{"id":57394,"date":"2021-04-04T09:15:28","date_gmt":"2021-04-04T14:15:28","guid":{"rendered":"https:\/\/olduvai.ca\/?p=57394"},"modified":"2021-04-04T09:15:28","modified_gmt":"2021-04-04T14:15:28","slug":"this-is-what-a-margin-call-looks-like-the-consequences-of-stock-market-mania","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=57394","title":{"rendered":"THIS is What a Margin Call Looks Like: the Consequences of Stock Market Mania"},"content":{"rendered":"
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THIS is What a Margin Call Looks Like: the Consequences of Stock Market Mania<\/a><\/h3>\n<\/div>\n<\/div>\n<\/section>\n
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\"THIS<\/p>\n
Financial World<\/a><\/span><\/div>\n<\/div>\n

A couple of weeks ago, we reported on\u00a0various examples of stock market mania<\/a>\u00a0that have exploded in 2021.<\/p>\n

Now it\u2019s time to examine a major event that could be a clear harbinger for \u201cthe big one\u201d to come. It starts with a name you never heard of before March, a modest hedge fund operating as a \u201cfamily office\u201d named\u00a0Archegos Capital<\/strong>, and it ends with some of the world\u2019s biggest brokers engaged in a mutually-destructive fire sale that wiped out\u00a0$35 billion in market value<\/em>.<\/strong><\/p>\n

Let\u2019s take a closer look at what Slate\u2019s Alex Kirshner calls\u00a0The Dumbest Financial Story of 2021<\/a><\/em>\u00a0(so far).<\/p>\n

Leverage: Fantastic on the Way Up, Hideous on the Way Down<\/strong><\/p>\n

Bill Hwang,\u00a0convicted inside trader<\/a>, founded Archegos as a \u201cfamily office.\u201d Kirshner explains this legal nicety \u201cfunctions like a hedge fund but manages the assets of just one or a few wealthy families. In theory, a family office gives a problem trader less opportunity to harm others, because they are not playing with outsiders\u2019 money.\u201d<\/p>\n

At Forbes, Antoine Gara\u00a0explains why this matters<\/a>: \u201ca family office exempts it from the Securities and Exchange Commission\u2019s\u00a0reporting requirements for investment firms<\/a>.\u201d<\/p>\n

Hwang\u2019s new firm approached big banks including Goldman Sachs, Morgan Stanley, Japan\u2019s Nomura and Switzerland\u2019s Credit Suisse. These firms extended leverage, or margin loans, to Archegos, which invested heavily on\u00a0swap trades<\/a>:<\/p>\n

Swaps are an effective tool to take big risks without disclosing much. Total return swaps, for instance, allow an investor to negotiate a trade with their broker to own the total return of a stock, or basket of stocks, for a predetermined size and period of time, and at an agreed cost…<\/p><\/blockquote>\n

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

birch gold group, archegos, financial markets, leverage, hedge funds, leverage<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

THIS is What a Margin Call Looks Like: the Consequences of Stock Market Mania Financial World A couple of weeks ago, we reported on\u00a0various examples of stock market mania\u00a0that have exploded in 2021. Now it\u2019s time to examine a major event that could be a clear harbinger for \u201cthe big one\u201d to come. It starts […]<\/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":[31093,18769,1849,2297,481],"class_list":["post-57394","post","type-post","status-publish","format-standard","hentry","category-economics","tag-archegos","tag-birch-gold-group","tag-financial-markets","tag-hedge-funds","tag-leverage"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/57394","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=57394"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/57394\/revisions"}],"predecessor-version":[{"id":57395,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/57394\/revisions\/57395"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=57394"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=57394"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=57394"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}