Welcome back to the channel everyone today, i want to talk about a number of big banks and hedge funds that are creating liquidity using the russian bonds and russian assets, but how it's most likely going to lead to them being margin called and potentially liquidated. So stay tuned and let's make some money, and now i want to dive straight in with the information so mark jones has pointed out this article from bloomberg. Wall street is already pouncing on russia's cheap corporate, dare it says banks and other hedge funds are bidding on bonds from gazprom. Russia's railway company and obviously conventional distressed bets have drawn scrutiny under the shadow of war.

Now the article says, as the us and allies tighten sanctions on russia and choke off invested demand for its assets. Parts of wall street are jumping on the buying opportunity that it's creating goldman sachs, jp morgan chase and a number of hedge funds have been purchasing beaten down. Company bonds tied to russia in recent days as hedge funds that specialize in buying cheap credit look to load up on the assets now, obviously, if different banks and different hedge funds can buy these assets and buy these bonds for pennies on a dollar, they could potentially Be using the bonds at full face value for margin and collateral requirements. Obviously, if these bonds are still rated aaa, they face a zero percent haircut.

If they're rated lower than triple a, they either face a 75 haircut or a 100 haircut. But there could be a number of russian bonds that still rated triple a. But these banks and hedge funds are scooping up for pennies on a dollar and they're still able to use these bonds at full face value for their margin requirements. Therefore, these banks and hedge funds are effectively creating liquidity in order to meet these modern requirements and not get margin called as the rest of their portfolios are taking a dive.

This obviously means these hedge funds and big banks can kick the can for a little longer and survive for a few more days, but actually these russian bonds may not be as good as they sound, and these large banks and hedge funds may be about to be Margin called moody's has just downgraded russia to ca, which is one step below junk bond, which is obviously saying that russia is expected to default, which we already knew, but importantly, the implications of this default have not yet been understood, nor priced into effect. The mispricing, coupled with the mirror image of soaring energy prices, will cause a cascade and a chain reaction. These big banks and hedge funds are scooping up these russian bonds to help meet margin requirements, but these russian bonds are just about to be downgraded way below aaa, and therefore the bondholders will suffer a 100 haircut. When these bonds suffer a 100 haircut, they will effectively be worthless for margin, requirements or margin purposes, and therefore these banks and hedge funds are going to be margin.

Called nazim has posted this article from bloomberg and said that margin calls are expected. This week, credit suisse wealth clients are facing margin, calls on russian assets. Credit suites have joined ubs in asking for more collateral for some portfolios and credit suites and other banks are not willing to lend against some russian assets. Therefore, these banks aren't willing to use some russian assets already for margin requirements and over the next few days or the next week or two are likely to stop allowing all russian assets for margin purposes.

If these banks stop lending against russian assets, that means the russian assets can't be used as collateral to support the margin requirements and therefore these banks and hedge funds are going to have defined margin from elsewhere or face margin. Calls the article says: credit suisse has joined large arrivals ubs in triggering margin calls on wealthy clients who use russian assets as collateral after their value slumped. In the wake of extensive sanctions imposed on the country. Switzerland's second largest bank is asking rich customers to post more collateral after cutting lending values on russian securities and, interestingly other banks with wealth management.

Arms as well have also cut lending values. Interestingly, this is already starting to impact the underlying stock and the underlying credit default swaps. For some of these large banks, guys, if you haven't already be sure to sign up to moomoo, using the link in the description below and make your first deposit to get five free shares, valued up to 3 500. Each and another guaranteed free share valued at around 20 dollars.

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And again it's not just credit suites as well. Here's the credit default swaps for ubs, and if i scroll down, we can also see the credit default swaps for citibank and also the credit default swaps for morgan stanley as well, and while none of these banks are yet seeing stress like the pandemic. For some, the credit market is reflecting as much or more stress than what transpired in the fourth quarter of 2018 during the liquidity crisis back in the fourth quarter of 2018, the s p drew down 20 in one singular quarter with currently 10 of the highs, and Last week's worst was 14 and therefore clearly the marketing is pricing. Another 10 drop in the s p 500 at the very minimum, and therefore, while these big banks are going around buying up russian assets, these russian assets could soon be downgraded and become absolutely worthless.

