| From: Don Green | 12/23/2022 5:25:47 PM | | | | | | Mega Millions jackpot up to $510 million before Christmas
Kelly Tyko
 The Dec. 23 Mega Millions jackpot has an estimated $510 million jackpot. Photo: John Smith/VIEWpress via Getty Images
More than half a billion dollars is up for grabs in the year's second-largest Mega Millions jackpot ahead of Christmas.
Driving the news: The lottery jackpot for Friday's drawing is an estimated $510 million or a cash option of approximately $266.8 million cash, Mega Millions said in a statement.
If Friday’s drawing has one or more winning tickets, the jackpot is estimated to be the 11th largest in the lottery's 20-year history.Flashback: In late July, a ticket sold in Illinois was the sole winner of the year's largest Mega Millions jackpot of $1.34 billion, the game's second-largest prize ever.
The last Mega Millions jackpot was won Oct. 14 when a $502 million prize was shared by winning tickets in California and Florida.The jackpot has been rolling since the Oct. 18 Mega Millions drawing that started with a $20 million grand prize.Meanwhile, 2022 has been a year of big jackpots.
The world's largest-ever lottery prize was won in November when one ticket won Powerball's $2.04 billion jackpot.When is the Mega Millions drawingMega Millions' drawings are held in Atlanta at 11pm ET Tuesdays and Fridays, which is 8pm PT.
The drawings are posted on the Mega Millions YouTube page.How it works: Two machines pick the numbers in the drawings with the first picking five white balls and the other selecting a gold “Mega Ball.”
Odds of winning Mega MillionsThe odds of winning the grand-prize jackpot are about 1 in 303 million per ticket.
Other odds vary by prize and range from 1 in 37 for matching the Mega Ball to 1 in 12.6 million for matching five balls without the Mega Ball.By the numbers: There have been only six Mega Million jackpot winners so far in 2022.
Since 2017, the number of jackpots won per year has ranged from five to seven.Mega Millions lottery ticket priceA Mega Millions ticket costs $2, but players in most states can "add the Megaplier for an additional $1 to multiply their non-jackpot prizes."
Context: Out of each $2 ticket, roughly 35 cents goes to non-jackpot prizes, about 75 cents goes to fund the jackpot, and the remaining 90 cents goes to the government.
How to play Mega Millions gameLottery players can pick six numbers from two separate pools of numbers — five different numbers from 1 to 70 (the white balls) and one number from 1 to 25 (the gold Mega Ball).
“Quick Pick” or “Easy Pick” tickets can also be purchased where numbers are selected automatically.States that sell Mega Millions lottery ticketsMega Millions tickets are sold in 45 states, Washington, D.C., and the U.S. Virgin Islands, with drawings held each Tuesday and Friday.
Alabama, Alaska, Hawaii, Nevada and Utah do not participate in the lottery.Mega Millions cut-off time: How late to buy ticketsThe deadline to purchase tickets for Friday's drawing varies by state because Mega Millions tickets are sold by individual lotteries.
Sales stop 15 minutes before the drawing in many states, including New York, Michigan, Virginia and Ohio, while Indiana sales on drawing dates cut off at 10:44pm ET.Lotteries in Florida and South Carolina end ticket sales an hour before the drawing, with Idaho ending the night's drawing sales an hour and five minutes prior.Where to buy Mega Millions tickets onlineMega Millions tickets are available to buy online in 10 states and Washington, D.C.
New York also has a subscription to purchase tickets online.Other states with online sales are Georgia, Illinois, Kentucky, Michigan, New Hampshire, North Carolina, North Dakota, Pennsylvania and Virginia.In most cases, you need to live in one of these states to buy an online ticket, but in "all cases you must be physically within their borders when you make any online ticket purchases," the Mega Millions website says.Mega Millions prizes: How much for matching numbers Here are the prize amounts for matching numbers with and without the gold Mega Ball:
Mega Ball: $2 One number and Mega Ball: $4Two numbers and Mega Ball: $10Three numbers: $10Three numbers and Mega Ball: $200Four numbers: $500Four numbers and Mega Ball: $10,000Five numbers: $1 millionFive numbers and Mega Ball: JackpotBetween the lines: Amounts for non-jackpot prizes are higher for players spending $1 extra for the optional Megaplier. |
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| From: Don Green | 1/12/2023 9:54:47 AM | | | | | | Data dictates who will win the Mega Millions lottery
The Mega Millions Lottery jackpot has now soared past $1.3. billion. This follows the Powerball lottery grand prize payout of $2 billion this past November. The chance of winning the Mega Millions grand prize is around one in 302 million, slightly worse than the one in 292 million for Powerball — both miniscule odds. However, when there are enough combinations of numbers picked, the likelihood that someone wins increases. The challenge is knowing who that person will be.
Winning the lottery provides images of a carefree life and providing funds to support family and friends. In the ideal, those are all possible outcomes that comes with winning, whether it be $1 billion, $100 million or even $10 million. These are viewed as sizeable prizes for most people who buy lottery tickets.
Yet, for every winner who uses the money wisely, there are winners who squander what is effectively an inheritance. The potential good that could be realized from their winnings end up being a liability that they could not have foreseen.
Lotteries are not entertainment. They are a business, and a highly regressive tax. The majority of people who purchase lottery tickets are low-income earners. These people can ill afford to squander their limited resources on the remote chance of winning a large prize that they believe will change their life for the better. The majority lose, which is how lotteries stay in business.
Payouts from lotteries typically run between 50 and 70 percent. With the excess or profit that remains, some is used to pay lottery expenses. The rest is kept by the state who runs the lottery or has a share in the lottery.
Some states advertise that the earnings from lotteries are used to support public schools. Illinois says that certain lottery earnings will go to the state’s Common School Fund. In reality, this is marketing, since they can say that the money can be used for anything. By directing lottery earnings to fund schools, it frees up general funds for other activities. States can play a shell gameto give the illusion that lottery earnings are used benevolently.
This implicitly suggests that lotteries will not show a deficit. Will school funds be required to cover such a shortfall? Of course not, since lotteries are designed to reap sizeable surpluses. Winnings paid out are set to not exceed what is collected.
For low-income earners who buy lottery tickets, dreams of a big win that will enable them to escape from their financial quagmire is an illusion. The majority of people who win a large lottery prize end up having little to show for it within just five years. In some cases, the winners are worse off than before their lottery win, as they make lifestyle changes, including quitting their job and purchasing expensive items, which they are often ill-equipped to manage.
Winners are also preyed upon by family and friends, seeking to cash in on the winner’s fortunes. Scammers are quick to outsmart such people and look for ways to take their share of the winnings.
Then there are tax management issues, which many lottery winners never had to deal with. Without the assistance of trustworthy tax and investment advisers, a simple life can quickly unravel.
So, who wins the lottery when a large payout occurs?
It is the lottery agency themselves. When payouts reach astronomical levels, like the upcoming Mega Millions payout, more people are willing to shell out a few dollars to win the chance for the grand prize. With more people buying tickets, the grand prize increases — and the agency profits soar.
The best strategy for those who spend their money on lotteries is simple: Don’t buy a ticket. If a person spends $20 every week on the lottery, the $1,000 they spend annually may give them some entertainment value. It will not however yield a positive return on investment.
Unfortunately, the very people who can ill afford to throw their money away are also the very people who are most prone to buy lottery tickets.
Those who do not buy lottery tickets also benefit from additional funds added to state coffers that they are not required to contribute to. It serves as a tax credit for them, paid for by those who buy lottery tickets. They, with the states and agencies who run the lotteries, are the big winners.
