By Pam Martens and Russ Martens: August 9, 2021 ~ On August 4, the Chairman of the Securities and Exchange Commission, Gary Gensler, sat for an interview on CNBC. During that interview, Gensler mentioned that his Twitter followers were posting comments on his Twitter page about Dark Pools. Specifically, this is what Gensler said: “We are taking a real close look at market structure and I recently started, you know, engaging on Twitter and to some of those Twitter followers that are writing about Dark Pools, we are looking very closely at this market structure that so many of our orders, retail public orders are not going to the lit markets but are going to internalizers, going to wholesalers, were taking the retail public’s trades rather than sending them to the stock exchanges.” Dark Pools are opaque, thinly regulated trading platforms that function much like private stock exchanges operating inside the … Continue reading →

By Pam Martens and Russ Martens: August 6, 2021 ~ When it comes to the top watchdog of trading on Wall Street, the Securities and Exchange Commission (SEC), that dog can’t hunt. It’s not that the career professionals at the SEC haven’t tried to hunt, it’s that when they get too close to ensnarling some powerful person on Wall Street, they are told to stand down. Having a Wall Street defense lawyer at the helm of the SEC under both Presidents Obama and Trump certainly hasn’t helped the matter. (See here and here.) The jury is still out on President Biden’s SEC Chair, Gary Gensler, who just took office on April 17. (It should be noted, however, that the case described below was settled by the SEC after he took office.) With that as a backdrop, consider the press release and order that the SEC released on June 29 against Neovest … Continue reading →

By Pam Martens and Russ Martens: August 5, 2021 ~ Robinhood is the poster boy for the craziest, most unregulated stock market era since 1929. That one ended in tears. This one will also. Robinhood is the trading app used by millions of young, inexperienced retail investors to trade stocks and options on their mobile phones. The company went public last Thursday on the Nasdaq stock market (the wonderful folks who brought us the dot.com crash in 2000). Robinhood closed the trading week last Friday with a share price of $35.15 – an embarrassing 7.5 percent below its IPO price of $38. Curiously, so far this week, through Wednesday’s closing price of $70.39, the stock has soared 100.256 percent from Friday’s closing price. In an efficient, regulated stock market that is capable of engaging in its core function of price discovery, Robinhood would not have doubled in price in three trading sessions. … Continue reading →

By Pam Martens and Russ Martens: August 4, 2021 ~ Yesterday, during a Senate Banking Committee hearing, Senator Chris Van Hollen of Maryland caught our attention when he said that there are three U.S. banks that “make 100 percent of their profits on overdraft fees.” He named the three banks as First Texas, Academy Bank and Woodforest National Bank. Van Hollen explained that most folks paying these fees are living paycheck to paycheck and many don’t even know that they’ve over-drafted their account because many banks provide no warning at the time the overdraft is occurring. The Consumer Financial Protection Bureau (CFPB) issued a report on overdraft fees in 2017, finding the following: “A small group of consumers pay most of these fees. In a given year, only 30% of consumers overdraw their checking account. The 8% of consumers who overdraft more than 10 times per year pay 74% of overdraft … Continue reading →

By Pam Martens: August 3, 2021 ~ Risky derivative bets made by the mega banks on Wall Street, offloaded onto inadequately capitalized counterparties, were at the core of the collapse of the U.S. financial system in 2008. That collapse left millions of Americans without jobs, which led to millions of families and traumatized children losing their homes to foreclosure. The bank bosses got their million-dollar bonuses from the taxpayer bailouts and the Federal Reserve secretly pumped in over $29 trillion over 31 months to shore up the failing trading houses on Wall Street and their foreign derivative counterparties. Wall Street banks have rebuilt that derivatives doomsday machine today – a $168 trillion monster concentrated at four mega banks on Wall Street. But as we read through dozens of pages of written testimony submitted by witnesses for today’s Senate Banking hearing, the word “derivative” did not appear once. At 10:00 a.m. the U.S. Senate … Continue reading →

