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These Are The Shadowy New York Financial Institutions That Forced Robinhood To Restrict Trading In Certain Stocks

Have you ever heard of the Depository Trust & Clearing Corporation?  What about Cede and Company?  If those names are foreign to you, then you don’t really understand how the core of our financial system really works.  A lot of people are blaming Robinhood CEO Vlad Tenev and the heads of other major trading platforms for the stock trading restrictions that we witnessed last week, but it was actually the DTCC that suddenly jacked up deposit requirements ten-fold.  Robinhood and other trading platforms were put in a vise-like grip, and they had no choice but to act.  Someone needs to investigate how these decisions were made at the DTCC, and if laws were broken those that were responsible for the decisions need to go to prison.

We are being told that retail traders needed to be brought under control “for their own good”, but it was the reckless short selling of the big hedge funds that actually set the stage of last week’s chaos.

Why doesn’t anyone ever talk about restricting their exceedingly foolish trading strategies?

Thanks to relentless buying by “the Reddit Army”, several major hedge funds got absolutely slaughtered last week, and that group included Melvin Capital

Melvin Capital, a premier Wall Street hedge fund entangled in the frenzy over GameStop (GME), lost 53% in January, a source familiar with the matter told CNN Business.

Melvin, a major short-seller of GameStop, bet that the company’s shares would drop. But, on January 11, GameStop announced new board members who could help it with digital sales. That set off a fury on Reddit, namely subreddit WallStreetBets, which catapulted GameStop’s stock more than 1,600%.

Of course the small fish are not supposed to beat up the big fish like that, and the billionaires at the big hedge funds undoubtedly reached out to their powerful friends for help.

There had been speculation that the big hedge funds leaned on Robinhood CEO Vlad Tenev and the heads of other large trading platforms directly, but the truth is more complicated.

It turns out that the pressure on Robinhood and other major trading platforms came from the clearinghouse level.  The following comes from a piece in USA Today that was authored by Vlad Tenev himself

In a matter of days, our clearinghouse-mandated deposit requirements related to stocks increased ten-fold. These deposits are the collateral we post to ensure our access to clearinghouse services on behalf of our customers. They are what led us to put temporary buying restrictions in place on a small number of securities that the clearinghouses had raised their deposit requirements on. As we noted in a blog on Friday, it was not because we wanted to stop people from buying these or any stocks — we built Robinhood to provide access to investing for all. And it certainly wasn’t because we were trying to help hedge funds.

Tenev didn’t mention it by name, but the company that clears almost all of Robinhood’s trades is the Depository Trust & Clearing Corporation.  If you are not familiar with the DTCC, here is some basic info from Wikipedia

The Depository Trust & Clearing Corporation (DTCC) is an American post-trade financial services company providing clearing and settlement services to the financial markets. It performs the exchange of securities on behalf of buyers and sellers and functions as a central securities depository by providing central custody of securities.

DTCC was established in 1999 as a holding company to combine The Depository Trust Company (DTC) and National Securities Clearing Corporation (NSCC). User-owned and directed, it automates, centralizes, standardizes, and streamlines processes in the capital markets.[3] Through its subsidiaries, DTCC provides clearance, settlement, and information services for equities, corporate and municipal bonds, unit investment trusts, government and mortgage-backed securities, money market instruments, and over-the-counter derivatives. It also manages transactions between mutual funds and insurance carriers and their respective investors.

In 2011, DTCC settled the vast majority of securities transactions in the United States and close to $1.7 quadrillion[4][5][6] in value worldwide, making it by far the highest financial value processor in the world.[6] DTCC operates facilities in the New York metropolitan area, and at multiple locations in and outside the United States.

Theoretically, the DTCC is supposed to be a neutral participant in the markets.

But as we saw last week, that is definitely not the case.

So why should we allow a “for-profit monopoly” to have so much power over our financial system?  The following comes from a piece that was just authored by Omid Malekan

The brilliance of this excuse is that it only proves the skeptics and conspiracy-theory believers right. DTCC is a for-profit monopoly that sits at the heart of America’s financial system. It is controlled by the biggest Wall Street institutions and responsible for all public equity settlement. A subsidiary of it literally owns every single share of publicly traded stock in America. Yes, you read that correctly. You don’t actually own your shares of Apple or Microsoft, they do. You are only allowed to enjoy the financial benefits of being an investor because your corporate overlords let you. Why? Because the government wants it that way (the fact that financial firms like DTCC always donate a lot of money to politicians has nothing to do with it.)

Of course the DTCC is not actually the top of the pyramid.

The Depository Trust & Clearing Corporation, the National Securities Clearing Corporation and the Fixed Income Clearing Corporation are all managed “under the umbrella” of a shadowy entity known as Cede and Company…

This small New York based financial institution has a dozen directors and no more than a half dozen employees but holds, according to some reports, some 34 trillion dollars in assets.