So, when the lottery jackpot reaches $1 billion dollars, the data say, avoid buying a ticket and thank those who do for contributing to your state’s general fund.
Sheldon H. Jacobson, Ph.D., is a professor in computer science at the University of Illinois Urbana-Champaign. A data scientist and operations researcher, he applies his expertise in data-driven risk-based decision-making to evaluate and inform public policy.
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| From: Don Green | 1/19/2023 4:54:57 PM | | | | | | $20M Mega Millions jackpot won in New York in first drawing after almost $1.35B Maine winThe Mega Millions jackpot has been won – again.A lucky ticket in New York matched all six numbers to win the $20 million jackpot Tuesday night.Tuesday's win follows the $1.348 billion Mega Millions jackpot that was won in Maine on Friday – which marked the second-highest prize in the lottery game's history.After not having been hit for months, the Mega Millions jackpot has been won in back-to-back drawings.
One ticket sold in New York in Tuesday's drawing matched all six numbers to win the $20 million jackpot, according to the Mega Millions website. Tuesday's winner can also choice the cash option of $10.6 million.
It's a far cry from the $1.348 billion Mega Millions jackpot won in Maine on Friday.
In addition to the jackpot, a ticket sold in Massachusetts matched all five white balls and had the Megaplier to win $3 million.
The jackpot will reset again to the current starting value of $20 million for Friday's drawing.
Meanwhile, the Powerball jackpot is at $439 million with a cash option of $237.3 million, according to the Powerball website.
Are lottery prizes getting bigger? Here's why the jackpots have grown so large.
Friday: Winning ticket for almost $1.35 billion Mega Millions jackpot sold in Maine
Mega Millions winning numbers: 1/17/23The winning numbers for Tuesday night's drawing were 2-12-18-24-39, Mega Ball: 18 and Megaplier was 3X.
When is next Mega Millions drawing?Mega Millions drawings are held every Tuesday and Friday at 11 p.m.
How do I play Mega Millions?The cost is $2 per ticket, but you can add the Megaplier for $1, which will increase the amount of your potential prize up to five times the original prize (except for the jackpot).
Each player selects five numbers from 1 to 70 for the white balls and one number from 1 to 25 for the Mega Ball. However, you can also have the lottery machine generate a random Quick Pick for you.
Prizes vary from $2 for the matching the Mega Ball to $1 million for matching all five white balls (except in California) to the jackpot for matching all six balls. You can check all the prize payouts on the Mega Millions site.
What do you do if you win the lottery? Here's what you need to know.
You don't need to be a U.S. citizen or a resident a particular state where you purchase your ticket.
Where can I play Mega Millions?You can play the game in 45 states plus the District of Columbia and the U.S. Virgin Islands. The states not offering Mega Millions are: Alabama, Alaska, Hawaii, Nevada and Utah.
Many grocery stores, gas stations and convenience stores sell lottery tickets. Some states allow Mega Millions tickets to be purchased online, but beware of scam websites. Check with your state lottery for more details.
What are my odds of winning?Playing the Mega Millions can be exciting, but just don't go spending those millions before you win.
The odds of winning the jackpot are 302,575,350-to-1.
The odds to match all five white balls are 12,607,306-to-1.
What does a lottery's cash option mean?The major lotteries in the United States offer two jackpot payout options: annuity and cash.
The annuity option is paid out over time. There is an immediate payment and then 29 annual payments after that, increasing by 5% each year.
How much will Mega Millions winner get after taxes? $1.35 billion jackpot shrinks quite a bit
The cash option is significantly lower than the advertised jackpot, but it is paid in a lump sum. You don't have to wait decades for all the money.
What was biggest Mega Millions jackpot?Here are the Top 10 jackpots ever since the Mega Millions began in 1996:
$1.537 billion, Oct. 23, 2018: Won in South Carolina$1.348 billion, Jan. 13, 2023: Won in Maine$1.337 billion: July 29, 2022: Illinois$1.05 billion, Jan. 22, 2021: Won in Michigan$656 million, March 30, 2012: Three winners in Illinois, Kansas, Maryland $648 million, Dec. 17, 2013: Two winners in California, Georgia$543 million, July 24, 2018: Won in California$536 million, July 8, 20116: Won in Indiana$533 million: March 30, 2018: Won in New Jersey $522 million: June 7, 2019: Won in CaliforniaWhat's everyone talking about? Sign up for our trending newsletter to get the latest news of the day
What was largest U.S. lottery jackpot ever?Here's a look at the top jackpots were won in the United States, between the Powerball and the Mega Millions lotteries:
$2.04 billion, Powerball, Nov. 7, 2022: California$1.586 billion, Powerball, Jan. 13, 2016: Three winners in California, Florida, Tennessee$1.537 billion, Mega Millions, Oct. 23, 2018: Won in South Carolina$1.348 billion, Mega Millions, Jan. 13, 2023: Won in Maine$1.337 billion, Mega Millions, July 29, 2022: Illinois$1.05 billion, Mega Millions, Jan. 22, 2021: Won in Michigan$768.4 million, Powerball, March 27, 2019: Won in Wisconsin$758.7 million, Powerball, Aug. 23, 2017: Won in Massachusetts$730 million,, Powerball, Jan. 20, 2021: Won in Maryland$699.8 million, Powerball, Oct. 4, 2021: Won in California |
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| From: Don Green | 2/15/2023 7:47:23 AM | | | | | | It's a Trap! Why You Shouldn't Bet Against the Price Difference in AMC Stock and APE SharesDespite the price differences between AMC's common and preferred shares, using an arbitrage trading strategy could be too risky. Here's why.
Bernard ZamboninFeb 14, 2023 5:39 AM EST
AMC Preferred Equity (APE) units are currently trading for a few dollars lower than AMC Entertainment's common stock.Many traders — including Jim Chanos — are betting that AMC shares will plunge to meet the value of the APE units.It is possible that APE will rise to match the price of AMC stock, rather than AMC falling to match APE units.
 Figure 1: It's a Trap! Why You Shouldn't Bet Against the Price Difference in AMC Stock and APE Shares
Noam Galai | Credit: WireImage
Read also: Why AMC Stock Might Be Ready for Another Short Squeeze
What Is the AMC/APE Arbitrage Strategy?Ever since the creation of AMC Entertainment's ( AMC) - Get Free Report preferred shares — the AMC Preferred Equity (APE) units — many traders have been using an arbitrage strategy. This involves exploiting the price difference between the two.
After all, theoretically, AMC and APE should be trading at the same price because they share the same underlying assets.
But APE shares have been trading around $2, reaching $3 in January. At the same time, AMC shares have been trading around $5, reaching $6.80 in the first week of February.
Famed short-seller Jim Chanos is among the many traders who have employed an arbitrage bet. A few months ago, he revealed that he had a short position in AMC while "going long" APE.
In a nutshell, he's betting that AMC shares will come down to APE's level. However, Chanos' AMC strategy has not yet paid off.
Why an AMC Arbitrage Strategy Is a Bad IdeaThe AMC/APE arbitrage trade isn't as simple as it looks.
That's largely because AMC is a meme stock that doesn't behave as it should.
The high volatility levels in the stock cause it to trade with zero correlation to the theater chain's business fundamentals. And that keeps the stock trading in a dissimilar pattern to the APE units.
In addition, betting against AMC shares and going long APE has been complicated by high borrow fees for traders who want to open short positions in AMC.
JonesTrading's arbitrage expert, Cabot Henderson, said that if AMC wasn't so unpredictable, shorting the stock and going long APE would be a guaranteed successful trade.
"If you can get stable borrow [fees], it's a home run. But that's the problem," Henderson said.
