much bigger things to worry about.”

In a major rebuke to the west’s biggest vaccine makers (including Pfizer, Moderna and J&J), President Joe Biden has decided to break with the Bill Gates-backed status quo and support a WTO initiative to make COVID-19 vaccine intellectual property open to all.

SCOOP: The U.S. will support a proposal to waive IP protections for Covid-19 vaccines, @AmbassadorTai tells @EMPosts and me. The U.S. will now participate in negotiations on text at the WTO.

Story on @TheTerminal

— Jenny Leonard (@jendeben) May 5, 2021

US stocks pulled back on the news, with the tech-heavy Nasdaq leading the selloff, as support for the WTO waiver proposal sponsored by India and South Africa would likely help accelerate the pace of vaccinations across the developing world.

Shares of Pfizer…

…and Moderna…

…were hit particularly hard since the success of the waiver would likely severely devalue their COVID vaccine business, which Pfizer said just yesterday will likely be a “durable revenue stream” as COVID vaccines likely become an annual dose like the flu vaccine.

Before announcing his divorce, Bill Gates recently doubled down on his opposition to the IP waiver proposal, insisting (seemingly without evidence) that poorer countries would be better off waiting to buy jabs from Pfizer, Moderna, J&J and others instead of rushing to make their own under an “open vaccine”-style paradigm.

It’s just the latest blow against Gates, the world’s de facto COVID vaccine czar, in what is shaping up to be a rough week for the billionaire.

Following almost two months of roughly flat-lining new Covid cases in the US, we are now again seeing clear signs of new improvement despite a notable slowdown in covid immunizations.

In recent days, many in the administration and its media propaganda arm, have tried to spook the broader population with scary stories that the recent pace of vaccinations will slow down sufficiently to prevent herd immunity from being reached, hoping to force any holdouts to get vaccinated. As a reference, as of Monday, the US population has received ~246M vaccines, or ~45% of the doses needed for full vaccination of the entire 12+ yo population (assuming two doses are needed for full vaccination).

Here are the facts: as Morgan Stanley notes, since the J&J pause (which has since been reversed), 7-day average daily vaccinations have declined by ~26% (3.4M to 2.5M).

However, it’s not all just J&J: as Morgan Stanley’s Matthew Harrison notes next, along with the decrease in the rate of J&J vaccine administration starting on April 13th, the administration rate of the other two available vaccines in the US (by Pfizer/BioNTech and Moderna) has also declined. Specifically, while use of the J&J vaccine has declined ~85% from the date of the pause in use, use of the Pfizer vaccine is down ~18% (~18% from peak) and use of the Moderna vaccine is down ~11% (~18% from peak). Therefore, the recent reduction in the total vaccination rate in the US is driven by a decrease in the administration rate of all available vaccines in the US.

While Harrison hopes the trend can stabilize, he doesn’t expect a quick reversal, as the J&J pause clearly has had an impact on the vaccination rate. Still, despite the pause, ~50% of US adults have received their first shot, penetration which is similar to the rate of willingness among the population. As shown in Exhibit 3, the rate of google searches for expressions related to vaccination (“covid vaccine” and “covid vaccine appointment”) had already started to decrease in early April and, if google trends represent a leading factor of the daily vaccinations (similar to what we had seen with the number of cases in our previous notes, e.g. here), then one would expect a reduction in the number of daily vaccinations sometime in mid-April.

As noted above, Morgan Stanley concludes that “without stabilization, our broad vaccination target by mid-summer as we discuss here could be at risk.”

That’s the bad news. The good news is that the slowdown in the rate of vaccinations is not leading to an increase in new cases: as BofA notes, the 7-day average of new cases declined 31% over the past 18 days without being influenced by holiday related changes in testing activity.

The 7-day PCR test positive rate declined to 4.5% from 5.3% over the same period.

Also the more  reliable – but slightly lagged – data on people hospitalized now shows a 7-day decline of 8.4% to 38,680 – now the lowest level since October 2020.

According to BofA, “in the past, data like that were reliable indicators of the beginning of significant and persistent improvement in the US Covid-19 situation.”

