This is what you need to know:.
Some companies that sell money said there would be delays in fulfilling orders as they face unusually high demand…Credit…Michael Dalder/Reuters
Last week, the rapid price swings of stocks like GameStop and AMC Entertainment, led by retailers looking to buy back Wall Street, expanded to a new target: cash. Precious metals prices rose 10% Monday to their highest level in eight years after online calls for a ban on silver.
The money’s appeal came from the rise in the S&P 500 Index in early trade, after European and Asian stock markets posted gains.
Retail sites selling silver coins and gold stated that demand was high and there would be delays in delivering orders. Moneymetals.com, a precious metals trader, said it would not accept any new orders for silver until Monday morning and also imposed certain restrictions on gold purchases. iShares Silver Trust, BlackRock’s main exchange-traded product for tracking metals, posted record net inflows of $944 million on Friday.
The shares of the companies exploiting the money have also risen. Fresnillo rose 15% and Polymetal International 7%, both among the biggest winners in the UK FTSE 100 index. On the US exchanges, Silvercorp Metals was up 30% and Fortuna Silver Mines was up 25%.
But the money market is fundamentally different from distressed companies like AMC and GameStop.
The company’s stock, which caught the attention of an army of day traders last week, driven by Reddit memes, is not popular with hedge funds. Driven by the rise in the price of these stocks, traders pushed companies that held short positions.
Melvin Capital Management, one of the hedge funds that bet on GameStop stock, lost 53 percent of its portfolio in January, according to an informed person. Short sellers lose money when a company’s shares rise, and the losses can be unlimited.
The price of the money was already rising before the recent interest, and some Reddit users have warned against throwing it around because the same hedge funds and investors who were toppled last week would benefit. In addition, the money market is much broader and deeper, which makes it harder to have an impact.
The price of silver rose nearly 50% last year, and some institutional investors expected it to outperform gold this year. Nonetheless, market participants, who appear to be primarily retail investors with interest in only a handful of stocks and assets, have become a new risk factor for large companies betting on stocks and for regulators concerned about the proper functioning of the markets.
U.S. Markets
- The S&P 500 Index rose 1%, recovering from a loss of more than 3% last week – its worst loss since late October.
- GameStop shares fell about 10% early in the session, after rising 400% last week and more than 1,600% in January. Another target of the commercial frenzy, the CMA, rose 18%. It reached about 280% last week.
Europe
- Most European stock market indexes were higher around noon. The Stoxx Europe 600 rose by more than 1%, driven by industrial and technological values.
- Online fashion retailer Asos bought Topshop, Miss Selfridge and other brands from the Arcadia Group, once the jewel in the crown of British retail, for 295 million pounds ($404 million). Asos shares are up more than 6%.
Asia
The Securities and Exchange Commission said last week it was actively monitoring the volatility of trading in GameStock shares and other securities …Carlo Allegri/Reuters …
After a week of wild trading, GameStop shares fell about 10% early Monday as attention shifted to the silver market, where the price of the precious metal reached its highest level since 2013 as silver coin sites reported unusually high demand.
GameStop shares stood at $483 last week and dropped to $61. It lost 44% Thursday after Robinhood and other trading platforms said they would limit customers’ ability to buy certain titles, including GameStop, AMC Entertainment and BlackBerry. The trading app then lifted some restrictions, and the stock climbed about 65% on Friday.
Posters were posted on Reddit’s Wall Street betting forum begging others to keep their GameStop stocks and options. GameStop shares closed Friday at $325, up 1,625% from January.
The CMA was up about 18% on Monday. Last week, the price jumped nearly 280%.
The interest in the money began over the weekend. Moneymetals.com, a precious metals trader, said it will not accept any new orders for silver until mid-May. iShares Silver Trust, which tracks the metal, reported record net inflows of $944 million on Friday.
The Securities and Exchange Commission said Wednesday that it is actively monitoring trading volatility. Melvin Capital Management, one of the hedge funds that bet against GameStop stock, lost 53 percent of its portfolio in January, according to a person familiar with the subject.
