{"id":57312,"date":"2021-03-29T16:10:52","date_gmt":"2021-03-29T21:10:52","guid":{"rendered":"https:\/\/olduvai.ca\/?p=57312"},"modified":"2021-03-29T16:10:52","modified_gmt":"2021-03-29T21:10:52","slug":"archegos-implosion-is-a-sign-of-massive-stock-market-leverage-that-stays-hidden-until-it-blows-up-and-hits-the-banks","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=57312","title":{"rendered":"Archegos Implosion is a Sign of Massive Stock Market Leverage that Stays Hidden until it Blows Up and Hits the Banks"},"content":{"rendered":"
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Archegos Implosion is a Sign of Massive Stock Market Leverage that Stays Hidden until it Blows Up and Hits the Banks<\/a><\/h3>\n<\/header>\n
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Banks, as prime brokers and counterparties to the hedge fund, are eating multi-billion-dollar losses as they try to get out of these secretive stock derivative positions.<\/strong><\/p>\n

The implosion of an undisclosed hedge fund, now widely reported to be Archegos Capital Management, is hitting the stocks of banks that served as prime brokers to the fund. The highly leveraged derivative positions, based on stocks, had blown up spectacularly. Banks get into these risky leveraged deals because they generate enormous amounts of profit \u2013 until they blow up and banks get hit as counterparties.<\/p>\n

Credit Suisse [CS<\/a>] is down 13% at the moment in US trading after it\u00a0warned this morning<\/a>\u00a0that \u201ca significant US-based hedge fund defaulted on margin calls made last week by Credit Suisse and certain other banks,\u201d and that it and \u201ca number of other banks are in the process of exiting these positions,\u201d and that the loss resulting from this exit \u201ccould be highly significant and material to our first quarter results.\u201d The bank deemed it \u201cpremature to quantify\u201d the loss.<\/p>\n

Nomura Holdings [NMR<\/a>] is down 14% at the moment in US trading after it\u00a0warned this morning<\/a>\u00a0that \u201can event occurred that could subject one of its US subsidiaries to a significant loss arising from transactions with a US client.\u201d It estimated the loss from this one client at \u201capproximately $2 billion, based on market prices as of March 26.\u201d<\/p>\n

As Credit Suisse pointed out, \u201ca number of other banks\u201d are also involved as counterparties to that one unnamed hedge fund, and have been trying to get out of these positions since last week.<\/p>\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n

financial markets, archegos, wolf richter, wolfstreet, stock market leverage, credit suisse, banks, nomura<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Archegos Implosion is a Sign of Massive Stock Market Leverage that Stays Hidden until it Blows Up and Hits the Banks Banks, as prime brokers and counterparties to the hedge fund, are eating multi-billion-dollar losses as they try to get out of these secretive stock derivative positions. The implosion of an undisclosed hedge fund, now […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[31093,63,4513,1849,8470,3600,4254,4255],"class_list":["post-57312","post","type-post","status-publish","format-standard","hentry","category-economics","tag-archegos","tag-banks","tag-credit-suisse","tag-financial-markets","tag-nomura","tag-stock-market-leverage","tag-wolf-richter","tag-wolfstreet"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/57312","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=57312"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/57312\/revisions"}],"predecessor-version":[{"id":57313,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/57312\/revisions\/57313"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=57312"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=57312"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=57312"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}