But the clearest indication that any vaccine-related scaremongering is just that, is that the University of Washington’s IHME Covid-19 model continues to forecast that daily infections then roughly halves monthly a few times after the turning point, and eventually shrinking to virtually nothing by the late summer.

One week after he wrote that early indications point to a 1.5 million jobs number, Standard Chartered’s Global head of FX Research, Steve Englander has published an even more important report, one looking at what jobs number would scare investors into believing the economy is overheating even more than is accepted, and spook stocks into a selloff. Englander’s summary: 2 million+ April job additions are needed for investors to see risk that the Fed changes its stance; Meanwhile, the widely expected whisper range of 1.0-1.5 million jobs “may not be enough for the Fed to shift, even if jobs exceed the 1mn consensus.” Of course, the bar for a job growth surprise is higher if 10Y UST yields are above 1.60%, which is not too far from today’s 1.59% yield.

Below we excerpt from his latest note, “What job growth would scare investors?”

We expect the US April non-farm payroll report (NFP; released 7 May) to show an increase of 1.5mn versus the consensus of c.1mn, and the number could well be higher, in our view (Early leads point to 1mn+ jobs). Of 69 forecasters in the Bloomberg consensus, 33 see 1mn jobs or more; our forecast is close to the top.

Our judgment is that it would take 2mn jobs for investors to think that the Fed might reconsider its view that the tapering discussion is premature. We think investors will see anything below 1.5mn as a continuation of strong data, but not enough to shift the Fed. Between 1.5 and 2mn there is likely to be uncertainty on Fed perceptions.

2mn+ jobs would be enough to get 10Y UST yields back over 1.60%, in our view, even if such strength is not proof of what the Fed dubs “substantial progress”. This could further erode the low asset-market volatility of recent months. Below 1mn jobs, yields could come off sharply. We do not see 1.0-1.5mn jobs as a sufficiently significant positive surprise to bond investors. Yields could fall on relief that the surprise was not greater.

For FX, the 2mn+ outcome with higher yields would probably be risk-off, and a USD plus. Vulnerable high-yielding EM currencies such as the TRY would likely suffer the most. In G10, commodity currencies may be vulnerable because of positioning and because investors see the yield impact as more important than the activity surprise. The best outcome for EM and commodity currencies is probably job growth between the 900,000 and 1.25mn, strong but not threatening from a Fed perspective.

The adult population in the employment-to-population ratio is 260mn, so 1.3mn job additions would increase the ratio by c.0.5%. Fed officials, including Fed Chair Powell, point to this ratio as the key labour-market gauge. Recently, Richmond Fed President Barkin indicated that he wanted to see substantial progress in getting to the pre-COVID cycle high of 61.1% (Figure 1). We estimate that would require the creation of 9mn jobs, just over 1mn per month to get there by end-2021. Progress is not the same as complete retracement, so we think near 60.5% is probably close enough to satisfy the vague criteria; this would be about 8mn job additions over the next couple of months.

We think investors expect the spring and early summer months in the US to be the high point of reopening and job creation. April and May releases of 2mn+ jobs would be roughly half of the needed job creation, and so approach the employment-to-population target within a couple of months. If April jobs hit or ran below expectations of 1mn, there would be no room for significant deceleration to reach the target ratio before year-end. If April and May were at 1.5mn and June and July hit 1mn, 3mn jobs would be needed over the next five months, about 600,000 per month to get in the range. This is possible, but would depend on the market thinking that April’s job creation would not decelerate rapidly.

To us the key question is what number would lead the center of the Fed to consider the possibility that the economy is recovering faster than expected. We doubt that a single number would be enough to change the Fed’s stance, but it would focus attention on the next data release. Unusual reactions to surprises can occur if forecasters’ views differ from investors’. In addition, investors may sometimes delay investments in advance of a major data or central bank event for fear of being badly wrong-footed. When the event is past, they proceed with the intended transactions and sometimes this pent-up demand outweighs any impact from the surprise.

