117 ms·
Very invulnerable. This whole “Squeeze” thing is a function of liquidity. The reason that stocks like GME and AMC can experience the effects of a short squeeze
by RC_ITR 4y ago
Very invulnerable.
This whole “Squeeze” thing is a function of liquidity. The reason that stocks like GME and AMC can experience the effects of a short squeeze is because of how relatively illiquid they are (i.e. point $1bn of consumer capital toward a $3bn stock with thin trading and you can do wild things).
The USD is the currency in which nearly all middle eastern oil is priced, the currency in which $16tn of consumer spending is done, quadrillions of stock trades, etc etc etc.
There’s no individual or group who can point enough capital at that to make for a squeeze, and even if they could, then why wouldn’t the treasury take advantage and start printing more dollars (see: Hertz issuing new shares and ruining wallstreetbet’s day)
- H8crilA 4y agoIt has happened in the 80s though. Soros (for example) has written a lot about this phenomenon and traded extensively on it, making a small truckload of money. It peaked in early 1985: https://tradingeconomics.com/united-states/currency https://tradingeconomics.com/united-states/currency It was bad for a lot of countries that had dollar-denominated debt, which is a bad idea precisely for this reason. Countries never learn though, it seems. But it was not too bad for the US actually.
- RC_ITR 4y agoNo, not even close. In 1985, Soros bet that the Plaza Accord (a market manipulation among a cartel of leading economies to weaken the dollar for political reasons) [1] would work and he was right. That has nothing to do with shorts or squeezes and everything to do with collusion among the Treasuries and Central Banks of something like 75% of the world economy at that point. Soros 'won' the trade because he realized how impactful this collusion would be while the rest of the market didn't. [1]https://www.nber.org/system/files/working_papers/w21813/w21813.pdf https://www.nber.org/system/files/working_papers/w21813/w218...
- 082349872349872 4y agoMaybe you can answer a different question of mine: what, if anything, did Japan get out of the Plaza Accord? By weakening USD (and hence USD-denominated commodities?) West Germany got a strong DM and hence could LBO East Germany and reunify. Japan got a strong JPY and ... what, besides stagflation? edit: am I calculating this right? to do a Plaza today would need, not the G5, but pretty much the entire G20?
- RC_ITR 4y agoJapan got the opportunity to go on an international asset-buying spree (which is always less impactful to real GDP than it seems cough Belt and Road cough) [0] [1] [0]https://www.washingtonpost.com/archive/politics/1989/10/31/japanese-to-buy-51-of-rockefeller-center/d6cca3ff-9e5a-4593-b6f0-4f939f464624/ https://www.washingtonpost.com/archive/politics/1989/10/31/j... [1]https://www.latimes.com/archives/la-xpm-1987-11-19-fi-22750-story.html https://www.latimes.com/archives/la-xpm-1987-11-19-fi-22750-...
- 082349872349872 4y agoAha, so the japanese didn't really care about domestic stagflation because they'd internationally diversified? Seems like that might lead into "absentee landlord" moral hazards at some point?
- H8crilA 4y agoFrom what I remember he also traded the up leg, and then the down leg. But it has been years since I read anything from him. Also, I remembered what it was called, the Reagan’s “Imperial Circle”: https://www.georgesoros.com/1984/05/23/the-danger-of-reagans-imperial-circle/ https://www.georgesoros.com/1984/05/23/the-danger-of-reagans...