A complex system of interlocking bodies, such as The Depository Trust & Clearing Corporation, the National Securities Clearing Corporation and the Fixed Income Clearing Corporation oversee all stock trading in the US. They all come under the umbrella of Cede.

And, on paper at least, own all the stocks traded.

One or more decision makers at these shadowy entities decided to put an extraordinary amount of pressure on Robinhood and other trading platforms.

We need to find out exactly who was involved in making the decisions, and if something illegal took place the decision makers need to be held accountable.

For now, Robinhood and other trading platforms will continue to restrict trading in certain stocks as we begin a new week

Robinhood will continue to limit trading on Monday in short-squeeze names like GameStop that have experienced explosive rallies and unprecedented volatility over the past week.

Customers can only buy one share of GameStop’s stock and five options contracts. However, the millennial-favored stock trading app did cut down its list of restricted stocks from as many as 50 on Friday to eight starting Monday.

Our financial system is far more vulnerable than most people realize, and it is just a matter of time before the house of cards comes tumbling down.

Anyone that still thinks that we have a “free market” after what we witnessed last week is simply being delusional.

Very powerful forces look out for the interests of the ultra-wealthy, and the game has been carefully designed for them to win.

***Michael’s new book entitled “Lost Prophecies Of The Future Of America” is now available in paperback and for the Kindle on Amazon.***

About the Author: My name is Michael Snyder and my brand new book entitled “Lost Prophecies Of The Future Of America” is now available on Amazon.com.  In addition to my new book, I have written four others that are available on Amazon.com including The Beginning Of The EndGet Prepared Now, and Living A Life That Really Matters. (#CommissionsEarned)  By purchasing the books you help to support the work that my wife and I are doing, and by giving it to others you help to multiply the impact that we are having on people all over the globe.  I have published thousands of articles on The Economic Collapse BlogEnd Of The American Dream and The Most Important News, and the articles that I publish on those sites are republished on dozens of other prominent websites all over the globe.  I always freely and happily allow others to republish my articles on their own websites, but I also ask that they include this “About the Author” section with each article.  The material contained in this article is for general information purposes only, and readers should consult licensed professionals before making any legal, business, financial or health decisions.  I encourage you to follow me on social media on FacebookTwitter and Parler, and any way that you can share these articles with others is a great help.  During these very challenging times, people will need hope more than ever before, and it is our goal to share the gospel of Jesus Christ with as many people as we possibly can.

The post These Are The Shadowy New York Financial Institutions That Forced Robinhood To Restrict Trading In Certain Stocks first appeared on End Of The American Dream.

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SYSTEM RESET: $3,448 Gold – MASSES TOTALLY NAÏVE!

This article was contributed by James Davis at Future Money Trends. 

I want to treat what we’re going through AS IF IT WERE WAR since the reaction is no less than that. Even in wartime, quarantines, stay-at-home orders, curfews, and temperature checking measures, as well as mandated vaccines, are CONSIDERED DESPERATE MEASURES and tyrannical policies.

In wartime, all of the resources are focused on WINNING IT. This is exactly what’s happening at the moment. During conflicts, there are casualties, wounded (infected, in this case), frontlines (hospitals, in this case), and UNMATCHED government intervention. In our current era, there is also UNPARALLELED central bank balance sheet expansion.

You can clearly see that even during WW2 when the gold standard was in place, the government will spend when it determines that it NEEDS TO, and the deficits could be QUITE OVERWHELMING.

History is clear that after such OUTRAGEOUS government spending, the public immediately demands a reversion to the mean, which means A RESET – a real one. In 1945, the last time Washington WENT NUTS on public spending, the Bretton Woods agreement came about.

Check out how the 1940-1944 period LED TO an utter reset:

Courtesy: Zerohedge.com

In less than two weeks, the U.S. economy will begin to REOPEN, but it won’t be SIMPLE. Measures such as social distancing, no shopping centers, no gatherings of over 50-100 people, no schools, no international traveling, and other protective restrictions will MAKE A “V”-SHAPED recovery impossible.

This is going to put a seal on higher STOCK PRICES. We saw a lightning-fast bounce in the markets, which are up over 30% since the March lows, but there’s no reason for anyone, sophisticated or rookie, to chase stocks much higher, even if they have a long-term outlook (2 to 5 years).

STOCKS AREN’T CHEAP.

To recap:

  1. Bonds are beyond expensive, brushing on being ALMOST IRRELEVANT to free markets (super-bubble).
  2. Stocks are expensive, with NO JUSTIFICATION to go higher (earnings will not improve for 1-3 years).
  3. Systemic risk is being avoided – the need for holding cash is DIMINISHED. Investors want to put money to work and are LOOKING FOR RELATIVE VALUE.