By Pam Martens and Russ Martens: August 2, 2021 ~ As of its most recent July 27 update on COVID vaccines, the Centers for Disease Control and Prevention (CDC) in the United States carries this statement: “Infections happen in only a small proportion of people who are fully vaccinated, even with the Delta variant.” That statement stands in stark contrast to what the Director of Public Health Services in Israel told television viewers of the CBS program, Face the Nation, on Sunday, reporting that 50 percent of new infections in Israel are from fully vaccinated people. The Pfizer–BioNTech mRNA COVID-19 vaccine was the exclusive vaccine used to inoculate the broad population of Israel. It was also one of the two most highly-administered vaccines in the United States, with Moderna’s mRNA vaccine being the other. As of July 12, only 12.8 million people in the U.S. had been vaccinated with the Johnson … Continue reading →

By Pam Martens and Russ Martens: July 30, 2021 ~ The Swiss mega bank, Credit Suisse, lost $5.5 billion in late March and early April from the highly-leveraged, highly concentrated stock positions it was financing via tricked-up derivatives for Archegos Capital Management, the family office hedge fund of Sung Kook “Bill” Hwang. Archegos blew up on March 25 after it defaulted on its margin calls from its banks. U.S. mega banks, Goldman Sachs and Morgan Stanley, were also extending high levels of margin debt to Archegos at the time of its blowup, as were other foreign banks. Over $10 billion in total losses have thus far been acknowledged by the banks. To get out in front of an ongoing Department of Justice investigation of the matter, Credit Suisse decided to hire the BigLaw firm, Paul, Weiss, Rifkind, Wharton & Garrison,  to conduct an investigation. Yesterday, Paul Weiss issued a 165-page report … Continue reading →

By Pam Martens and Russ Martens: July 28, 2021 ~ You really can’t make this stuff up. A G30 Working Group Chaired by Tim Geithner, the former President of the New York Fed, that secretly sluiced $29 trillion to bail out the Wall Street banks from their hubristic collapse in 2008, released a report today calling for a Standing Repo Facility from the Fed that would be “open to a broad range of market participants….” The ink was barely dry on that report when the Fed issued a press release today saying it was doing just that. The Standing Repo Facility (effectively meaning that it is permanent until the Fed says otherwise) will be able to lend out $500 billion in overnight loans each day at below-market interest rates. If the $500 billion runs out, Fed Chair Jerome Powell has the discretion to increase it. The repo operations will be conducted … Continue reading →

By Pam Martens and Russ Martens: July 28, 2021 ~ According to their latest 13F form filings with the Securities and Exchange Commission, as of March 31, 2021 the U.S. mega banks on Wall Street held a staggering $6.56 billion in three Chinese education stocks that just had their business model put through a shredder by the Chinese Communist Party. As of yesterday’s close, that $6.56 billion is now worth about 90 percent less than it was on March 31. Depending on just when these mega banks started panic dumping their positions, their losses could be substantial. New Oriental Education & Technology (stock symbol EDU), Gaotu Techedu (which previously went by the name GSX Techedu) (stock symbol is now GOTU), and TAL Education Group (stock symbol TAL) were all trading below $7 a share shortly after the market opened this morning. New Oriental has gone from a share price of more … Continue reading →

By Pam Martens and Russ Martens: July 27, 2021 ~ It’s going to be very hard for Americans to get their brains around what is happening in China. The Chinese Communist Party (CCP) decided to wipe out an entire industry – notwithstanding the fact that tens of billions of dollars were already invested in that industry’s publicly-traded companies, many of which were listed on the New York Stock Exchange. The industry is the private education market in China. A sampling of the carnage is reflected in the chart above. Shares of New Oriental Education & Technology (EDU), TAL Education (TAL), and Gaotu Techedu (GOTU), all listed on the New York Stock Exchange, have lost nearly all of their market value since April. Regulations issued over the weekend by China’s Ministry of Education now bar these private tutoring and online education platforms from making profits, from capital raising, and from being listed … Continue reading →