According to the strategist, the risk of a short squeeze makes the arbitrage trade in AMC extremely unpredictable: "The real question for 'arbs' is about how to hedge these positions, given the potential for a massive short squeeze."
What to Do InsteadThere's no logical reason why APE units are lagging behind AMC stock.
Since the APE units were created in August 2022, they have not even come close to matching the share price of AMC's common shares.
The most natural thing would be for the prices of both equities to balance out sooner or later.
But because meme stocks defy market logic, shorting AMC can be a very risky trade.
Traders who wish to bet against the theater chain's shares must pay borrow fees of over 160%, which is very high. See below:
 Figure 2: AMC's borrowed shares.
Stocksera, data by Interactive Brokers
If AMC stock experiences any sharp upward movements in price — as we've seen with short squeezes — short sellers will be forced to cover their margins and lose money on these very high fees.
In theory, the safer strategy is to bet that the APEs will rise in price to match the common shares, rather than the opposite. Investors can do that by skipping a short position in AMC and just going long APE.
(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting Wall Street Memes) |
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| From: Don Green | 2/23/2023 8:16:11 AM | | | | | | Payment for Order Flow (PFOF) Explained
February 22, 2023 by Ziga Breznik
In recent years, the subject of payment for order flow, often known as PFOF, has garnered a significant amount of attention, notably in the aftermath of the scandal involving GameStop and Robinhood.
In this blog, we will be taking a deep dive into what payment for order flow is, how it operates, as well as the benefits and drawbacks of using this trading model for a retail customer.
In addition, we will go through the regulations governing PFOF, look at some real-world applications of it, and speculate about its potential stock market uses in the years to come.
What exactly is meant by “Payment for Order Flow”? In layman's terms, pay-for-order-flow, or PFOF, refers to the practice of brokers receiving payments from market makers in exchange for sending client orders to specific market makers. On the other hand, market makers earn money off the difference in price between a security's bid and ask price. This remuneration may come in the form of a percentage of the spread or a flat charge per share, depending on the agreement between the parties.
When a consumer uses a broker to place an order, the broker can either carry out the transaction themselves or forward the order to a market maker.
In the second scenario, the market maker is the one who is responsible for paying the commission to the broker in exchange for the right to carry out the order. Afterward, the market maker either carries out the transaction themselves or forwards the order to another venue, such as a stock exchange.
The primary benefit of PFOF is that it enables brokers to offer commission-free trading to customers. Brokers can collect money from market makers while at the same time offering consumers with minimal or no commission costs because of the relationship between the two parties. On the other hand, market makers profit from a steady stream of order flow.
Pros and Cons of Using Payment for Order Flow PFOF, like any other kind of trading practice, has both its share of pros and cons. Let's have a look at some of the most important benefits and drawbacks of this option for retail traders.
ProsLow or No Commission Fees: The primary benefit of order flow payments is that it enables brokers to provide consumers with the option of zero commission trading. This presents a substantial opportunity for many traders, especially those who engage in frequent transactions or who work with very small amounts of money. Better Prices: Because market makers profit from the spread, they have an incentive to offer the best possible price for a security. This can result in better prices for customers than they might receive if their orders were executed by the broker itself. Improved Liquidity: PFOF may also be of use in increasing the market's overall liquidity. Market makers have the opportunity to earn a profit from the spread by buying and selling securities, an action that may contribute to the market's ability to sustain a healthy level of activity. Cons of PFOF Potential Conflicts of Interest: One of the most serious concerns when dealing with PFOF is that it has the ability to generate possible conflicts of interest for brokers. They may be encouraged to prefer one market maker over others since they are getting charged for taking orders to a certain market maker. Yet, doing so may not be in the best interest of the consumer because it is in the best interest of the market maker. Lower Transparency: PFOF may also have the effect of lessening the degree to which the market is transparent. Clients may not be aware of which market maker their order is being sent to or the remuneration that their broker is getting for directing that order in certain cases. Less Control Over Order Execution: When a customer places an order through a broker, they may have less control over how that order is executed than if they were executing it themselves. This can lead to potential slippage and other issues.Official Regulation PFOF is a heavily regulated practice in the United States. The Securities and Exchange Commission (SEC) requires brokers to disclose the compensation they receive for directing customer orders to market makers. The SEC also requires brokers to ensure that customer orders are executed at the best possible price, taking into account all available market information.
Recently, there have been calls for increased regulation of PFOF. Some critics argue that it creates potential conflicts of interest and reduces transparency in the market. Othershave proposed banning PFOF altogether, while others have suggested alternative models that would provide customers with more control over their orders.
In 2020, the SEC conducted a review of the practice of PFOF and released a report on its findings. The report highlighted the potential conflicts of interest associated with PFOF and recommended that the SEC take additional steps to increase transparency and ensure that brokers are acting in the best interest of their customers.
Examples of Payment for Order Flow in ActionMany popular brokers and market makers in the United States use PFOF. Some of the most well-known examples include Robinhood, TD Ameritrade, and Citadel Securities.
Robinhood is perhaps the most famous example of a broker that relies heavily on PFOF. The company has been criticized for prioritizing its relationships with market makers over the best interests of its customers. In 2021, Robinhood paid a $65 million settlement to the SEC for failing to properly disclose its use of PFOF and for other violations.
TD Ameritrade is another well-known broker that uses PFOF. The company has been criticized for not being transparent enough about how it routes customer orders and for potentially prioritizing certain market makers over others.
Citadel Securities is one of the largest market makers in the United States and is a major player in the PFOF space. The company has been accused of having too much influence over the market and has been the subject of investigations by regulators.
ConclusionPFOF is a complex and controversial practice that has both advantages and disadvantages. While it allows brokers to offer commission-free trading to customers and can help increase market liquidity, it can also create potential conflicts of interest and reduce transparency.
As the SEC continues to review the practice of PFOF, we will likely see increased regulation and potential changes to how brokers and market makers operate. While it is unclear what the future of PFOF will look like, it is clear that it will continue to be a topic of discussion and debate in the trading community.
Ziga Breznik is the owner and head of research at PublicFinanceInternational.org – he is an active investor in the forex, crypto and stock markets – he has seen trading platforms disappear along with his investments – especially during the “crypto boom”. Ziga learned the hard way that finding a reputable and trustworthy online brokerage is key to long-term success in the financial markets. He founded PublicFinanceInternational.org as a platform where he shares his research with one goal in mind: to provide unbiased and trustworthy online brokers reviews. |
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| To: Don Green who wrote (896) | 2/27/2023 2:23:20 PM | | From: Don Green | | | | The AMC And APE Consolidation Saga, Part 3
Bill Oxford/iStock via Getty Images
This article is written as a continuation/update based on two previous submissions, the AMC/APE Convergence Trade and AMC and Antara Jointly Loosen Lockup Restrictions, But Why?. If you are not familiar with the situation, I strongly suggest you read those articles first.
Feb 13-17th - As expected, Antara SellsWe left off by hearing that Antara Capital and AMC Entertainment Holdings, Inc. (NYSE: AMC) had agreed to loosen their lockup restrictions allowing Antara to sell up to XX Million shares at any time, and AMC could sell up to YY Million shares at any time. AMC later clarified that they would not sell until after their Q4 earnings report on Feb 28th (likely a couple days after that based on typical earnings blackout procedures).
Given that Antara had the ability to sell shares of AMC Preferred Equity units ( APE), and the economic incentive (they would make 300-400% on their sales based on a $0.65 purchase price), they clearly did and reported it on their Form 4.
