By Pam Martens and Russ Martens: May 5, 2021 ~ The House Financial Services Committee has released its official Memorandum outlining the general topics it wants to cover in tomorrow’s hearing on the wild trading action in GameStop and other meme stocks in January that has raised serious questions about U.S. market integrity. The implosion of the Archegos Capital Management family office hedge fund in March, which has generated losses of more than $10 billion thus far at global systemically important banks, will likely be a key topic when the Senate Banking and House Financial Services Committees haul Wall Street bank CEOs to hearings on May 26 and 27, respectively. An insightful paragraph in the Memorandum for the House hearing tomorrow reads as follows: “Testimony given at the first two GameStop hearings raised concerns about the market dominance of some capital market participants, as well as correlated risks arising from the … Continue reading →

By Pam Martens and Russ Martens: May 4, 2021 ~ It was just 11 days ago that we wrote the following about family office hedge funds like Archegos that are failing to publicly file a list of their stock positions along with the market values, as the SEC requires for entities managing more than $100 million: “Another example is billionaire Bill Gates’ family office, Cascade Investment LLC. According to CaproAsia it ranks number 3 among the world’s largest family offices with $51 billion in assets. Cascade Investment LLC hasn’t filed a 13F form with the SEC since the quarter ending September 30, 2008 (coincidentally, the same quarter that Wall Street blew itself up, taking the stock market along with it). At that point in time, Cascade Investment showed $4.32 billion in stock positions. Its only filings since that time simply show what stocks it’s acquired and sold, but not the 13F which … Continue reading →

By Pam Martens and Russ Martens: May 3, 2021 ~ The House Financial Services Committee is showing a decidedly gutsy streak under the Chairmanship of Congresswoman Maxine Waters. No less than four hearings this month will take a deep dive into the underpinnings of an out of control Wall Street. The kickoff begins this Thursday with the Committee’s third hearing on the wild trading action in shares of GameStop and other meme stocks. GameStop trades on the New York Stock Exchange but its trading pattern has looked more like that of a penny stock operated out of a boiler room – raising serious questions about the integrity of U.S. markets. On January 28, 2021 GameStop hit an intraday peak of $483, bringing its run from a share price of $18.84 on December 31, 2020 — a gain of 2,465 percent for a struggling brick and mortar retail outlet that sells video … Continue reading →

By Pam Martens and Russ Martens: April 30, 2021 ~ During Federal Reserve Chairman Jerome Powell’s press conference this past Wednesday, he took a question from Brian Cheung of Yahoo Finance. The question was: “It seems like to people on the outside who might not follow finance daily, they’re paying attention to things like GameStop, now Dogecoin. And it seems like there’s interesting reach for yield in this market to some extent — also Archegos. So, does the Fed see a relationship between low rates and easy policy to those things, and is there a financial stability concern from the Fed’s perspective at this time?” As part of Powell’s long, meandering answer, he said this: “Leverage in the financial system is not a problem.” Within a second or so, Powell repeated himself: “Leverage in the financial system is not an issue.” (Read the full transcript here.) Either Powell has not read … Continue reading →

By Pam Martens and Russ Martens: April 29, 2021 ~ Less than seven hours after Wall Street On Parade ran our negative critique on SEC Chairman Gary Gensler’s pick to be the top crime fighter at his agency, Alex Young K. Oh abruptly resigned that position after just six days on the job. Corporate media is now attempting to blame the sudden exodus of the 20-year veteran of the law firm Paul, Weiss, Rifkind, Wharton & Garrison (one of the go-to law firms for the mega Wall Street banks) over her and/or her Paul Weiss colleagues saying something rude in a deposition where they were defense counsel for Exxon Mobil. (If you’ve ever sat for a deposition represented by Big Law on both sides, you know that rudeness is often de rigueur.) According to reporting at Politico, lawyers for plaintiffs in the case told the court that the Paul Weiss lawyers … Continue reading →

