Comments on the Archegos Capital margin calls, Cryptocurrency use case thanks to Visa, and gold’s continued correction
Ed Moya, Senior Market Analyst at OANDA joins me to recap some of the major market news starting with the Archegos Capital’s massive margin calls from late last week. We discuss what this action means for the big picture of markets and overall liquidity. We then move to cryptocurrencies and Visa’s announcement that it will start settling transactions in USD coin (USDC). It is another use case argument for cryptos. Finally we touch on gold’s continued correction today.
Click here to visit the OANDA website and read over Ed’s daily note.
B had posted this on the weekend show, but it relates to those large block trades towards the end of last week.
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Wall Street banks ditch $19 billion of stocks in ‘unprecedented’ block trade selloff – media
28 Mar, 2021
“Goldman Sachs and Morgan Stanley have reportedly sold $19 billion worth of shares in Chinese tech and US media companies.”
“Goldman Sachs alone liquidated $10.5 billion worth of stocks in block trades on Friday, Bloomberg reported citing the investment bank’s email to clients. The first batch, that included $6.6 billion worth of shares of Baidu, Tencent Music Entertainment Group and Vipshop Holdings, was sold before the market opened on Friday. Later that day, the bank reportedly managed the sale of $3.9 billion worth of shares in American media conglomerates ViacomCBS and Discovery, as well some other companies, such as Farfetch, iQiyi and GSX Techedu.”
https://www.rt.com/business/519419-wall-street-banks-block-trades/
“Another US investment bank involved in the block trades, which are believed to have wiped $35 billion off affected firms’ valuations in just one day, was Morgan Stanley. The investment bank offered two batches of shares worth $4 billion each on Friday, according to the Financial Times.”
“While block trades, when sellers are looking for buyers for large volumes of securities at a price sometimes negotiated privately between the two parties, are a common thing, the scale of Friday’s moves raised eyebrows.”
“I’ve never seen something of this magnitude in my 25-year career,” portfolio manager at Swiss-based Bellevue Asset Management AG, Michel Keusch, told Bloomberg.
Is it just me, or am I the only one that thinks the bad investments of the banks and hedge funds will hurt PMs. Aren’t they all too big to fail and will be given money and there will be no criminal activity found to exist. Call me cynical….
Interesting comments David. I’m not sure how the malinvestment from banks and hedgies will hurt the precious metals, because if anything, this further exposes the financial rot under the surface of the artificially inflated assets bubble. If the government does bail them out again as “too big to fail,” this time around there may be more pushback from people (like there should have been against this ridiculous notion of interfering in the free markets back in 2008 and 2009). In a free market, if companies make bad investments and fail, then they crash and burn, and different market participant will come in to take their place that does a better job. When the government intervenes and bails out toxic companies, like they’ve done for over a decade now (from auto makers to airline companies), then they actually are disrupting the free market forces and just showing phony the whole system is now. If anything, that shows the structural weaknesses and cracks forming under the surface, which should be a boon to investors hedging the upcoming chaos with at least a small allocation to precious metals in their portfolios.
As long as the banks are in trouble, the last thing they want is the PMs running around looking like an alternative to their fraud system.
Global banks brace for losses from Archegos fallout
March 28, 2021 – By Matt Scuffham, John Revill, Makiko Yamazaki – Reuters
“Global banks may lose more than $6 billion from the downfall of Archegos Capital, sources familiar with trades involving the U.S. investment firm said on Monday, and regulators and investors fear the episode could reverberate more widely…”
https://www.reuters.com/article/us-usa-markets-blocktrades-idUSKBN2BK0OR
Visa moves to allow payment settlements using cryptocurrency
Reuters – Noor Zainab Hussain – March 29, 2021
“Visa Inc. said on Monday it will allow the use of the cryptocurrency USD Coin to settle transactions on its payment network, the latest sign of growing acceptance of digital currencies by the mainstream financial industry.”
https://www.ctvnews.ca/business/visa-moves-to-allow-payment-settlements-using-cryptocurrency-1.5366242