Welcome back to the channel everyone today, i want to talk about how a number of brokers will go bankrupt during the squeeze. I also want to talk a bit more about what's to come over the next few weeks and the next few months for the wider market. So stay tuned and let's make some money and now we'll dive straight in with the key information. So you may remember a few days ago i made a video on the recent nickel short squeeze jack farci, just tweeted, saying that lme chief executive matt chamberlain told bloomberg this morning that if the exchange hadn't cancelled a number of trades, several brokers would have struggled to Survive from the bloomberg article, it says the lme chief executive officer, matt chamberlain, defended the decision saying that some brokers would have struggled if the nickel trades had stood and weren't cancelled and unwound.

He said it would have been extremely difficult for some of our market participants to continue their activities. Chamberlain said in an interview with bloomberg tv, the ability of the financial system to get that money to the members in london and then into the exchange. I think, would have been significantly stressed for brokers on the lme. Tuesday's drama was a throwback to the exchange's darkest days.

The last time lme suspended trading in one of its contracts was during the 1985 tin crisis, where an international producers cartel collapsed after it could no longer prop up the tin price. That crisis was a harrowing experience that changed the shape of the market. Many historic brokers were forced out of business from the losses and according to lme law, the stress from the crisis shortened a number of lives. Now you may say tom that must have been an absolutely catastrophic short squeeze for the lme exchange to cancel a number of trades and suspend trading on both sides.

Jim bianco just posted a thread on the lme situation and why it should bother everyone in the market. It's a blatant disregard for the rules to protect one chinese tycoon against the market, and he believes it's far worse than what happened to gamestop and amc. He says: xinxiang is china's largest nickel producer with 40 billion dollars in revenues. It's run by its founder zhang wanda and his moniker is the big shot.

Take that to mean he has a huge ego, jinguanda shorted, a hundred thousand tons of nickel, which yes, there is a huge amount. A hundred thousand tons of nickel at the previous price of twenty thousand dollars per ton is around two billion dollars at the very tippy top of the squeeze before trading was suspended. That would have been worth around 10 billion dollars. Therefore, that's around an 8 billion dollar margin call that juan gwanda just suffered.

Xing was counseled terrain in this massive short, but he's the big shot and runs sing-sheng, so he knows better than everyone. Obviously, in retrospect this position was causing market imbalances. This imbalance often shows up when all markets are stressed like they were or are with russia invading ukraine and the current political climber. The market moved against him enough to get a margin call by all accounts.

He simply said that he did not want to pay for that margin call. So the enemy gave him a reprise and in other words the lme ignored its own rules, and let him not pay the margin call but didn't liquidate his position. Why? Maybe because he's the big shot a made player and his broker was the state-owned china, construction bank and the lme is owned by the hong kong stock exchange. Hong kong, as of 2020, is also now part of china when he was given his reprieve.

The market had an offside player that could be squeezed, so prices rocketed, 250 percent to a hundred thousand dollars per ton. At that point, not only did he not want to pay for the margin call, but he also couldn't pay for the margin call not to worry the lme halted trading and cancelled trades back down to 50 000 per ton. You may say tom, that's absolutely crazy. How many trades did the lme cancel? Did they just cancel one or two large trades, or did they wipe out thousands of trades mark thompson? Tweeted, saying i've been looking at the nickel trade data for tuesday morning and the cancelled lme trades? The numbers are quite staggering.

There was over 9 000 trade lots that were actually cancelled. Those 9 000 trades had a total contract value of 3.9 billion dollars by cancelling and unwinding all of those trades. It moved the price of nickel back down to 48 000 per ton and that wiped out around 1.3 billion dollars worth of profits on those 9 000 trades. And he says for an exchange to cancel 5 000 combined trades for a total of nine thousand individual trades, and to do so retrospectively does not sit well with me at all.

These trades were between willing buyers and willing sellers in a functioning market. None of those trades were fraudulent, none of those trades were forced or under duress. They were all functioning trades placed in a functioning market, and he says this creates serious credibility issues for the lme. Where is the line if they can do this retrospectively in nickel? What else can they do? How can you trade on an exchange, if you do not have certainty that your profits will be paid and others will be let off from their losses but to make matters worse for the lme jinguanda, the big shot wants to stay in his short position on the Lme and doesn't want to pay for that margin, call he's more than happy for all of the trades to be unwound, and now he wants to stay in his short position and potentially even add to his short position.