Conclusion:

Reopening while keeping many EMPLOYEES out of work since their industries are DEEMED TOO RISKY, will result in slow recovery and MONETIZED DEBT ISSUANCE.

Courtesy: Zerohedge.com

The uptrend in the gold/equities ratio is CLEAR AS DAY.

Assuming we only REVERT to mean and DON’T OVERSHOOT, and assuming the S&P 500 stays flat for the foreseeable future, a 1.2x multiple to the S&P 500 brings us to ($2,874*1.2=$3,448). This is PURE MATHEMATICS.

The amount of oil that is stored will PUT A LID on prices going forward. I don’t think that $20/barrel is a long-term SUSTAINABLE price, but in the coming months, there’s A SERIOUS GLUT to work through.

Salaries and abundance in workforces will allow companies to retain personnel quickly while keeping margins HIGH.

Nowhere is this advantage of (1) low energy prices and (2) stagnant salaries MORE IMPORTANT than in the commodities sector, where oil and labor are the TWO LARGEST expenses.

Newmont Mining is already the SECOND-BEST performing stock this year in the S&P 500.

Other mining operators are also GENERATING big returns as well.

Courtesy: Zerohedge.com

In order to keep the millions of unemployed workers of the airline, casino, cruise line, hotel, restaurant, tourism, clothing, furniture, and other FROZEN industries WHOLE, the government will continue paying larger-than-normal BENEFITS.

More money out the door without increases in productivity is a RECIPE FOR INFLATION if I’ve ever seen one.

My projection:

Gold might see some headwinds in the coming weeks because so many people moved into the trade in the past few weeks, but it will build the new baseline at around $1,750. From there, we climb to a NEW ALL-TIME HIGH.

Next, infrastructure programs will cause IN-DEFICIT base metals, such as copper, to enjoy ROBUST FUNDAMENTALS.

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The Unstoppable Coronavirus vs. The “All-Powerful” Federal Reserve

This article was originally published by Michael Snyder at The Economic Collapse Blog. 

Has the Federal Reserve finally met an opponent that it won’t be able to defeat?  Ever since the last financial crisis, unprecedented intervention by the Fed at key moments has kept the economy and the financial system relatively stable.

No matter what has come along, it has seemed like the Federal Reserve has always had an answer, and this has created an environment that has enabled the most ridiculous stock market bubble in U.S. history to grow to epic proportions.  But now COVID-19 is perhaps the greatest challenge that the Fed has faced in modern times.  No matter how low-interest rates are pushed, and no matter how much helicopter money the Fed drops from the sky, it isn’t going to cause fearful Americans to go shopping, take trips or start businesses.  And nothing that the Fed can do will be able to mitigate the severe disruptions to global supply chains that we are currently witnessing.

But that doesn’t mean that the Fed isn’t going to go back to the same old playbook that has worked so well in the past.

On Tuesday the Fed announced an emergency rate cut, and instead of soaring, stock prices absolutely tanked.  In fact, the Dow Jones Industrial Average ended the day down 785 points

The decision to cut rates by half a percentage point came two weeks before the Fed’s scheduled meeting as the central bank felt it was necessary to act quickly to combat the effect of the virus spreading worldwide. It’s the first such emergency action coming in between scheduled meetings since the financial crisis.

The Dow Jones Industrial Average closed 785.91 points lower, or nearly 3%, to 25,917.41; it rose more than 300 points earlier in the day. The 30-stock average gyrated between sharp gains and solid losses after the decision was announced. The S&P 500 fell 2.8% to 3,003.37 while the Nasdaq Composite pulled back 3% to 8,684.09.

At this point, the Federal Reserve doesn’t have much room to reduce interest rates.  But of course, President Trump was disappointed in the Fed’s decision because he wanted an even bigger rate cut

Trump tweeted following the Fed’s move – keeping up his longstanding practice of demanding lower rates.

‘The Federal Reserve is cutting but must further ease and, most importantly, come into line with other countries/competitors,’ Trump wrote. ‘We are not playing on a level field. Not fair to USA. It is finally time for the Federal Reserve to LEAD. More easing and cutting!’

Meanwhile, just about everyone else is using the word “panic” to describe this move by the Fed.  The following example comes from Zero Hedge

Instead, as it stands “it smells like panic” as more than one Wall Street veteran put it.

Worse, as BMO’s Ian Lyngen puts it, what happened after the Fed’s emergency 50bps rate cut, the biggest since Jerome Kerviel blew up SocGen, “the situation didn’t play out exactly as Powell might have envisioned.

So just how bad is it? Well, as plunging stocks demonstrate, the Fed is this close from losing all credibility…. and since the market has been held up for the past 11 years on nothing but Fed faith – and trillions in Fed liquidity – this could be a very, very big problem.

