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As the markets melt down today, I want to flag a few things:
1. Robinhood is paid by the hedge fund Citadel for its order flow https://bsic.it/how-payment-for-order-flow-is-impacting-markets-the-robinhood-and-citadel-case/
1. Robinhood is paid by the hedge fund Citadel for its order flow https://bsic.it/how-payment-for-order-flow-is-impacting-markets-the-robinhood-and-citadel-case/
2. Melvin Capital, which has been regularly discussed on Wall Street Bets, has now received a $2.75 billion investment by Citadel and Point72 Asset Management, following the blow up of their short against GameStop $GME https://www.wsj.com/articles/citadel-point72-to-invest-2-75-billion-into-melvin-capital-management-11611604340
3. One question I have is whether or not Robinhood is providing its clients with best execution. There have been arguments for and against: https://www.institutionalinvestor.com/article/b1m2p1cv68bx56/Twitter-Freaked-Out-Over-Robinhood-Selling-Its-Trade-Flow-But-the-App-and-Others-Have-Been-Doing-It-for-Years
4. Many major market participants that have a hand in today’s action that don’t receive the same regulatory scrutiny as banks do. Would be good for FSOC to consider if there are firms that should be designated as Systemically Important Financial Institutions (SIFIs)
5. Another question I have is where the intense activity we saw in after hours trading yesterday was coming from.
6. Many folks have noted this, but we haven’t really seen this level of volatility across so many individual names before outside of crash moments like the pandemic and 2008: https://twitter.com/tradermike/status/1354472847171870720
7. While some hedge funds are undoubtedly melting down there are absolutely other hedge funds cleaning up. The retail vs. Wall Street narrative oversimplifies what is almost certainly actually happening.
8. Also worth noting that the Trump administration/Steve Mnuchin shut down the working group looking at Hedge Funds that was housed at the Financial Stability Oversight Council: https://www.americanbanker.com/opinion/mnuchin-shows-no-interest-in-continuing-fsocs-hedge-fund-inquiry
9. Wall Street isn’t losing when executions are through the roof — the casino analogy is there for a reason. While some hedge funds might blow up, the house always wins when there’s increased order flow.
10. Are markets supposed to be for rampant speculation, or are they supposed to drive innovation and jobs? For too long, it’s been the former.
Part of the sad reality of our K-shaped recovery is the overheated equities market still doesn’t translate to higher wages for workers
Part of the sad reality of our K-shaped recovery is the overheated equities market still doesn’t translate to higher wages for workers
12. Case in point about the House always winning. When volumes soar, pretty good bet that so do Wall Street profits: https://twitter.com/ltabb/status/1354543710487326730
