Malt Liquidity 2
Feelings, PE, and more
It’s not what happened, it’s how you feel about it
One of my favorite traditions of hyped IPOs is the preponderance of people buying the wrong stock. The obvious conclusion is that uninformed traders are simply confusing the tickers - TWTRQ instead of TWTR is a notorious example, as is ZOOM instead of ZM - but I really think this is too simplistic. As noted in the paper linked above, particularly for tech IPOs, there is a certainly an image of some pre-IPO effect on tickers related to the upcoming stock sale. My personal theory is that, since the advent of Robinhood, where people destroy their wealth in the name of “democratization of finance”, there are a lot more potential traders who will simply type “Zoom” in the stock-search window and buy whatever pops up. Thus, a lot of the demand for related tickers could just be buying up of potential confusion points in the hope of getting out before the music stops.
At around 5 AM PST Monday morning, NKLA had a press release stating NKLA Signs MOU with GM, and something curious happened to the stock - the company, a known fraud (exposed in what is one of the most hilarious research reports I’ve ever read), absolutely exploded just prior to the news release, before promptly selling off.
Certainly, the pop was algorithmically driven, and as soon as the report was properly processed - that the agreement was non-binding, that GM wasn’t taking a stake in the company but rather simply providing fuel cells for the “existing” products (in a pathetic effort to save face, after private firms did their due diligence for them), and that NKLA was refunding all orders on their “proprietary” Badger truck - the stock sold off, as it was obvious that this was a death sentence for the business. So what exactly happened here? After all, some shares were absolutely traded between the premarket high of 39.3 - around 40% above the previous day’s close - and 27, which was still 'up’. “What happened”, though, as it was for Hillary Clinton, probably isn’t the correct question here. It seems pretty obvious that someone’s algorithm took “NKLA + sign + GM” as a screaming buy signal and massively raised the bid before, obviously, the stock dumped off. One could cite this as an example of shoddy logic, but I like to think of it as another example of latency edge being so well-defined and mature in markets that trying to front-run people’s sentiment, especially in these meme-worthy retail-driven stocks (remember, quizzically, Hertz rallied after declaring bankruptcy), might be the only way to seek further edge.
In which ‘PE’ stands for Private Eye
While the peak of corporate espionage might have been fictional dream-hacking, reality continues to be self-satirizing and far more unbelievable, as more reports of Credit Suisse spying on its employees continue to come out - these incidents predating the already ridiculous 2019 saga where the then-CEO Tidjane Thiam sicced a private eye on a high-up employee who dared defect to the competing firm UBS, and then attempted to have his COO/coworker across three companies blamed for it. Supposedly, the spying was done to make sure “employees weren’t poached.” I’m not particularly surprised that banks would have internal surveillance groups - after all, hedge funds are known to track flights as potential indicators of merger talk, though the usefulness is questionable - but it is pretty hilarious to read the details of how horrible these investigators were at, you know, being private:
On Sept. 17, Mr. Khan, while out shopping with his wife, realized his car was being followed, a person briefed on the events said. He parked, and took out his phone to take photos of the other car and its driver, according to the person and the Investigo statement. Shaken, Mr. Khan called Credit Suisse security.
Making this story even more ridiculous is that, supposedly, Mr. Thiam and Mr. Khan were on frosty terms over cocktail party remarks:
At a party in January at Mr. Thiam’s home, Mr. Khan spoke with Mr. Thiam’s girlfriend about some trees on the Thiam property. The discussion got heated. Mr. Thiam scolded Mr. Khan for what he perceived as rude behavior, according to the people familiar with the matter.
Naturally, the private investigator later committed suicide, which certainly quashed the rampant speculation brewing in people’s minds.
Stay Reserved
So, uh, don’t threaten to bomb the Federal Reserve on Twitter?
A 19-year-old resident of Harlingen has been ordered to federal prison after he claimed he was being “edgy” when threatening to destroy the Federal Reserve, announced U.S. Attorney Ryan K. Patrick.
I can’t believe this needs to be said, but, uh, here’s the “Gold Standard” of social media conduct - it’s probably a bad idea to make public threats of mass violence.
At the hearing, the court found sufficient evidence in support of Schrimsher’s intent and that he disrupted public, governmental or business functions. Judge Rodriguez also noted Schrimsher had precursor chemicals and bomb making recipes in his bedroom at the time he made the threats.
While clearly making an example out of this case, it would be worth noting that the venn diagram of “people interested in bomb recipes” and “people with extremely antagonistic views towards the Fed” is a circle, making intention impossible to assume. There are plenty of other things to be edgy about! Perhaps try masquerading your angst in a fictional novel about a convoluted Simpson-esque plot involving pouring bleach into Amazon’s ink supply to prevent Quantitative Easing.
On that note…