In addition to their APE sales, they have a significant quantity of options-hedges in place. Via a series of Form 3 and Form 4 filings from Antara, I've managed to reconstruct a forecast of Antara's position in AMC and APE as of Feb 17th:
 SEC Reports
My interpretation of Antara's position is that they have hedged their long APE position with March, April, May and June put options. They are heavily weighted towards the March expiry because they are (or as you'll soon see, WERE) confident that the vote would succeed and share consolidation would occur as expected on 3/14.
Feb 20-24th - And then the wrinkle...Late on Feb 20th, a class action suit was filed in Delaware Chancery Court requesting a temporary restraining order to prevent/delay the vote from happening and being effective on March 14th. I'm not a lawyer and have little interest in dissecting the merit (or lack thereof) of the case's minutia. However, procedurally, the existence of this suit added a considerable amount of uncertainty as to whether or not the vote (and share consolidation) would go forward as planned.
Information percolated through social media, court dockets, and traders. The market was slow to react, but ultimately people who were betting on the consolidation were forced to unwind their positions. The arbitrage spread between AMC and APE widened significantly, from $2.70 to as high as $4.30, finally settling around $4.00
 Market Data
On Thursday Feb 23rd, the courts had a quick hearing between the defendants (AMC) and the Plaintiffs to discuss how the case would proceed. Due to the fast-approaching vote date, they agreed that there would be a hearing on March 10th. The hearing would either be for a temporary restraining order (TRO) or a Preliminary Injunction (PI).
As you will see with the Form 4's that will likely be disclosed later tonight (Monday February 27th), Antara closed the majority of their March put position on Thursday and Friday after hearing about the courts plan to move forward.
This action is incredibly telling because they are the largest active trader/arbitrager in this market, and they presumably have the best information. They have very little faith in the March deal close date and are selling their hedges at a loss, because holding them will result in them losing even more. (Note: losing money on the hedges will likely still result in a profit on this entire position.)
Based on the Form 3 & 4 filings and other public options data, Antara’s positioning before and after the 2/23 hearing can be forecasted and is anticipated to look like:
 SEC Reports
The high strike puts ($5 / $6) had significant extrinsic value remaining and were closed out completely. For the $3’s, there was significant volume immediately after the hearing:
 Market Data Providers
I strongly suspect this is Antara further reducing their March hedges, and anticipate that we will see this corroborated in their Form 4 filings to be released tonight (2 business days after the trade date). Antara seems to be leaving their $2’s, but likely weren’t sold because they simply aren’t worth very much anymore (~$0.08), and given the size of the position, any re-positioning would be constrained by market liquidity.
Feb 27 - And here we are...We're now all caught up, except there's a tweet circulating that purports to be a leaked email from the plaintiffs council. If genuine, the implication ( and follow up on twitter) is that AMC will still hold their vote, as scheduled on March 14th. However, if the vote succeeds, the share consolidation will not occur until after the results of the preliminary injunction ruling held on April 27th.
This "leaked email" may be entirely fabricated, or it may be genuine. If it is genuine, it creates the following sequence of strategic advantages that benefit the different major parties:
The plaintiffs get a significant amount of time to do discovery, which gives them a higher chance at being successful.The defendants get to hold their vote as scheduled. One might ask why is this important, and the crucial reason to me is because AMC and Antara lock up agreements expire immediately after the special meeting/vote (independent on whether the share consolidation is effective or not). If a TRO was granted and no vote was held, it makes slows down the timer on AMC and Antara share sales.AMC gets to segregate their issuance of shares from Antara's selling of APEs. Ultimately the result of this delay is that Antara will make less money and AMC will make more money. In the world where AMC and Antara are "competing to sell shares" after the original 3/14 vote + consolidation dates, Antara will now be selling pre-consolidation APEs on 3/14+, and AMC can issue post-consolidation AMC/APE shares in May/June. Most likely, AMC will get higher prices and Antara will get lower prices.This scheduling fits the narrative that (at first glance, was bizarrely) suggested by AMC's lawyers at the 2/23 meeting. They said to the judge something along the lines of "we would like to hold the vote and just not make it effective until later." A non-effective vote is useless, unless your lockup is contingent on holding the vote.What's next?The AMC-APE arbitrage spread currently sits at $4.25, which is basically higher than it has ever been since the announcement of the plan to consolidate the classes 2 months ago on December 21st. Anyone historically attempting to "arbitrage" the deal by buying APE and shorting AMC (either explicitly, or synthetically via options), has almost certainly lost money- unless they had impeccable timing to catch the random ups and downs of the spread.
At the moment of writing this article, there is no confirmation of the hearing dates going forward, but the market is pricing in a significant delay. If the rumors prove to be untrue, significant uncertainty will persist until the results of the March 10th hearing. If the rumor is true and confirmed, arbitragers will have to make the difficult decision to either close their position at a significant loss, or continue to chase the arbitrage by borrowing shares for an additional 2-3 months. Both of those are very unappetizing options and will likely result in the arbitrage spread widening.
The author continually trades in/out of various positions based on what he perceives as dislocations in the market's pricing and the implied probabilities of deal outcomes.
Acknowledgement: Credit to Jasper Chan for working on this article with me. |
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| From: Don Green | 2/28/2023 7:53:36 PM | | | | | | How to watch football like an expert from the comfort of your couch
Ted Nguyen
[Follow our live blog for all NFL Week 3 scores and action]
American football is one of the most complicated, potentially confusing sports in the world – if not the most complicated, potentially confusing sport in the world. But that’s part of what makes it so captivating. There are multiple games of chess being played on the field from snap to snap that even the most avid watchers could miss. There is always something to learn about the game and there are levels to watching it.
To achieve Level 1, or beginner level, one must know the general rules, know a little bit about every position, and some basic strategy. To achieve Level 2, or intermediate level, one must know the rules enough to make a legitimate argument during challenges, know some of the nuances of every position, and be able to identify some schemes. To achieve Level 3, or expert level, one must know almost every rule and its intent, understand every position and the many different archetypes of every position, and be able to identify many different schemes.
[Listen to Ted Nguyen’s podcast Run The Film]
To achieve Level 4, which is that of a film analyst, one must able to identify most schemes and thoroughly understand strategy. Being a Level 4 viewer doesn’t require any higher level of intelligence than the next person, but it does require one to sacrifice more important things in life to nerd out over studying football. And Level 5 is that of a competent coach. The goal of this article is to try to get readers to Level 3 and set readers up to get to Level 4 if they choose to sell their souls to further their football education.
Common misconceptions and questionsHow can you tell whether it’s an RPO or play action?
With the spread game becoming a bigger part of the NFL every year, analysts who specialize in the pro game are still playing catch-up with college concepts. Right now, the hot buzzword is “RPO,” which stands for run/pass option.
An RPO is a run play that has a pass concept built into it. The quarterback makes a pre-snap or post-snap read on a defender that the offense doesn’t block. The theory behind the RPO is to read the extra defender in the box rather than blocking him. If the offense has five blockers and there are six defenders in the box, the quarterback would read the sixth defender.
A play action is a play in which the offense will fake a run to get defenders to step up, and then throw a pass.
However, commentators seem to mistakenly call every shotgun play with a fake run action an RPO, when the play could simply be a play-action pass. So how can you tell the difference between a regular play action and RPO? Watch the offensive line.
If the offensive line isn’t aggressively getting to the second level, it’s a play action. The linemen might even initially take a few steps like they are run blocking before stopping at the line of scrimmage.
If they get downfield on a pass play, you know it’s an RPO. It is illegal for a lineman, who is usually an ineligible receiver, to be more than 1 yard downfield of the line of scrimmage without making contact with an opponent. This seems to be a gray area with referees, who don’t make this call often. Offensive coaches don’t mind, while this has been a point of contention for defensive coaches.