We also think that the initial level of bond yields matter. As of midday ET on 4 May, 10Y USTs yielded 1.58% and money-markets were pricing in slightly more than three Fed hikes by end-2023. If yields were above 1.60%, it would take a bigger surprise to push yields sustainably higher than if yields were 1.55%. We can imagine 10Y yields rising 8-10bps in the first instance on a 2mn+ NFP print, but see momentum fading and yields retracing a bit thereafter.

Price action recently in response to strong data releases suggests to us that positioning is still skewed net short. Hence, the initial knee-jerk higher in yields might simply be used as an opportunity for profit-taking, if even the market does not see a 2mn+ job print as proof of “substantial progress”. It would qualify as progress towards “substantial progress” perhaps but not “substantial progress” itself.

We are also cognizant of the risk of a short fall in jobs versus expectations. Only 2 of 79 forecasts are below 800,000, so the consensus of 1mn could generate a modest bond rally and 650,000 quite a move down. Given the volatility of labor-market data, such a print might not extinguish optimism, but it would raise the possibility that the market is wrong in its hawkishness and the Fed is right in its dovish stance. On such an outcome we could see 10Y UST yields drop below 1.50%. A weak number in isolation (i.e., if other indicators point to a robust reopening) might have a modest and possibly temporary negative impact on growth-linked currencies such as the ZAR and MXN. However, if a sequence of releases put the strong global growth story into question, equities could suffer, dragging down a broad set of risk- and growth-linked currencies.

Our discussion has been tied to NFP because that has been the focus of forecasters. However, much of the policy discussion relating to the employment-to-population ratio (and minority job gains) is derived from the household employment survey, which is independent of the payroll survey. On a month-to-month basis the employment numbers based on NFP are generally considered more reliable. The two measures of employment generally converge over roughly a 12-month period and tend to be more aligned when they are driven by large, common cyclical forces. We expect market reaction to first key off the NFP numbers and then the unemployment rate, because headlines focus on these. But there could be confusion if employment in the household survey diverges from employment in the payroll survey.

The other day, we learned that Credit Suisse, which was left on the hook for $5 billion after dumping blocks of stocks owned by its prime brokerage on behalf of Archegos Capital Management, earned just $17MM in fees from its relationship with Archegos, revealing that the fund was a 300x leveraged time bomb for Credit Suisse.

This helps explain why Lara Warner, the bank’s former risk chief, apparently wasn’t aware of the details of the relationship until days before the blowup: Archegos simply wasn’t an important enough client.

Now, hours after UBS CEO Ralph Hamers and Chairman Axel Weber launched an apology tour to investors after revealing a surprise loss tied to Archegos, the FT reports that Archegos is finally preparing to officially file for bankruptcy protection as Credit Suisse and the other half dozen prime brokers who also worked with the fund threaten lawsuits to try and recover whatever they can to help compensate for the more than $10 billion in losses reported so far.

Bill Hwang

For the banks, this is now a push to recoup any losses that they can.

According to the FT, the New York-based family office, infamously run by former Tiger Asia head Bill Hwang, has hired restructuring advisers to assess potential legal claims from banks and to plan for a winding down of its operations as it prepares to seek bankruptcy protection.

The biggest question for Archegos is whether it might have recourse for how its brokers unceremoniously dumped the fund’s positions, effectively forcing a firesale that send the fund’s assets to zero.

A person close to the situation said: “There is a question mark over how much the banks are entitled to claim and whether the fund has any recourse for the way the banks behaved when they dumped the stocks. It will come down to what indemnity was in the loan and swap agreements.”

“They have all lawyered up and threatened lawsuits,” the person added. “The banks are all going to claim as much as they possibly can.”

To be sure, it’s not exactly clear how much money the fund has left, though it reportedly had  committed (with the same collateral being offered to multiple banks) all its roughly $10 billion in assets to derivatives trades that allowed the firm to take massive positions in companies including ViacomCBS without ever needing to disclose the stake.

All told, the six banks that served as prime brokers for Archegos – Credit Suisse, Nomura, Morgan Stanley, UBS, MUFG and Mizuho – have reported some $10 billion in losses so far.

Lenders are also reportedly investigating whether Hwang’s family office withheld or provided incorrect information about the scale of its borrowing from other prime brokers, with UBS reportedly investigating whether it was “fraudulently induced” to lend to Archegos.