Vlad Tenev, CEO of Robinholding, in 2016. Elon Musk fired Mr. Shadow from trading restrictions on shares of GameStop and other companies…Credit…Brendan McDermid/Reuters
It was a weekend and a very surreal week for me.
That’s what Vlad Tenev, CEO of online broker Robinhood, said in a public conversation with Elon Musk – of all people – about the challenges his company has faced amid rising stocks like GameStop, according to DealBook News.
Tenev spoke on social media site Clubhouse last Sunday about what led Robinhood to impose restrictions on GameStop shares and other companies last week, prompting outrage from customers and politicians. Last Thursday, a division of the Depository Trust and Clearing Corporation, Wall Street’s main clearing house for stock market transactions, demanded additional collateral of $3 billion – an order of magnitude higher than usual, Tenyev said – to cover its clients’ risky transactions.
This demand was subsequently reduced to around $700 million, but Robinhood still had to tap into lines of credit from banks and raise $1 billion from existing investors.
It was scary, Mr. Shadow said.
Mr Tenev said the clearing house decision was based on an opaque formula but was intended to dispel persistent rumours that Wall Street elites were behind it. Mr Musk, a notorious Twitter provocateur, wondered if there was really something fishy behind the bond request. They’re getting a little caught up in conspiracy theories, said Tenev, who added that other brokers have also been asked to deposit additional money.
We had no choice in the matter, Mr. Shadow said. We had to comply with regulatory capital requirements.
Robinhood also denied speculation that his brokerage firm had imposed trading restrictions to help partners on Wall Street, including Citadel, the large financial firm whose brokerage does most of its trading and whose hedge fund invested in another investment firm that bet against GameStop’s stock price.
When Mr. Musk asked if Robinhold was angry at the Citadel, Mr. Musk shot back from the shadows: It’s fake.
Unlike fraud or manipulation, which regulators like Gary Gensler are used to, the hype for GameStop is about investors who have publicly acknowledged the risks they take… Kayana Szymczak for the New York Times
The recent surge in GameStop shares, due to individual investors’ rally to Reddit, has put new pressure on the Biden administration to select Gary Gensler as its top candidate for the Securities and Exchange Commission.
Gensler will lead the agency as it faces calls for tighter regulation of online trading programs like Robinhood, which critics say allow inexperienced investors to make risky financial bets, writes Deborah B. Solomon in the New York Times. However, proponents of these platforms claim that they help to eliminate the inequalities in financial markets that have long put cash-rich companies at an advantage over the average citizen. The S.E.C. stated in a statement that it is monitoring the situation closely.
What’s happening with GameStop has almost nothing to do with GameStop, said Barbara Roper, director of investor advocacy at the American Consumers Union. When you see that the markets have essentially turned into a video game or a casino, it has pretty serious implications for how we use the markets to finance our economy.
The question for Mr. Gensler and the agency would be what they should do to address the concerns of people like Ms. Roper.
The S.E.C.’s role has traditionally been to ensure that companies disclose enough information so that people can make informed investment decisions. But it does so by enforcing laws written before the advent of commercial platforms like Robinhood. Mr. Gensler’s first steps will be for those who know him to investigate the GameStop wave to find out who benefited from it, as there is speculation that it may have been fueled by a few large foundations after all.
Melvin Capital was a key player in the stock market drama surrounding video game retailer GameStop.Credit…Nick Ziminski/Reuters
Melvin Capital Management, one of the hedge funds that plundered social media billboards to make short-term investments on the fall of GameStop stock, lost 53% of its portfolio in January, said a person familiar with the subject.
The main reason for this was the huge losses the company suffered when retail investors offered to buy GameStop shares. The Wall Street Journal first reported the extent of Melvin Capital’s loss.