After the Chiefs beat the Broncos in Week 8 of 2018, former Broncos head coach Vance Joseph complained about the Chiefs going too far downfield on their RPOs.
“Linemen are 5 yards downfield, how do we fix that? I don’t know,” Joseph said. “What’s the rule say? I don’t know. But we have to figure this out and that’s on tape. That’s on tape, I’ve seen it.”
What’s the difference between a bubble screen and true screen?A true screen is a play in which the quarterback will take a drop-back to invite the pass rush to go after him. Offensive linemen would block for a couple of seconds before letting the pass rushers “beat” them and then release downfield to block. The idea behind a true screen is to draw the rushers in and throw the ball over their heads and get a convoy of offensive linemen ahead of the ball carrier.
A bubble screen is one in which the ball is immediately thrown to the perimeter. Only skill players block on a bubble screen play and offensive linemen are uninvolved in the actual bubble screen. Bubble screens are often used as the pass option as part of RPOs.
So don’t get mad at the play-caller for calling too many bubble screens. He may be calling plays in which the bubble screen is an option and it’s being thrown because the offense has a numbers advantage.
What is the purpose of motion and shifts?A shift is when multiple players move and get set before the ball is snapped. Shifts are usually used to quickly change the formation so the defense doesn’t have a lot of time to adjust to it.
A motion is when a player is still moving before the snap. By rule, only one player is allowed to be in motion before the snap.
Why do teams put a player in motion?
Early in the game, play callers might use a lot of motion to see how a defense will respond. They might be able to take advantage of the knowledge later in the game.Motion could give a quarterback information. For example, if a defender follows the motion man across the formation, they would know the defense is likely in man coverage.Offenses could outflank defenders with fly motion or threaten to outflank them, which forces them to react.Because motion happens right before the snap, defenders have to quickly communicate changes in a small time window, which can cause lapses.Motion doesn’t allow the defense to stay set and settle in mentally.First-year Cowboys offensive coordinator Kellen Moore used a motion or shift on nearly every snap in his debut against the Giants. In the clip, he used motion to set the back in shotgun late. Defenses will typically be alert for a RPO on the side that the running back is offset to in the gun so by motioning him in the backfield late, Moore didn’t give the Giants a chance to set up a RPO defense.
What is the difference between zone coverage and pattern match?Classic zone coverage or what Nick Saban calls “country” zone is when defenders are responsible for areas of the field. They’ll drop into those areas while keeping their eyes on the quarterback and reacting to the ball.
Pattern match is an umbrella term that could refer to zone match and man match. In zone match coverages, defenders drop to an area but are eyeing receivers and reacting accordingly. Their drops and movement change based on the route distribution. An example of this is Nick Saban’s rip/liz coverage.
In man match coverage, defenders are reading receivers and will eventually lock on man-to-man with receivers according to their reads after the route distribution. A good example of a man match system is Mike Zimmer’s schemewith the Vikings.
What is a true double team?You’ll often hear announcers say quarterbacks are throwing into double or even triple coverage, and it may look like they are correct because by the time the camera catches up with a throw there might be multiple defenders around the ball. But if you watch closely, most of the time that’s just the secondary converging after the ball is thrown.
A true double team is a defensive call. The team that probably uses the most true double teams is the New England Patriots. You can often tell a true double team by the alignment of the defensive backs.
This is an obvious example as you can see two defensive backs in the grill of the receiver. A more common example is if a safety is heavily tilted toward a receiver before the snap and gets his eyes on the receiver post snap. The Patriots call for a true double team is one “1 double (players number)”
Example: If they want to double Reggie Wayne (No. 87), the call would be “1 double #87”.
When the Patriots & Belichick played the Colts in the 2014 AFCCG, TY Hilton saw 1 Double & Cover 7 brackets the entire game. Have to take away #13. pic.twitter.com/gtxQUhu89G
— James Light (@JamesALight) January 5, 2019
Quarterbacks aren’t always “looking off” defendersQuarterbacks will stare down deep safeties or purposefully look in a different direction in order to get them to move because zone defenders will react to the quarterback’s eyes. This is known as “looking off.” But the term is thrown around too loosely.
Just because a quarterback looks elsewhere before eventually getting to his target doesn’t mean he’s “looking off” the defender. He could just be going through his progressions. If it’s a well-designed play concept, his progressions should have a similar effect of a “look off.” Route combinations are designed so that if one route is covered, another should open up.
Tips on watching the game: ‘Find the grass.’How we watch on TV is largely affected by the camera angles. Broadcasts tend to favor tight camera angles that are zoomed into wherever the ball is going. The problem is that there are 22 players on the field and oftentimes we can’t see the secondary and how the routes are developing downfield. Essentially, half of the story of the game is being hidden, especially with the ever-increasing usage of the passing game.
The NFL is starting to experiment with the usage of the sky cam, but based on backlash from fans I don’t anticipate a major change in how the game is shown. We can still watch the game smarter, but until fans are allowed to choose their own camera angles, we’ll have to take our clues where we can get them.
Chris Brown, the editor of Smart Football and one of the central figures in the evolution of how football is being covered more analytically, offers his advice:
“Before the snap, find the grass. A lot of people say to understand what’s really going on ‘watch the defense,’ or ‘watch the linebackers’ (partially on the theory that you will naturally find the ball) which is perfectly fine advice, but the reality is it’s a kind of odd way to watch an entire game or for more than just a few plays.
“The easier and to me just as interesting thing is to, before the snap, instead of watching the QB look at the sideline or whatever, is try to look at the defense and figure out where the “grass” is — are they packed in tight and way off the receivers? Are they spread out with big gaps/bubbles inside? Is anyone covering the slot receiver? Chances are that whatever you see is the same thing that the QB and offensive coordinator sees too, and you’ll be amazed at how often the ball goes to that grass… as well as how often good defenses show open grass and then close it up fast. Then once the ball is snapped you can watch as a normal, though now more informed, fan.”
Here, you can see the defensive backs are backed off and the inside linebacker and outside linebacker are lined up tight in the box. There is plenty of grass underneath on the inside of the two-receiver side. Quarterback Jimmy Garoppolo hit his receiver, who ran a slam route, right into the void for a nice gain.
Just following Brown’s advice, you’ll be able to predict where the ball will go more often than not, and if that space closes up quick you might have recognized a defensive disguise, which is worth noting.
How to watch the game like an NFL quarterback with Carson PalmerIf you want to take things a step further, you can play armchair quarterback and try to process the defense pre-snap like quarterbacks do. To help us understand how a quarterback reads defenses, I talked to former NFL quarterback Carson Palmer, who was as cerebral as any quarterback to have played the game. Here is what he looks for at the line of scrimmage broken down in steps:
1. What personnel group is on the field?Pay attention to the offensive personnel that is in the game and how the defense is reacting. If the offense has 11 personnel (3 receivers, 1 running back, 1 tight end) in the game, does the defense have its nickel (5 defensive backs) or dime (6 defensive backs) in? This affects matchups and noticing these things will help you find mismatches and look really smart in front of your friends when you yell, “look out, there’s a linebacker on Travis Kelce!”
2. Is it a single high defense with one safety in the middle of the field or is the middle of the field open because there are two deep safeties?With most TV broadcasts, you’ll at least be able to see the safeties before the snap. Count how many deep safeties there are. If there is one safety, the coverage is likely going to be cover 3 zone or cover 1 man. If there are two safeties, it is likely cover 2 zone, cover 4, or 2-man.
