Because it is so important and another part of the movement downwards I am posting this seperately.
First, the TruNews report
‘It’s going to hurt more than anybody thinks it ever could’: Dire economic prediction issued
Financial regulators across the world are monitoring the collapse of the New York-based billionaire Bill Hwang’s personal hedge fund.
The sudden liquidation of Hwang’s Archegos Capital Management sparked a fire sale of more than $20bn assets that has left some of the world’s biggest investment banks nursing billions of dollars of losses.
The US Securities and Exchange Commission on Monday said it had been “monitoring the situation and communicating with market participants since last week” as panic spreads about the possible scale of the fallout from the forced liquidation of Hwang’s Archegos fund.
The investment banks Nomura and Credit Suisse on Monday warned investors that they are facing huge losses from their exposure to Archegos. Shares in Japan’s Nomura dropped 16% and Credit Suisse dropped 14% as analysts speculated on just how much money they could lose.
Nomura, which is Japan’s largest investment bank, warned it faced a possible $2bn loss. Credit Suisse said its losses would be “highly significant and material” but did not put a figure on it. The Financial Times said the Swiss bank could faces losses as high as $4bn. Credit Suisse declined to comment on any estimate.
You can almost hear the relief in Brussels that the latest financial crisis, the blowup of Bill Hwang’s family office Archegos, has passed it by. That doesn’t mean the next one will.
The European Union is eager to take work from the City of London after Brexit, but it needs to appreciate that greater exposure to the financial sector means bigger risks. Europe’s approach of setting up finance hubs in several locations will magnify the dangers rather than prevent them.
As with the 2008 Lehman Brothers collapse, the splintered approach to trying to manage the massive margin call on Archegos made matters worse. Deutsche Bank AG dodged this bullet (mimicking Goldman Sachs Group Inc. and others) by a swift disposal of $4 billion of available-for-sale collateral from its prime brokerage exposure to Hwang. Credit Suisse Group AG and Nomura Holdings Inc. were less fortunate. Two of Japan’s megabanks have also revealed exposure. The collateral they hold may now both be much lower in value and less liquid, taking much longer to offload, with commensurate larger losses.
The scale of the Archegos blowup looks manageable for the finance system, even if does leave a few bank victims, but imagine something similar happening in the infinitely bigger interest-rate market at some point. And then imagine clearing houses in different European cities trying to manage the fallout collectively.
While neither Credit Suisse nor Nomura named the fund, it’s been widely reported that Archegos Capital Management is the firm connected to the fire sale.
In a trading update before the market open, Credit Suisse said a number of other banks were also affected and had begun exiting their positions with the unnamed firm. The Zurich-based lender’s shares closed down nearly 14% on Monday following the announcement.
“While at this time it is premature to quantify the exact size of the loss resulting from this exit, it could be highly significant and material to our first quarter results, notwithstanding the positive trends announced in our trading statement earlier this month,” Credit Suisse said. It added that it would provide a further update on the matter “in due course.”
A margin call occurs when a broker demands that an investor deposits more money into a margin account, which enables them to invest money borrowed from the broker, to bring it to a minimum required amount. The investor then has to either deposit into the account, or sell some of the assets held in it.
Nomura also issued a trading update on Monday warning of a “significant loss” at one of its U.S. subsidiaries resulting from transactions with a client stateside. Japan’s largest investment bank said it was evaluating the potential extent of the loss, estimated at $2 billion. Its shares fell more than 16% on Monday.
Biden spending plan to weaken dollar ‘substantially’: Bear Traps Report founder
The Bear Traps Report founder Larry McDonald argues President Biden’s infrastructure plan will force the Fed into ‘yield curve control’ by the third or fourth quarter to ‘suppress yields and hold them down,’ which weakens the dollar and ‘gives you a boom for commodities.’
“If all else fails, they take you to war”