Founded by Gabe Plotkin, a protégé of billionaire Stephen A. Cohen, owner of the New York Mets, Melvin Capital had $8 billion in assets under management at the end of January. This includes $2.75 billion that Cohen’s fund, Point72, and Citadel, another hedge fund, have put into Melvin Capital, as well as fresh capital from new investors, the person said.
Citadel’s hedge fund returns fell 3% in one month, about a third of which is due to a $2 billion investment in Melvin about a week ago, according to two people familiar with Citadel’s performance.
Melvin Capital resigned his position at GameStop because he needed to raise additional funds, Plotkin confirmed in an interview with CNBC last week. The firm played a key role in the market drama led by a group of day traders who traded a handful of stocks that had been abandoned by Wall Street – forcing large hedge funds to take losses.
The traders seem to be mostly small investors focused on a handful of stocks like GameStop and AMC Entertainment. But they have emerged as a new risk factor for large companies, which have bet against them with so-called short selling. While the financial damage on Wall Street has so far been limited to a few companies, the volatility has left the broader market reeling. The S&P 500 fell 1.9% on Friday, ending its worst week in three months.
Google is increasingly striving to dominate the digital advertising market. Credit…Elijah Nouvelage/ Agence France-Presse – Getty Images
The owner of the Charleston Gazette-Mail and other West Virginia news publications sued Google and Facebook in federal court Friday, accusing the companies of anti-competitive and monopolistic practices that harm the newspaper industry.
The publisher, HD Media, said the lawsuit was the first of its kind filed by a newspaper company. The lawsuit focuses on Google’s central role in the online advertising market and the agreement between Google and Facebook, which is at the heart of an antitrust case brought by ten state attorneys general. By 2019, it is estimated that more than half of all digital advertising spending will come from the two technology companies combined.
Google and Facebook have monopolized the digital ad market, stifling a major source of revenue for newspapers across the country. This is the result of a lawsuit filed by HD Media in the United States District Court for the Southern District of West Virginia.
There is no longer a competitive market in which newspapers can fairly compete for online ad revenue, the lawsuit continues.
The growth of digital media has led to a sharp decline in revenues for many newspaper companies that previously relied on print advertising and magazine subscriptions to stay in business. More than one in four newspapers in the United States closed their doors between 2004 and 2018, and tens of thousands of newsroom jobs disappeared.
In addition to The Gazette-Mail, which won the 2018 Pulitzer Prize for investigative journalism, HD Media’s newspapers include The Herald-Dispatch and The Logan Banner.
We invite all other newspapers in the U.S. to join the cause, Doug Reynolds, managing partner of HD Media, said on Friday. We fight not only for the future of the press, but also for the preservation of our democracy.
Technology companies have been subject to new audits in recent months. In October, the Justice Department filed a lawsuit against Google, accusing the company of illegally protecting its monopoly on internet search and the digital advertising market. In two lawsuits filed in December, dozens of states accused Google of abusing its dominant position in online advertising and hindering competitors from searching.
Last month, Genius Media, which produces poetry reviews, and two left-wing magazines, The Nation and The Progressive, filed a lawsuit against Google, as well as its parent company Alphabet and its partner YouTube, alleging what the lawsuit calls anti-competitive behavior in the digital ad market.
Following a separate complaint, Google asked for comment on a statement released this month. The company said in a press release that its advertising activities help websites and applications make money and fund quality content. Facebook did not immediately respond to a request for comment.
frequently asked questions
Does money go up when the stock market goes down?
Money didn’t sell well during the stock market declines. However, you will see that Money has fallen less than the S&P in all but one of its crashes. This is important because the high volatility of money generally leads to a larger decline.
What are the best money stocks to buy now?
Best Silver Stocks for 2021 | Motley’s Madman
How much has the market fallen today?
The S&P 500 fell 3.5%, or 119.65 points, to 3,271.03 and the Nasdaq Composite fell 3.7%, or 426.48 points, to 11,004.87. The Dow and the S&P 500 had their worst day since the eleventh hour. June.
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