3. Then you get into your cadence and you try to figure out which way the safeties are rotating or rollingNFL quarterbacks are too good for teams to just keep their defense stagnant and make it easy for quarterbacks to read what the coverage is. Safeties will often show one look and then rotate or roll when the quarterback starts his cadence. Where they move or how they move gives the quarterback clues to what the coverage is and where pressure could be coming from.
“If they start as a middle of the field open defense with two high safeties and as the snap count gets underway, do they roll down to a single high safety? And which way are they rolling? Are they rolling towards the tight end or the slot receiver? If they are rolling down and rotating one way, are they rotating because they are bringing pressure from that side? So is the safety coming down to the nickel side because the nickel is blitzing? Or is the safety coming down to insert inside the nickel and play run defense in the middle of the formation?”
Amazingly Palmer and other NFL quarterbacks had to answer these questions and process all this information in the matter of seconds while they are barking out the cadence. As a viewer, the more you practice looking for these keys from the TV screen, the better you’ll be at predicting what’s coming before the snap and maybe even predict what quarterbacks should be seeing, but remember you do have an advantage as a viewer when you can see the screen from a wide view and don’t have pass rushers pinning their ears back looking at you like you’re Thanksgiving dinner.
I was surprised to hear that Palmer said that he didn’t really look at where the cornerbacks are lined up before the snap. He said he would look at that on the sidelines from images from the eye in the sky after the play and obviously he would have an idea where through film study while preparing for the game.
“It’s hard to see and hard to tell what’s going on outside as far as corners leverages. Now, there are so many guys playing press bail. They’ll come up and press the receiver and at the snap, they’ll turn and bail. It’s sort of irrelevant. It’s great to know but it’s a lot more to see than what you really need to see pre-snap.”
This makes sense because there is only so much a quarterback could see and process from his vantage point and quarterbacks could likely know how they will set their progressions by knowing what sort of coverage shell (one high or two high) that the defense is in. But as viewers, we get to see the corners pretty easily and they can give give us clues to what sort of coverage the defense is in.
Are the corners backed off? Where are their eyes? If there is one deep safety and the cornerbacks are also backed off with their eyes on the quarterback, it’s likely a cover 3 zone. You won’t know the coverage for sure until after the snap but you can figure out most coverages just based on the pre-snap alignment of the safeties and cornerbacks.
4. Advanced blitz indicators“Well, the advance indicator is trying to see what side the nose tackle is shaded on because a lot of teams will bring pressure to the bubble (B-gap) but that’s next level PhD kinda stuff,” explained Palmer. “That’s something you look for in year five, six, seven, eight, and on. But for a young quarterback that’s something that could get overlooked and really you don’t have time to figure that out.”
The idea here is that a lot of blitzes will be run toward the B-gap or the side that the one-technique defensive tackle is lined up. Obviously, this isn’t a hard, fast rule but it’s something to look for along with other clues that might help a quarterback figure out where a blitz is coming from. Palmer also mentioned that some defenses will move the shaded nose tackle before the snap so quarterbacks don’t get a bead on where their blitzes are coming from.
“As I got more experienced, I started looking for more bluffs. For example, a young nickel cornerback early in the snap count at the line of scrimmage might try to step at you to show you that he’s coming but normally, they are bringing the blitz from the other side once he starts to do that,” said Palmer. “So look for the bluff and I assume he’s not coming till he proves that he will come. Normally, they are just trying to get your eyes over there and bring the pressure from the other side before you recognize it.”
Even as a former quarterback, Palmer admits it’s hard for him to recognize things like where the pressure is coming from when watching on TV. We see what the camera is focused on and often they are too zoomed in on the quarterback, which leaves out half of the story of the game. But that doesn’t mean we as viewers shouldn’t try. It really does make the game more rewarding when you can see some of the things that Palmer talks about.
What’s everyone yapping about before the snap?Oftentimes the broadcast will pick up on a quarterback’s pre-snap communication and while we won’t be able to understand all of it, there are some common calls that we can figure out.
Turn up your sound. Audio in the clip.
“Rip” usually means the offense is sliding the protection to the right, while “Liz” means the offense is sliding the protection to the left. It may vary from team to team but usually if you hear a word that starts with the letter “R,” it indicates right and “L” left. These words might not always refer to protection, it could mean that a quarterback is changing the direction of a run play.
If you hear the quarterback or center bark out something like: “52 is the Mike,” he’s identifying who the middle linebacker is because it affects how the protection is set.
Quarterbacks could also completely change the play but they’ll use code words that are often impossible to figure out because they could change from week to week.
One of the last things that a quarterback will bark out is the signal to start the cadence. Peyton Manning’s famous cadence starter was “Omaha,” which told the rest of the offense that the ball will be snapped on the next sound. Other cadence starters could be “Sunday” or “Monday.” Some cadence starters could tell the offense to go on first “hut” or second “hut.”
There are games that the offense will play with cadence starters or cadences if defenses start to get a bead on them. Manning had a way to turn his Omaha call into a hard count. It’s impossible to know what every call at the line of scrimmage means but there are some universal calls that you’ll hear over and over again.
What to look for post-snapAfter the snap, viewers are completely at the mercy of the camera. Again, broadcasts will typically zoom in on the quarterback so you won’t have any idea what is happening with the route concepts and how defenses are reacting to them.
If you’re lucky, you can see a safety rotation and confirm the coverage or catch a defense disguising – defenses could present one look before the snap but switch to a different coverage after the snap in an attempt to confuse the offense. You could usually catch a quick glimpse at what the corners are doing before they are out of the picture. If their eyes are locked on the receivers in front of them, they are probably in man coverage.
The way to get the most information after the snap is to try to have a soft focus on the offensive line, while mainly focusing on the ball. The offensive line doesn’t lie. If they are firing aggressively down field, the offense is going to run the ball. If they back away from the line of scrimmage, it’s a pass. Linemen can deceive to a degree but usually have a tough time lying.
Got all of that?If you’ve carefully read or already know the information in this article, you are either already an “expert” viewer or at least on your way to becoming one. However, context is key. After all, in order to recognize cover 4, you have to know what it is. A helpful place to start is to click on the hyperlinks in the article, but don’t be satisfied there. There are so many great resources for you to further your football education in the internet age. The more schemes you know, the closer you will get to Level 3 and beyond.
(Top photo: Jason O. Watson / Getty Images) |
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| From: Don Green | 3/3/2023 8:19:18 AM | | | | | | Equities Execution in Focus
GlobalTradingMarch 2, 2023
With Katherine Chairez, Head of Execution Strategy, Harris Associates
Briefly outline your career background and current role/responsibilities at Harris Associates.
I spent the first 11 years of my career on the sell side in financial engineering and execution consulting roles at Goldman Sachs and then Citadel Securities in New York. From there, I moved to the buy side with UBS Asset Management in Chicago, where over four years I focused on trading strategy and analytics and eventually headed the Americas equity trading desk.
I currently serve as the head of execution strategy at Harris Associates, a role I’ve held for the past four years. In this role, I am responsible for best execution initiatives across global equities with a focus on algorithmic trading, automation and strategy selection.
How has the execution landscape evolved over the course of your career?
When I entered the electronic trading space in 2005, dark pools had not yet reached prominence in the U.S. During that time, algorithm utilization, when it occurred, was often confined to primitive volume-weighted average price, time-weighted average price and percentage of volume strategies.
With the emergence of dark pools and fragmentation, so too emerged a second generation of liquidity seeking algorithms. Child order placement was no longer just about size, time and price, but also venue.