If you can believe it, even CNBC’s Jim Cramer is saying that this move by the Fed has made him “nervous”

Cramer went on to say that he’d previously been optimistic, despite the recent Dow freefall. But the Fed’s move has caused him to adopt a more cautious posture.

“It makes me feel, wow, the weakness must be much more than I thought,” Cramer said. “And I’ve been trying to be bullish, but I can’t.”

He added, “I’m now nervous. I’m more nervous than I was before.”

The Federal Reserve has almost entirely run out of interest rate ammunition already, and we aren’t even officially in a recession yet.

So what are they going to do once things get really bad?

A reduction in interest rates usually spurs the U.S. economy, but these are not normal times.

Even if interest rates were pushed all the way to the floor, it isn’t going to change the fact that global supply chains are collapsing and a large portion of the population is scared to death of this virus

Lower borrowing costs typically spur more consumers to buy houses, cars and other products, and encourage businesses to purchase more equipment such as factory machines, computers.

But historically low rates can’t address delayed deliveries from China that leave store shelves half-filled and auto manufacturers short of imported parts. They can’t prod shoppers fearful of contracting the virus to visit malls and restaurants. And they can’t bring back throngs of foreign tourists to U.S. hotels and shopping centers, including many from China and other countries now subject to travel bans.

And the problems that we are seeing with global supply chains are expected to continue to get worse in the weeks ahead.  In fact, Harvard Business Review is anticipating that the impact of this virus could peak “in mid-March”…

Reports on how the Covid-19 outbreak is affecting supply chains and disrupting manufacturing operations around the world are increasing daily. But the worst is yet to come. We predict that the peak of the impact of Covid-19 on global supply chains will occur in mid-March, forcing thousands of companies to throttle down or temporarily shut assembly and manufacturing plants in the U.S. and Europe. The most vulnerable companies are those which rely heavily or solely on factories in China for parts and materials. The activity of Chinese manufacturing plants has fallen in the past month and is expected to remain depressed for months.

But what if this virus just continues to explode all over the planet?

When I posted my last article yesterday, the number of confirmed cases outside of China had just surpassed the 10,000 mark.

As I write this, that number is just shy of the 13,000 mark, and by the time most of you read this article it will be even higher.

After interest rates are pushed all the way to the floor, “helicopter money” will be about the only weapon the Fed has left.

Normally, “helicopter money” pushes up stock prices, but in the middle of a horrifying global pandemic, people are not going to want stocks.

Instead, there is going to be tremendous demand for food and other essential supplies, and “helicopter money” will just escalate prices to absolutely absurd levels.

Sadly, fear of this virus is already starting to cause this to happen

Would you pay $149 for a two-pack of 12-ounce bottles of Purell? How about a single container of Clorox wipes for $44.25, plus $14.59 shipping?

As the coronavirus spreads and people rush to protect themselves and their families from getting sick, the U.S. is seeing heavy demand for everything from masks to hand sanitizer.

If you use Purell, I hope that you stocked up ahead of time.

There has never been a time like this before in all of American history, and what we have seen so far is just the beginning.

Now that the U.S. is planning to start testing more people, we are being warned that we could see an explosion in the number of confirmed cases in the weeks ahead.

If that happens, there is going to be a tremendous amount of fear.

But now is not a time for fear.  Now is a time to be calm, to think rationally, and to act resolutely.

It is during moments of crisis that we find out who we really are, and hopefully, this challenge will bring out the best in all of us.

About the Author: I am a voice crying out for change in a society that generally seems content to stay asleep. My name is Michael Snyder and I am the publisher of The Economic Collapse BlogEnd Of The American Dream and The Most Important News, and the articles that I publish on those sites are republished on dozens of other prominent websites all over the globe. I have written four books that are available on Amazon.com including The Beginning Of The EndGet Prepared Now, and Living A Life That Really Matters. (#CommissionsEarned) By purchasing those books you help to support my work. I always freely and happily allow others to republish my articles on their own websites, but due to government regulations, I need those that republish my articles to include this “About the Author” section with each article. In order to comply with those government regulations, I need to tell you that the controversial opinions in this article are mine alone and do not necessarily reflect the views of the websites where my work is republished. This article may contain opinions on political matters, but it is not intended to promote the candidacy of any particular political candidate. The material contained in this article is for general information purposes only, and readers should consult licensed professionals before making any legal, business, financial or health decisions. Those responding to this article by making comments are solely responsible for their viewpoints, and those viewpoints do not necessarily represent the viewpoints of Michael Snyder or the operators of the websites where my work is republished. I encourage you to follow me on social media on Facebook and Twitter, and anyway that you can share these articles with others is a great help.

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