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What happens to Credit Suisse' short positions? are they transferred along to UBS? do they need to close before the deal is done? or will they be sold to another bank?
So far it seems that the shorts & bullet swaps will be coming along to UBS, but that these positions don't fit in UBS' model and they're way too risky, so they want to get rid of them.
UBS will either close these positions and take the loss which will be handled by the Swiss Gov, or sell the positions off to some other hedge fund, bank or market maker.
UBS may try and close the bullet swaps & shorts, hoping that the loss is $9bn or less, but it could end up being much, much more, as these are level 3 financial instruments which are VERY hard to value.
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Today I Want to explain what's going to happen to Credit Suisse's short positions and their Total return swaps. Obviously, UBS has just acquired Credit Suisse but are there swaps and short positions going to transfer into UBS as well? Are they going to be closed out of before the deal is finalized? Or are they going to be sold off to another bank entirely? Or stay tuned and let's make some money and now on a dive straight in with the key information. So obviously UBS received tons of incentives from the Swiss government and a Swiss National Bank to actually complete this acquisition. First off is this giant liquidity line the Swiss National Bank has offered to UBS to get the deal done.

Now this is effectively money UBS can draw in case there's a bank run on UBS as well as go Kevin tweeted he said Switzerland's Central Bank has given UBS a liquidity line of over a hundred billion dollars to tap into as part of its deal to buy Credit Suisse And that basically means if UBS experiences a bank run as well or starts taking on heavy losses, they can effectively draw an almost unlimited amount of money from the Swiss central bank. Now on top of that, as I touched on earlier, the government have also covered the first nine billion dollars of any losses that UBS takes on, effectively paying UBS 6 billion dollars to acquire credit. Suites Obviously, UBS technically paid 3 billion, but the first nine billion of losses are covered. Therefore, UBS is effectively getting six billion dollars in cash for free to acquire Credit Suisse And on top of that, as I touched on this, 17 billion dollars worth of bonds have just been completely zeroed.

Meaning, there's almost 23 billion dollars worth of incentives given to UBS to acquire credit Suites And therefore there must be something absolutely horrific in the Credit Suites books. And on top of that, as Jim Bianco said, he also assumes the Central Bank will still honor the 54 billion Swiss Francs They promised the Credit Suisse on Thursday as well that 54 billion dollar buying out credit Suite had already received is likely to still be honored on top of that 100 billion dollar liquidity facility. Now, what's really interesting here is something that has absolutely transferred into Credit Suisse is the Arcados bullet Swaps. Now obviously, most of these bullet swaps are two-year bullet swaps.

Now you may be saying one: Tom did our chaos collapse around about two years ago? And number two, what kind of swaps did Arcados hold? Now to answer the first question, are Kagos collapsed on March 26, 2021, The two-year anniversary would be March 26 2023, only a few days from now, And therefore, Archaicos's swaps are clearly coming up for a new. and that's why UBS effectively need these additional sweeteners in the Credit Suisse deal because they know these swaps are toxic, likely to expire worthless, and with a giant liability attached that UBS couldn't cover on its own. And we also know that Arcados was shorting GameStop on AMC and was also massively over leveraged long on other positions that are likely still out there, still toxic and still about to cause a giant giant headache. And on top of that, the UBS Chairman just said after taking Credit Suisse's positions, those long data positions in derivatives AK swaps don't align with the UBS interests and therefore UBS is looking to unwind these positions, therefore meaning to close them.
Now saying unwind doesn't necessarily mean that UBS is going to close these positions. All it really means is that UBS does not want them. They are either going to close out of those positions or try and unwind and unload those positions onto another unsuspecting Bank unsuspecting hedge fund or unsuspecting Market Maker. But obviously, the main answer is is that yes, so far, these positions have indeed transferred from Credit Suisse to UBS.

but UBS absolutely does not want them because it doesn't align with their interest. Therefore, they are either looking to close those positions and cover those bullet swaps and cover those shorts or shift them onto another bank hedge fund or Market maker. As always, Sad, but truthful tweeted, he said: the UBS Chairman just admitted those swaps are level three financial instruments. Now, with financial instruments, you've got three types of evaluation measures.

You've got level one, level two, and level three. Now, this is a bit of complex accounting, but all that really means is that level one financial instruments have a quoted and traded price phrase similar, or the exact same instrument. With level Two instruments, the price can also be calculated and they are directly observable, but they're not quite the exact same as Level One quota prices. Now, with Level Three financial instruments, the value of those instruments are really difficult to calculate because they're not based on observable Market data.