Advancements in technology gave way to further innovation—new order types, new venue types, etc.—and speed became a differentiator.
Along the way, as the landscape became more complex, electronic solutions became even more essential.
How has Harris’ execution strategy adapted to such changes in the execution landscape?
The ability to navigate a constantly changing landscape is critical to an effective execution strategy. Necessarily, the way Harris executes today looks very different compared to even just five years ago.
For example, with more volume shifting toward the close in the U.S., we have pivoted to incorporate imbalance feeds, utilize better auction estimates and leverage D-Quote flexibility.
In Europe, where we have seen periodic auctions, LIS venues, SIs and MTFs exhibit statistically different markouts, we have focused on curating an appropriate liquidity experience for various segments of our flow.
Overall, as we have worked with our brokers to develop custom algorithmic strategies that align with our various order segments, we have shifted to a higher proportion of low touch trading.
What allows Harris to manage execution so well?
We run a very efficient team at Harris. From trading to analytics to execution strategy, and including our support teams and technology stack throughout, we are aligned on our trading philosophy and approach across more than 30 markets.
Because we run lean, we are also very nimble. We are able to adapt quickly to improvement opportunities that crop up over time. Oftentimes, we are the first client to approach a broker to request a given feature.
We maintain frequent interactions with our brokers around the globe so that we can supplement our observations at Harris with what they see more broadly. These collective findings often motivate new initiatives and collaborations, such as new algorithm features or strategies, that we pursue on our path of continuous improvement.
Finally, we have the full support and trust of our portfolio managers, which allows us to pursue the initiatives that we think will be most meaningful for our clients.
How have objectives around execution strategy changed?
While the landscape has changed considerably over time, the name of the game has remained the same: liquidity. The challenge, though, is not about separating good liquidity from bad, as some believe. The challenge is in understanding one’s own liquidity needs, discerning the goals of would-be counterparties, and ascertaining how and when those interests should intersect. In my opinion, firms that can do these three things well are serving their clients well.
How do you measure the effectiveness of your execution strategy?
We utilize structured A/B experiments to observe the effectiveness of a given test strategy versus the status quo. Harris uses impact-adjusted arrival price as our primary benchmark for measuring trading costs. We also consider other factors and data points, such as volume-weighted average price, participation-weighted price, reversion and liquidity capture, for additional insights on execution quality.
How do you see execution strategy needs changing in the future?
I think we’ll continue to see a trend toward more consistency and transparency around best execution oversight, which hopefully will arm the buy side with more information and control.
We’re definitely staying tuned to the market structure developments in the U.S. While there remains uncertainty about the current proposals, there is potential for significant impact to some key players in the space. We must try to anticipate how that might impact our clients.
Longer term, with the execution strategy function becoming increasingly technical, I think we’ll continue to notice a natural shift of early career technical talent across industries. It will be interesting to see how temporary and/or permanent work-from-home and hybrid protocols in finance affect the early career talent pipeline in the space. |
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| From: Don Green | 3/24/2023 5:27:11 PM | | | | | | What Does AMC Stock Have to Do With the Collapse of Credit Suisse?Not so long ago, Credit Suisse predicted that AMC shares would reach less than a dollar per share. However, the tables have turned. Here's what you need to know.
Mar 23, 2023 8:48 AM EDT
Swiss bank Credit Suisse collapsed over the weekend and will now be acquired at a discount by rival UBS.Credit Suisse analysts had rated AMC shares as a "sell" and expected the stock to reach below $1.Credit Suisse's chairman blames social media and retail investors for the swift downfall of the bank.
 Figure 1: What Does AMC Stock Have to Do With the Collapse of Credit Suisse?
Getty Images
Read also: GameStop (GME) Reports A Profit, Stock Goes Bananas. Short Sellers In Panic
What Happened to Credit Suisse?Over the weekend, Switzerland-based financial giant Credit Suisse ( CS) - Get Free Report collapsed. Shares of the bank are now worth less than $1.
But Credit Suisse's problems were no new development. The bank had struggled with financial losses, mismanagement, scandals, and liquidity concerns for years.
In 2021, Credit Suisse was one of the banks involved in the Archegos Capital Management scandal, which caused it $4.7 billion in losses.
Credit Suisse was also the lead investor in the failed Greensill Capital two years ago and was involved in an espionage scandal five years ago, along with other troubles.
Now rival Swiss bank UBS ( UBS) - Get Free Report is set to acquire Credit Suisse at a hefty discount.
What Credit Suisse's Chairman SaidThis week, Credit Suisse chairman Axel Lehmann was asked about the reasons behind the bank's collapse. His answer was surprising.
According to Lehmann, not only had the bank been overcome by risk, but it was also affected by an outdated business model.
He pointed out that the bank's customers had been loyal for quite a long time. However, since last autumn, a social media storm has targeted Credit Suisse, shaking the confidence of its investors.
Fox Business journalist Charles Payne tweeted that Lehmann deserves to be nominated for "Clown A$$ of the Year" for that statement:
When Credit Suisse Poked the Apes Last October, Credit Suisse joined the AMC Entertainment ( AMC) - Get Free Report bears. The bank's analysts rated the theater chain as a "sell" and forecast a price target of 95 cents.
Credit Suisse's main problem with AMC was the company's lack of profitability. According to Credit Suisse, even if attendance levels were to return to pre-pandemic levels, AMC would still need to see healthy returns on its balance sheet.
Apparently, the Swiss bank wasn't counting on this happening.
Credit Suisse's position on AMC has been interpreted by many individual investors as a case of the pot calling the kettle black. At the time, Credit Suisse itself was worth less than $4 per share and was already showing signs of approaching penny-stock levels.
With Credit Suisse's business already in turmoil, many in the market started to question its survival.
Investors began to turn their attention toward the rapid decline of Credit Suisse and, of course, its potential spillover effects.
The bank reported steadily decreasing revenues, losses from its Russian business, and also litigation costs. This forced the bank to drastically reduce its headcount at the end of last year.
Today Credit Suisse shares are worth less than $1, while AMC's stock trades for nearly $5 per share.
The Bottom LineThe collapse of Credit Suisse didn't happen overnight, nor did it have only one cause. There was an accumulation of factors that had already been weighing on the bank's outdated business model — along with many bad strategic decisions over the past years.
Perhaps the final blow came when retail investors on social media platforms scrutinized Credit Suisse's reputation. This possibly impacted the abrupt collapse of its share price.
AMC and GameStop ( GME) - Get Free Report are the most-talked-about stocks on social media sites like Reddit. Socially mobilized retail investors — also known as the "Apes" — believe that banks and institutional investors are the enemies of individual investors due to their unequal trading structures.
So it's not hard to understand why many retail investors root against financial institutions like Credit Suisse.
Even last October, when the social media storm hit Credit Suisse shares hard, company executives issued a memo telling employees not to confuse stock performance with the bank's capital strength and liquidity.
Since 2021, we've probably seen the most speculative stock market in history. The negative exposure of Credit Suisse on social media was just the icing on the cake.
(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting Wall Street Memes) |
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| From: Don Green | 3/28/2023 7:50:52 AM | | | | | | I am retired Navy So I find this very interesting and a Lesson Learned
Reinforce the Navy Reserve
Sailors man the rails as the USS Ronald Reagan departs for Yokosuka, Japan, from Naval Station North Island in San Diego, Calif., August 31, 2015. (Mike Blake/Reuters)none
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“It is not that life ashore is distasteful to me. But life at sea is better.” —Sir Francis Drake
Here’s what we know: The Navy is as valuable in peacetime as it is in wartime. Were it not for our forces afloat, the seas would be significantly more at risk from the predations of piracy, as well as endangered by rogue states. The stolid presence of American warships is the guarantor of international sea lanes by which the world’s poorest are supplied the means of economic advancement and by which the world’s wealthiest nations develop their life-bettering technologies. From the South China Sea to the Suez and Panama Canals, vessels bearing the designation “USS” protect the goods necessary for energy, nourishment, and shelter.