Not only in terms of face value, but also for margin requirements. This is obviously starting to be priced into the credit default swaps, because other players in the market know that these big banks and hedge funds are making the wrong choices, as the master investor says by month end we're really going to see how bad things are for The global economy, i expect market to be in a bearish trend until march 15th or march 16th, but looking at the global repercussions of everything going on we'll see - and he says i'm looking out for defaults on a very large scale. Potentially one of the big banks going under or some very very large hedge funds, like citadel being bankrupt now rudy here, does make a very important point saying i thought amc would go up based off its negative beta as the wider market starts to crash. Surely amc and its negative beta will kick in and cause amc to skyrocket.

Now, that is true, but to a certain extent the reason why amc has a negative beta and the reason why it'll perform different to the wider market is because of the number of shorts. Currently, shorting amc when the market starts to crash and hedge funds end up being liquidated, it will cause the wider market to crash even more as they're forced to sell off tons and tons of assets into the open market at market value, causing the stock to drop. Even harder, but when these large banks, institutions and hedge funds get margin called while they do have to sell off their assets, they're also forced to cover their shorts during a liquidation, and therefore amc will go up based on its negative, beta or beta when other hedge Funds and institutions start being liquidated when the wider market has fallen five or ten percent. That's not quite yet enough to trigger those liquidations and therefore not quite yet enough to trigger those shorts to cover their short shares.

But when the s p 500 continues to drop. Maybe it's 20 25, 30, 35 or even more. At some point, these institutions will be liquidated, forced to sell off their other assets and forced to cover their short positions and we're already starting to see some other hedge funds really feeling the pinch already. Donna hugh george tweeted, seeing another hedge fund losing billions.

The dominoes are falling one by one. He says they're, not liquid enough to keep printing counterfeit shares and therefore do we need the international criminal court to investigate the crime of the century. Tiger global's loss this year widens to 23 after the february swoon chase coleman's tiger global management posted a 10 decline for its flagship hedge fund last month, a significantly steeper drop than expected now, interestingly, tiger global management is another target club fund, the exact same tiger club, Where bill huang actually originated from believe it or not, bill cline himself actually invested billions into chase coleman's fund and, interestingly mark codes. Tweeted saying 2022, the year of the tiger cubs blowing up wait till they have to mark down their private investments down 30 to 70 percent.

Then what now we know that bill huang invested billions of dollars into chase coleman's tiger club fund. But, interestingly, a number of these toyo cubs actually invest in each other's funds and therefore, when these hedge funds have to mark down their billion dollar investments in other target club funds. We're gon na see a number of these hedge funds fail to meet their margin, requirements and again be margin called, and now the real dark paul actually tweeted, something that i found very very interesting. We know that citadel was banned in china for a number of years due to their unusual practices and potential market manipulation.

But interestingly, andrew left of citroen research was also banned from trading in china for five years again due to market manipulation, as darkpool says, citadel was also banned and therefore that tells you a lot about u.s markets, citadel, practically rules, u.s markets and andrew left of citroen Research has been trading in the u.s for a number of years, but both of these companies or both of these people were actually banned in china, both for market manipulation. The article says in 2016 andrew left was banned for five years by the hong kong market misconduct tribunal for disclosing false or misleading information in connection with the publication of a research report on chinese property developer. Nonetheless, evergrande group and therefore it seems like a number of these activist - short sellers - not only manipulate the us market, but also try to manipulate chinese markets as well, and this is the exact same citroen research that two months ago, tweeted saying maybe it's time for the Amc apes to put their bananas in people's mouths and actually align their interests with management and therefore that is a clear connection that these activist short sellers, like citroen research, not only manipulate the chinese markets, but also manipulate amc, guys be sure to. Let me know down in the comments below what you think about the incoming margin calls for large banks and other large hedge funds, potentially like citadel, and as always guys, if you enjoyed this video, be sure to check out some of my others.

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