Basically saying, it's really difficult to Value these swaps or to Value these short positions because they can't model anything that would really tell the true value of just how toxic these positions are because obviously the sheer amount of synthetic shares. it's really hard to model exactly what will happen during the AMC squeeze, so they can't really value just how deep in the hole they are with these toxic positions. But what we do know is that UBS are holding them because Credit Suisse while still holding them as well. but UBS absolutely wants to get rid of them.

Although it potentially won't be long until UBS realizes the nine billion dollars worth of losses the government has promised to cover may not be enough to close out of those short positions. As I said, the value of these instruments have no observable Market data. Therefore, it's really difficult for UBS to try and figure out exactly how much liabilities they're going to take on if these positions were closed and therefore May likely try and sell them off to another bank Market maker or hedge fund Either that or they may try and exercise the positions and close out of those short positions and effectively cross their fingers and hope they don't end up bankrupt. But it seems that investors are perceiving this risk is much greater than UBS is estimating.
and that's why the UBS credit default swaps have just started to go crazy. As Bloomberg tweeted, they said investors are perceiving a much higher risk when it comes to UBS the cost of ensuring debt of a UBS group AKA Those credit default swaps within the next five years has risen by 63 basis points. We can see that in November December these credit default swaps shot to around 150 basis points. They then obviously called off only to around 75 basis points, but in the last few days they've shot all the way to 230 240 basis points.

It seems the market did not like the acquisition of Credit Suisse by UBS and the market believes that Credit Suisse has not got a good enough deal. Even though they've effectively been given 23 billion dollars in incentives with a backstop facility of 150 billion dollars, the market still doesn't think it's going to be enough. Basically saying clearly, the market is expecting a massive, massive blow up of these Credit Suisse bullet swaps that may end up bankrupting UBS as well. And on top of that, it's not just a UBS that's struggling because Executives of First Republic Bank are scrambling to find a buyer and announce a deal sometime today or sometime over Sunday Monday or Tuesday And given the market sentiment, First Republic may not survive the coming days and so far a buyer is unclear.

it's the bestie letter tweeted. It seems the U.S government and the FDIC and the FED are completely unorganized and do not have a handle of what's currently going on with a banking crisis. They said first, they tried to get large Banks to save the day, then they tried to find a buyer for Silicon Valley Bank but couldn't Now they're meeting with Warren Buffett for help to bail out the financial system and he said this is the last thing we need to restore confidence in the system and he said it's becoming even more evident that large Banks and funds will win from this. He said governments are desperate to contain the crisis and don't want to take on the burden, but investors are already looking for a bargain it seems to defend.

The government are absolutely clueless as to what to do, and they're trying to get any bank to rescue any other bank we without stepping in too much. So far, it seems like a complete repeat of 2008 when the FED in the government were days if not weeks behind what was actually happening. and as I said, this may also be the case for UBS that could be completely underestimating just how much toxic liabilities Credit Suisse actually have or just how much damage those toxic liabilities can actually do. But guys, be sure to let me know what you think down in the comments below.
And as always, guys, be sure to ding that notification Bell because that way you'll be alerted when I put a new video. Cheers!.

By Stock Chat

where the coffee is hot and so is the chat

23 thoughts on “Will the credit suisse shorts be closed?! – amc stock short squeeze update”
  1. Avataaar/Circle Created with python_avatars Nigel Roddy says:

    Why do you let all the fake comments in your vids, surely not so the comments count increases…. Half to the comments in your vids are fake πŸ€”πŸ€”

  2. Avataaar/Circle Created with python_avatars Walshak Thomas says:

    You work for 40yrs to have $1m in your retirement, meanwhile some people are putting just $10k in a meme coin for just few months and now they are multimillionaires, all thanks to Mrs CharIotte God bless you ma πŸ‘

  3. Avataaar/Circle Created with python_avatars Will The Trill says:

    Curious if anyone here has tried copy trading.
    What was your experience? I’m relatively new to trading and I am looking study some traders and copy their open trades rather than investing myself and lose money emotionally.

  4. Avataaar/Circle Created with python_avatars Char00 1977 says:

    Maybe this video will hold true.
    Or
    Maybe it's like the few hundred videos before it.

  5. Avataaar/Circle Created with python_avatars mike veraguas says:

    Don't expect the stupidity of these people to not keep kicking the can down the road. It's not there road anymore, They're all old farts with no road left.

  6. Avataaar/Circle Created with python_avatars jeda756 says:

    if they want to make deal with us retail investors i think if all come up with a number nothing ridiculous saying maybe 50k the high and forces us to sell then making new rule in the market saying any short selling must be paid back in T+5 day or 10 days but not in the dark pool on the open market. also we have to find way to slowly get rid of Dark pool as well cause this dont help the market at all.