Here’s another thing we know, having been reported almost everywhere: The market has rarely been tougher for military recruiting. When the Navy reports that it cannot find enough new sailors to replenish its annual losses, it is an international trade concern just as it is an American defense concern. An arrogant assertion? No, it is the unvarnished truth. There exists no force on earth that can secure the sea lanes if our Navy is allowed to atrophy — and the atrophy would be self-inflicted by rigid bureaucracy.
To take Drake’s remark a step further, life at sea should be the keel upon which the modern Navy’s retention lies. A sailor on land, in the shipyard, or at a mustering depot is a body that can be better used aboard the nation’s seagoing vessels. Be he mopping, working an underway replenishment, or filling one of the multitudinous roles required to maintain the vessel’s mission readiness, it should be a priority to see the young seaman detached from anything other than deployments and preparing ships to deploy. But what to do when fresh sailors are getting hard to come by?
Last year, to make up for its recruitment gap, the Navy dipped into its delayed-entrant savings account. Consequently, there’s no longer a fund of pending recruits to draw from. If young Americans are both less inclined to serve as well as less qualified — just 23 percent are qualified today, and not even 10 percentare inclined to join up in the first place — then we must look elsewhere for those who would take up a seabag and cross the ship’s brow.
If not new bodies, then what about Certified Pre-Owned? We should recruit the already recruited, some 48,000 of them, the young veteran sailors in our schools and workplaces — and it would be easier than one might think. As any salesman will tell you, a repeat sale is easier than a cold call.
Right now, when a sailor leaves the service, he’s gone. He’s made the excruciating decision to leave his shipmates, attend separation classes, and finally walk himself outside the gates of the naval base with nothing but a DD-214, a few tattoos he didn’t have at 18, and, for some, a void of purpose. For many, this void is an opportunity, but it is nonetheless novel and terrifying. There’s no easy way back aboard, though he’s more qualified than anyone driving past him.
Separating requires hardening one’s heart against the appeals of senior leadership to stay, so it’s unlikely he’s ready to return. But a year later? When he’s meeting up at a bar in Greater Milwaukee with other guys he served with, and they get to talking about their time, isn’t there a part of him that wishes, as they do, that he could go back for just a while longer? Almost always, yes.
But to return to the service often requires as much or more work than his original enlistment, and he doesn’t want to go through a year of paperwork just to get orders to a ship in the yards, where he’ll be for four years — he wants to sail. He wants to fly to Oahu and step aboard a ship the day it points its bow westward under steam.
Here is an opportunity: We should seek out experienced separated sailors and offer them temporary positions back aboard soon-to-be-deployed vessels the sailing of which depends on men with their qualifications. Additionally, we should reformat the reserves to make continued deployments possible without unnecessary mustering and rigamarole.
First, the hard numbers. When a sailor enlists, he signs up for eight years in the Individual Ready Reserve (IRR) as an addendum to his active-duty contract (i.e., the timer for the inactive obligation starts counting down the second he’s sworn into the service). Additionally, a recruit often receives a “secret” security clearance that lasts for ten years; without the clearance, a sailor is essentially unable to serve on a ship. For simplicity’s sake, let’s assume neither of these numbers is adjustable. Whether a sailor has a four-year enlistment or extends it to six or eight, he has the inactive obligation and the benefit of a decade under a security clearance.
It would benefit the Navy to keep sailors on retainer even after an active enlistment ends. If I had my druthers, the process would be as simple as the engineering officer getting the captain’s approval (a captain who needs to meet certain minimums for viability to deploy), then picking up his phone and asking his former sailors if they’d be willing to come back for a cruise. If a former sailor said yes, the JAG — a Navy lawyer — would send over a contract that reenlisted the refrigeration mechanic for nine months, with the understanding that the deployment could be extended. The sailor would report to an existing Military Entrance Processing Station (MEPS) and go through the normal medical lookover. He’d then be handed a ticket and jet off to meet the ship. After a successful deployment, the sailor would receive a completion bonus and return to whatever else he had going on in his life. (More practically, an anodyne call from the chief engineer urging a former sailor to report to MEPS to hear about an opportunity seems like a more OPSEC-friendly version, though lacking in dramatic satisfaction.)
Simple as that.
The former sailor already knows ship life, the Navy’s expectations, and how to manage a watch rotation and maintenance. It takes two years to get a recruit past the NUB (non-useful body) stage (boot camp then schooling then on-board qualifications); it’d take two days to get a former sailor back into the routine. When old salts rode along on Tiger cruises — an opportunity for civilians to ride a ship home from Hawaii to homeport with an active sailor they know — it was easy to pick them out because they knew how to move around the ship and speak the language. The only difference was that the salts were grayer, happier versions of active-duty sailors.
But I’m not talking about bringing back retirees for a glory cruise. No, we have tens of thousands of sailors leaving the service every year who are of sound body and mind, most of them still in their twenties, who don’t want to do the Navy full-time or put up with the imposition of Selected Reserve (SELRES) — the type of reserves that have monthly drilling musters and other superfluous obligations.
Most return sailors would be junior enlisted — the labor force of the ship. We could have used an extra couple of watch standers on every deployment I was a part of, but I never did see a reservist slotted in to that or any other position needed before deployments. Having to switch to a twelve- from an eight-hour shift because someone was busted for drugs or got pregnant weeks before deployment was . . . frustrating. Frustrating because we knew no one was coming to fill that gap, so we should all get used to less sleep. Please know, however, that officers in the reserves inform me that a recent policy shift looks to improve this relationship. Sailors in high-demand rates (jobs) — such as a fire controlman with an AEGIS specialty — retain that title when joining the active reserves. Also, there’s now a portal where active reservists can apply for billets on ships in need of certain qualifications.
Consider the secondary advantages of more fluid hiring practices. The Navy would clean out some of the ranks of reluctant lifers who are leery of returning to the civilian world. If sailors knew the door wasn’t slamming behind them and so were less afraid of going forth, I have to think that some of the nastier culture issues in the service might dissipate with the pressure relief of a door left ajar. People who feel trapped are rarely generous or fun to work with — we all served with an E-6 like this at some point.
Then the financial incentives. On one hand, the Navy would be paying for the part of a ship’s cycle that gets the best return — the deployment phase — instead of offering huge reenlistment bonuses to sailors leaving for shore duty or for a ship welded to a pier. For many sailor-turned-civilian-turned-sailors who are hard-up in their civilian lives, the opportunity to stash away cash would be welcome and, with the move away from the pension system, would allow former sailors to avail themselves of the Thrift Saving Plan (the pension’s replacement) for a protracted period to ensure a more secure retirement.
Here’s what I know: The Navy needs sailors, and it doesn’t look like they’ll be streaming into recruiting offices. I offer my suggestion as a way for the most vital branch of the military to quickly rectify a deficit, improve the mission readiness of the fleet, and allow captains to efficiently man their ships without having to beg a detailer for the impossible. We have built into an enlisted man’s contract the structure for eight to ten years of at least sporadic assistance. Rather than allow qualified individuals to disappear, we should call them back for the things that matter most. With 90,000 sailors between IRR and SELRES, we have the bodies. Let’s make it as seamless as possible to get them where we need them to be.
Sailors will forever wish to sail. Let them. |
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