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Tag Archives: Wall Street shenanigans

What Unicorn Money-Sinkholes Actually Disrupt

They have accomplished an amazing feat: losing tons of money year after year during the Good Times in what were profitable industries. By Wolf Richter. This is the transcript from my podcast last Sunday, THE WOLF STREET REPORT: What do the companies Wayfair, Zillow, Uber, Lyft, WeWork, Carvana, Tesla, Airbnb, Casper Sleep, Zume, and many others have in common in addition to their current or former status as unicorns with huge valuations? There is one fundamental thing they all have in...

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What Powell said About Negative Interest Rates, Their Effect on Banks, Jawboning, and Why the Fed Might Not Buy a Lot of Junk Bonds

The reasons behind the Fed’s No-NIRP stance: It doesn’t work and kills bank stocks. One of the most revealing statements. By Wolf Richter for WOLF STREET. Over the years, the Fed has waffled on all kinds of things, from what represents “price stability” to what it will do with regards to asset purchases. But there’s one theme that it has been relentlessly consistent about: a negative interest rate policy (NIRP). There has been a lot of clamoring for negative interest rates, ranging...

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Another SoftBank Unicorn Gets in Trouble: “Reverse Factoring” Specialist Greensill

“Its track record of disrupting traditional financing” hit by fallout from client companies that suddenly collapsed under undisclosed debts. Tentacles spread to Credit Suisse. By Nick Corbishley, for WOLF STREET: SoftBank appears to have a brand new problem on its hands: UK-based unicorn Greensill. Last year, SoftBank’s Vision Fund invested  $1.45 billion in two rounds in this company. The second round pushed its “valuation,” decided behind closed doors, to $6 billion. The stated...

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Coronavirus Drives Barrage of New Lobbying Activity

Follow the Bailout Money. By Wolf Richter for WOLF STREET. When the $2.2 trillion bailout package was being put together by Congress in all haste in March, a mad scramble broke out over who would get what. Part of this deal was the $349 billion Paycheck Protection Program for “small businesses” – which can be, as we now know, a publicly traded company with over 5,700 employees, or a KKR-backed power company that, upon getting the loan, files for prepackaged Chapter 11 bankruptcy. And...

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SoftBank’s Fake “Valuations” Come Unglued

But it was fun while it lasted. By Wolf Richter for WOLF STREET. The numbers are huge: SoftBank Group said that it would book a loss of $16.7 billion (¥1.8 trillion) at its Vision Fund for its fiscal year ended March 31, stemming “from a decrease in the fair value of investments due to the deteriorating market environment.” Separately, a spokesman of the fund told Barron’s that this loss included $9.9 billion in new losses. In November, SoftBank had already reported a loss for the...

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Another U.S. IPO of a Chinese Company Goes Bust in 11 Months

Trading of Luckin shares now halted. Wall Street banks, which get big-fat fees, are all too happy to sell this stuff to the American public. By Wolf Richter for WOLF STREET. Luckin Coffee is a Chinese coffee chain, founded in 2017, that had sold American Depositary Shares (ADS) to the US public in an IPO in May 2019, thereby extracting $561 million from US investors. Each of those ADS represents eight actual shares. At the peak, on January 17, the market capitalization of the Luckin...

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New York Fed, FDIC Tout “Opacity in a Banking Crisis” to Keep Corporations, Hedge Funds, PE Firms & Counterparties in the Dark about Weak Banks

“Suppressing” bank balance-sheet data in a banking crisis to prevent the biggies from yanking their billions out of a weakened bank. By Wolf Richter for WOLF STREET. US banks are now finding themselves in a situation where homeowners don’t have to make mortgage payments for few months, and renters don’t have to pay rent for a while, which leaves many landlords unable to make their mortgage payments – not to speak of the many Airbnb hosts that have no guests and won’t be able to make...

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Estimates About the Collapse of Share Buybacks Emerge

“The leveraged share buyback game has ended, which also means an end to the phony earnings growth.” By Wolf Richter for WOLF STREET: HSBC and Goldman Sachs have now both come out with estimates about the extent of the collapse of share buybacks. So far into this crash, over 50 companies have suspended share buybacks, accounting for $190 billion in cash that is not flowing into the stock market, representing over a quarter of total share buybacks in 2019. HSBC estimates that over the...

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Corruption in the Time of Coronavirus

Now even the fig leaf is gone.  By Karen Parker Feld, The Irreverent Economist at Paladin Advisors: On March 23, the Fed announced its largest-ever intervention in the financial markets. Bazooka is too timid a word to describe it. More like a neutron bomb. Our central bank, supposed defender of the currency and the stability of markets, can now purchase an unlimited amount of US Treasury and agency mortgage-backed securities (now running at the unheard-of rate of $625 billion per...

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Four Mortgage REITs Collapse After Chaos Hit $16-Tn Markets for Residential & Commercial Mortgage-Backed Securities

In good Financial Crisis manner, stuff blows up despite the Fed’s effort to stem the chaos. Now hoping for taxpayer bailouts. By Wolf Richter for WOLF STREET: Mortgage REIT # 4 so far: This afternoon, March 24, MFA Financial announced that it had received “an unusually high number of margin calls from financing counterparties,” and that by the close of business on Monday, it couldn’t meet those margin calls. Its shares [MFA] had started out the day in the positive at just under $3 and...

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