The prime brokers are facing investigations of their own into their risk controls from regulators from the US to Switzerland.

US lawmakers have also pressed these banks to explain why they extended such large levels of credit to Hwang despite his former fund, Tiger Asia Management, being charged with insider trading by authorities in the US and Hong Kong.

Via BabylonBee.com,

It’s hard to know what’s true these days. That’s why our fact-checkers work around the clock to protect you from dangerous misinformation that could lead your feeble little mind astray…

How do Biden’s most influential statements stand up to our rigorous fact-checking? Read and find out! You can trust us. We’re fact-checkers.   

1. “So you go ahead and you stack spaghetti sauce at a store, and and and a supermarket, you control the guy or the woman who runs the brings out the carts on on on ah, on a forklift.” 

FACT CHECK: TRUE 

After researching this claim from Biden, we found there are indeed people who stack spaghetti sauce at grocery stores. We could not confirm whether the spaghetti sauce stackers actually control the people who bring out the carts, or whether they use a forklift to do so. While some facts of the claim are unconfirmed, we’re rating this true because Biden is a really good guy. 

2. “High-speed rail at 200 miles an hour from Charlotte, one, and another line going from, in Florida, down to Tampa. Another line, if we had moved Gov, we would have had that tunnel fixed in New York now. The money was there to get it done.”

FACT CHECK: TRUE 

According to our research, there are some high-speed trains that can reach speeds of 200 miles per hour. Charlotte, Florida, Tampa, and New York are all real places. Money exists. It doesn’t get more accurate than this. 

3. “Could.. take care if you were a quartermaster, you can sure in hell take care running a you know, a department store, thing, uh, you know, where the second floor of the ladies department or whatever.”

FACT CHECK: NEEDS CONTEXT

While the specific meaning of this isolated Biden quote is unclear, it was spoken in the context of a larger discussion about Biden caring about poor people and doing good things for minorities. He’s the best. 

4. “And the kids used to come up and reach in the pool and rub my leg down so it was straight and then watch the hair come back up again. So I learned about roaches, and about kids jumping on my lap. And I love kids jumping on my lap.”

FACT CHECK: NEEDS CONTEXT

We’ll get back to you on this. 

5. “Now we have over 120 million dead from COVID.”

FACT CHECK: TRUE

While the specific numbers of this claim aren’t technically accurate, they speak to a deeper truth that COVID is really bad. Thanks for protecting us, Mr. President!

6. “I may be Irish but I’m not stupid.”

FACT CHECK: TRUE

Our researchers determined Biden has English, French, and Irish heritage, so the first part of his statement is true. He also has an IQ of 76, which technically means he doesn’t fall under the definition of mentally handicapped. Another true statement! 

7. “I guess what I’m trying to say without boring you too long at breakfast—and you all look dull as hell, I might add. The dullest audience I have ever spoken to. Just sitting there, staring at me. Pretend you like me!”

FACT CHECK: TRUE

The crowd was indeed very dull. We know because we were in it. And we are very dull. We appreciate Biden calling us out here and encouraging us to be better. 

8. “His mom lived in Long Island for ten years or so. God rest her soul. And- although, she’s- wait- your mom’s still- your mom’s still alive. Your dad passed. God bless her soul.”

FACT CHECK: TRUE

Biden made this statement regarding Irish Prime Minister Brian Cowen’s mother, who sources confirmed was indeed alive at the time. Biden also called Cowen’s deceased father a “her.” Since it is unclear what gender Cowen’s father identified as at his death, we are giving Biden the benefit of a doubt and rating this “true.” 

9. “Poor kids are just as bright and just as talented as white kids.”

FACT CHECK: TRUE

…we know what you meant Mr. President. It’s ok! 

“You cannot go to a 7-11 or a Dunkin’ Donuts unless you have a slight Indian accent… I’m not joking.”

FACT CHECK: NEEDS CONTEXT

Biden’s statement was spoken during an exchange where he was praising the vibrant culture brought by Indian-Americans to the area of Delaware where he lives. It was actually the opposite of racist, and shame on you for thinking otherwise. 

10 out of 10 successful fact-checks for President Biden!