Market 05/13: BOJ suffers big loss after market intervention - GameStop returns?

FREE SEMINAR: How to protect your account from economic risks

By Steve Le - Monday, 5/13/2024 4PM New York Time

In the current volatile economic situation, protecting your account is extremely important, but doing so effectively is not easy. In the free seminar on Monday, Steve Le, Founder of Viet Hustler, will delve into important topics related to Hedging and Diversification to help everyone protect their accounts from upcoming macroeconomic risks.

Topics discussed:

• Methods to identify market risks

• Market approaches to minimize risks

• Effective hedge tactics

• How to diversify optimally

How to join:

1. Join Discord via link

2. Log in or create a Discord account if you don't have one

3. Click on the event link here to join at 4PM New York 05/13

Note: The exchange will not be recorded and uploaded to Youtube.

Statements by Treasury Secretary Yellen and Fed official: Jefferson

1. Yellen

• The Biden administration's top priority is to reduce inflation.

• Hopes China does not retaliate against any steps Washington takes to protect investments in new industries

2. Jefferson

• Inflation has decreased significantly from its peak.

• The pace of inflation decline has slowed

• Keeping policy interest rates high until inflation falls is appropriate.

Legend "The Roaring Kitty" returns: GameStop stock and memecoins surge

First time since June 2021, "Roaring Kitty" returns on X

FYI: "TheRoaringKitty" is Keith Gill's personal account.

• In 2021, hedge funds and short-sellers shorted too many GameStop shares, causing the price to drop sharply.

• Gill bought a large volume of GME call options to drive up the stock price. Then short-sellers simultaneously reversed large short positions, pushing GameStop stock to a record high - creating the historic short squeeze:

  

• Before causing the 2021 short squeeze, Gill also posted a few ambiguous images on X…

• Therefore, this time when Gill posted the image below today, it stirred up meme stocks:

  

• GameStop hits $10 billion market cap for the first time since October 2022, up +91% in today's session

• Meme stocks race to surge and developers "seize the opportunity" to issue a series of memecoins on various blockchains.

• E-Trade goes down right when GameStop surges over 100%, preventing many users from logging into their accounts

Japan: BOJ loses $8.7 billion due to market intervention via derivatives - SoftBank faces bankruptcy risk.

BOJ bought $20 billion in JPY forward contracts to intervene in the forex market to protect the Yen on 04/29

… and, with the current situation, BOJ has lost $8.7 billion on this deal:

• Viet Hustler reported BOJ showing signs of intervention to rescue the Yen on 04/29, read more at: Japan intervenes to save the Yen

SoftBank announces weak business results for the 2nd consecutive quarter

SoftBank announced profit of 1.48 billion USD, equivalent to 231 billion Japanese Yen from January to March - 2nd consecutive quarter with dismal results…

• Q3/2023, JPY depreciated about 3.5% against USD and SoftBank lost 648 billion JPY due to unfavorable USDJPY exchange rate for their USD-denominated financing debts:

• Q4/23, JPY appreciated about 3.6% against USD, but SoftBank still lost 308 billion JPY due to FX as the Yen appreciation still couldn't offset losses from USD-denominated listed debt…

This bank is currently seeking ways to avoid bankruptcy:

• SoftBank has pledged everything the bank can accept as collateral from its balance sheet, including SoftBank shares!

• Individual Masayoshi Son has borrowed billions of dollars from SoftBank to invest in Vision Fund 2 (a very poorly performing fund) and used SB Northstar Limited (SoftBank's hedge fund) as collateral

BOJ is likely directly involved in the SoftBank bailout package last weekend because:

• They are the second largest shareholder after Masayoshi Son

• The third largest shareholder is JP Morgan.

US: Households worried about financial issues as inflation expectations rise in April - New York Fed

After staying at 3.0% for the past 4 months, US households' average inflation expectations for the next year rose to 3.26% - according to New York Fed.

• The percentage of consumers who think they won't be able to pay their minimum debt in the next 3 months is at the highest level since the pandemic

• The number of people who believe they can find another job in the next 3 months dropped to 50.88%

• Expectations for college tuition increases in the next year rose to 9.02%, highest since late 2022

China: CPI rises in April while PPI cools

• April CPI up +0.3% Y/Y, beating forecast of 0.1%, third consecutive month of Y/Y CPI increase

• CPI up +0.1% M/M, higher than predicted -0.1% M/M

• PPI down -2.5% Y/Y in April, worse than forecast -2.3% Y/Y, equivalent to -0.2% M/M decline

Total social financing in April fell nearly 200 billion RMB (27.7 billion USD) from previous month - first decline since 2017

• Data shows industrial loans not largely used for production purposes

• Credit growth inflated by lending to local government-related entities and financial speculation activities

China may start issuing 138 billion USD in bonds on Friday to boost the economy

• This 1 trillion CNY bond issuance includes:

From last week, bonds issued at fastest pace since February

Economic calendar week 05/13 - 05/19

1. April PPI inflation data - Tuesday

2. Fed Chair Powell speaks - Tuesday

3. CPI inflation data for April - Wednesday

4. Retail sales data for April - Wednesday

5. Fed Philadelphia manufacturing data - Thursday

6. 12 Fed officials speaking this week

• This week's earnings release schedule:

Other news

1. China exported 500,000 vehicles in April and is on track to export 6 million cars per year, affirming its No. 1 vehicle export position

China's auto production has returned to a long-time high (over 30 million vehicles/year)

2. U.S. Treasury reported a $210 billion surplus in April with $776 billion collected and $567 billion spent

3. Uber and Lyft are being sued for signing subcontractor contracts with drivers and employees instead of employment contracts.

   • A series of Uber drivers and employees may not receive legal worker benefits…