The lme initially said that nickel trading would restart tomorrow, but they've put that on hold, because obviously the lme want jinguanda to close out of his position and not continue to short nickel. The theory is that those short imbalances still exist and the price could skyrocket back over a hundred thousand dollars per ton and double his margin. Then again the lme would have to cancel even more trades guys. Many of you may not have a lot of confidence in the stock market at the moment.

There's all this market manipulation and market fraud. That seems to be going entirely unpunished, and that's why i personally also invest in cryptocurrency, especially during this big dip with blockfy. You cannot only invest in crypto, but you can also get up to 250 in free bitcoin when you sign up using the link in the description below and make your first deposit. More than 500 000 people and 350 institutions globally use block fi to manage over 10 billion dollars in assets.

Block fi is also an entirely free platform that has no minimum balance and block fight also offers a rewards credit card with an introductory rate of 3.5 cashback. On your purchases also paid in crypto, so you can continue to accumulate more and more there's, also no annual fee and no foreign transaction fee. But the card is only available in the us, so guys be sure to send it to block file using the link in the description below and make that first deposit to get up to 250 dollars of free bitcoin. Could this happen to amc on the american stock exchange and i think right now? The actual answer is that i don't really know this is a chinese-owned exchange that canceled and suspended trading to protect a chinese-based investor.

China obviously has very different values and very different aims. Compared to the united states, but saying that, could a united states stock exchange, which is largely funded by united states, hedge funds, cancelled trades to protect those united states-based hedge funds? Well, anything is possible, they may say tom cots. Did alan ken griffin just ask the new york stock exchange to turn off the exchange when amc starts to squeeze that way, ken griffin won't get margin called and won't have to pay for his margin call and if anything, he can just add a short position. Even more but hang loose says why didn't the new york stock exchange halt things and revert, amc and gamestop to the proper price when its president even acknowledged that amc share price wasn't properly being reflected back in january? It wasn't the new york stock exchange that halted trading on gamestop and amc.

It was brokers like robin hood, turning off the buy button and again back in june, when amc ran up again, the new york stock exchange again did not turn off the trading and did not turn off the exchange. They just laid a run and said hey. What will be will be and hang lou says, that's right because it wasn't hurting the elites. In that scenario, ken griffin isn't technically part of that elite group like jp morgan, goldman sachs and bank of america.

In this nickel play jp morgan, chases, the largest counterparty to jinguanda and therefore stands to lose the most. So all of a sudden when it's jp morgan, losing tons and tons of money, the new york stock exchange would be concerned and would haul trading. But if it's only citadel and ken griffin, they couldn't really care and believe it or not, even jim cramer, is saying that the pressure from defaulting funds and hedge funds that have huge withdrawals are causing immense problems. As stonks batman says, blue chip stocks are in a bubble.

The hedge funds treated them as a savings account they tossed all of the gains they made into blue chip stocks. Now, retail investors are doing the same thing, but with shorted stocks a lot of liquidity in the markets is parked and i believe the scale will till because obviously blue chips was the collateral for those large hedge funds against their short positions. As long as the blue chips kept going up, they didn't have to cover their shorts because they would never run out of margin and they absolutely had to keep these blue chip stocks continually, going up to not get margin called. But now many of these blue chip stocks are already down 10 to 20 from their highs and some even more and therefore many of these large hedge funds are going to be running out of margin and will end up being margin called.

But obviously, when tons and tons of these hedge funds end up being margin called and amc squeezes, many brokers are likely to go under and end up bankrupt. Donahue george has posted a tweet, and i think this is absolutely what's to come for a number of other hedge funds. He says another hedge fund bites, the dust air abt global. Shutting down is just another domino.

Falling tick-tock hedges justice is coming airavt globally. Shutting down as hedge fund gets hit by an unravelling of growth trades. The firm's hedge fund lost only 8.5 last year, but was down by double digits in 2022, through the last month alone and donahue george also tweeted, saying blackrock lost 17 billion dollars due to its russian exposure. I wonder if they'll have to liquidate assets to cover their losses.

Fortune posted an article saying blackrock, just lost 17 billion dollars due to its russian exposure, but that's just the tip of the iceberg, as western banks are owed 121 billion dollars by russian entities. This is only going to make those margin requirement matters worse, as these hedge funds have now lost an additional 121 billion dollars, and dr marco metzler reckons that russian default will soon have a spin-over effect into international banks and leasing companies entering the next phase of the Global financial meltdown guys be sure to. Let me know down in the comments below what you think about brokers going bankrupt during the squeeze and whether you think this is what's to come for the wider market and as always guys. If you enjoyed this video be sure to check out some of my others, alternatively, subscribe to the channel and ding that notification bell, because that way, you'll be alerted.

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