  7. Avataaar/Circle Created with python_avatars Meeeee says:

    Please!
    Don't ANYBODY worry…. Ken Griffin will be fine.

  8. Avataaar/Circle Created with python_avatars Frederick Miles says:

    Meaning they have evidence to sell to the criminal – someone is going pay through the nose or they drop it on the market. I am guessing the latter – unless UBS has some smart folks who look under the hood and starts snatching up assets that would increase in value during an unwinding.

  9. Avataaar/Circle Created with python_avatars Frederick Miles says:

    Yes they are buying a crime scene and they know it.

  10. Avataaar/Circle Created with python_avatars footserable says:

    hey Tom, how much are you earning clickbaiting and promoting moomoo? 🀣🀣🀣🀣

  11. Avataaar/Circle Created with python_avatars Paul Stephen says:

    It would be pretty stupid if Credit Suisse continued with its bad behavior of shorting anything at this time , they lost so much money doing this and they need positive investments into the near future , AMC is in debt but is stabile and that is not a good company to short

  12. Avataaar/Circle Created with python_avatars DOPE DOPE says:

    This is cause the squeezeπŸ˜…?

  13. Avataaar/Circle Created with python_avatars Gorilla Trader says:

    There is no excuse for this. The retail traders have been warning the entire world that the stock market and financial system is a house cards. Either the people in charge are completely incompetent or they have no clue how to prevent it only to react to it. I don't buy they don't know what's happening, they do, that is the scary thing. Compare it to anything else, law enforcement, medical, teachers, lawyers etc. They are bad actors but the good ones say nothing. They either are afraid of retribution, are doing the same immoral/illegal acts, or would not want to be judged harshly themselves. For example, a lawyer can steal their clients money and what happens, they get their license suspended, not taken away, but suspended, which means they can still be a lawyer after the suspension. Look at Madoff, the SEC was warned, none of the big banks had money with Madoff, they all knew what was going on. So the question is why didn't they do something? How do they punish one and not all…they all are doing it, IMO the stock market has become one big Ponzi scheme to pay pensions. Everyone is willing to look they other way as long as they get their pensions. Take away or lose their pensions and there will be rioting in the streets.

  14. Avataaar/Circle Created with python_avatars Ferry Harmer says:

    πŸ€” Kinda makes you wonder about the vote and what happens to these Bullet Swaps when the CUSIP number changes eh?

  15. Avataaar/Circle Created with python_avatars Gorilla Trader says:

    They are going to Warren Buffet for help, hmm. Now do you know why they don't want a wealth transfer. Let me explain. Let's say Warren Buffet loses/gives all his money to 4 million different investors. Then who does the govt go to? To get the same amount of help, they would theoretically have to go to 4 million different people instead of 1. Same thing for politically donations. They would rather deal with a few select people than many.

  16. Avataaar/Circle Created with python_avatars Yasuko Bryan says:

    They can’t close because we won’t sell. Perhaps way too many IOUs. The government needs to make a deal with us providing the future plan to demolish the corruption. Why a HF is the main MM to start with. They are not very bright.

  17. Avataaar/Circle Created with python_avatars Eimestein says:

    Funny how the word toxic could be actually also
    bad management
    greed
    no accountability

  18. Avataaar/Circle Created with python_avatars ALLEN β—‰ says:

    The rich stay rich by spending like the poor and investing without hesitating then the poor stay poor by spending like the rich yet not investing like the rich

  19. Avataaar/Circle Created with python_avatars Williams says:

    πŸ“Œ Nice video, love how you take your time to educate your viewers. You gave me the mindset to invest my savings now I have made profits over $120k Right now and still making more , I am enjoying a good life with what I made investing. Indeed β€šbuilding a Portfolio income (investing) through a licensed investment adviser is one out of many ways to earn passive income.

  20. Avataaar/Circle Created with python_avatars Rod Dominguez says:

    Investing now should be in every wise individuals list, in some months time you’ll be ecstatic with the decision you made today.

  21. Avataaar/Circle Created with python_avatars William Navarrete says:

    T.J. great video, always enjoy.

  22. Avataaar/Circle Created with python_avatars Tammy Morris says:

    My life has changed. Thank you Jesus. $32,000 weekly profit Our lord God has lifted up my Life!!! , Glory to the eternal God Almighty.

  23. Avataaar/Circle Created with python_avatars KeepitReal2772 says:

    This is the big banks and the government trying to play hide the toxic potato. We all know how that story is going to endπŸ’ŽπŸ¦πŸš€πŸ’―

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