By Pam Martens and Russ Martens: April 28, 2021 ~ The only thing worse than SEC Chairman Gary Gensler’s pick for Director of Enforcement at Wall Street’s so-called watchdog is the way corporate media is attempting to spin it. On April 22 Gensler announced that he had appointed Alex Young K. Oh to be his top Wall Street crime fighter. Reuters (and numerous other media outlets) spun the announcement like this: “The U.S. Securities and Exchange Commission on Thursday named former federal prosecutor Alex Oh as its new head of enforcement, the first woman of color to lead the division, which plays a crucial role in policing U.S. financial markets.” Yes, Alex Young K. Oh was a former federal prosecutor, but one of numerous assistant U.S. Attorneys working in the Southern District of New York more than two decades ago. What Oh has been doing for the past two decades is … Continue reading →

By Pam Martens and Russ Martens: April 27, 2021 ~ This morning, UBS reported that it had experienced a hit in the first quarter of $774 million related to its exposure to the implosion of the family office hedge fund, Archegos Capital Management. That brings the tally thus far to more than $10 billion in losses to the global mega banks that have acknowledged losses from their relationship with Archegos. The only thing surprising to us about the Archegos announcement from UBS was that it didn’t take a bigger hit. According to the stock positions reported by UBS on its 13F filing with the SEC for the quarter ending December 31, 2020, it had significant exposure to seven of the same stocks that Archegos had arranged swap contracts on with its numerous prime brokers: ViacomCBS, Discovery, Tencent Music Entertainment Group, Vipshop Holdings, iQIYI Inc., Baidu, and GSX Techedu. (For how these … Continue reading →

By Pam Martens and Russ Martens: April 26, 2021 ~ On Wednesday, March 11, 2020, the World Health Organization declared COVID-19 to be a pandemic. From that point on, through March 23, the share price performance of the Standard & Poor’s 500 began to diverge dramatically from the share price performance of the mega banks on Wall Street. (See chart above.) From the start of the year in 2020, the S&P 500 fell a little more than 30 percent through March 23 while Bank of America, Morgan Stanley, Goldman Sachs, and JPMorgan Chase were down from 40 to 50 percent. Citigroup was down by a stunning 56 percent. (Citigroup had closed at $79.89 on December 31, 2019. By the close of trading on March 23, 2020, it was a $35.39 stock.) We compared these bank stocks to the S&P 500 because the companies that make up the S&P 500 index are … Continue reading →

By Pam Martens and Russ Martens: April 23, 2021 ~ According to the most recent 13F filings made with the Securities and Exchange Commission, the biggest banks on Wall Street are each sitting on hundreds of billions of dollars of stock positions – which we are now learning include highly leveraged stock positions for hedge funds called family offices. The purpose of the SEC’s 13F filing is to provide transparency to the public as to the beneficial owners of publicly-traded stocks. Institutions holding more than $100 million in assets are supposed to file the 13F. But as the public learned to its horror over the past month, a reckless family office hedge fund called Archegos Capital Management built up stock positions estimated at $100 billion by borrowing about $90 billion of that from a handful of the largest Wall Street banks. Archegos had been in operation since 2013, but had never … Continue reading →

By Pam Martens and Russ Martens: April 22, 2021 ~ The headline above was Point Number 6 in a multi-point Tweet offered by Grant’s Interest Rate Observer on November 18 of last year on how the Fed has grossly distorted markets. The 4,000-year claim is derived from the seminal book on interest rates, Sidney Homer’s A History of Interest Rates, Fourth Edition, co-authored by Richard Sylla. One of our readers recently sent us a link to a fascinating interview with James Grant, the Founder and Editor of Grant’s Interest Rate Observer. The interview was conducted in February by Consuelo Mack for the PBS program, WealthTrack. We listened carefully to the interview and were delighted to see that over the more than three decades that Grant has been chronicling the Fed’s thumb on the scale, the powerful forces on Wall Street have failed to compromise his voice. If anything, Grant has become … Continue reading →