Is the stock market going to tank?

[jono]

You're thinking logically and there's no logic to this hence the necessity IMO of hedging

The next inflection point is a delist with HTZ going to the pinks ( many retail accounts restrict buying on the pinks or raise margin requirements).

It takes time in Ch 11 proceedings to sort out competing claims and obtain necessary court orders that crystallize the inevitability of equity going to zero. Sometimes it can take years. For example old GM shares are still in a pink sheet trust.and trading only on participation in class action settlement proceeds but otherwise are zero

Yeah, I wasn't planning to go without the hedge, I'm just thinking the odds of a catalyst coming from the BK judge are pretty high and might effectively cap the opportunity.

[summit]

Think I'll sell some shit today

[LeeLau]

Yeah, I wasn't planning to go without the hedge, I'm just thinking the odds of a catalyst coming from the BK judge are pretty high and might effectively cap the opportunity.

Around 2006- 7 I worked on the buy side with DIP financiers who would short commons and participate in DIP financing of bankrupt companies. I'd help with the terms and work closely with the bk lawyers who would understand the ins and outs of the process. I learned enough to know that the processes were very technical and interwoven with not just the Bankruptcy Code but also state UCC, liens and then have to consider if the asset-backed contracts truly were cancelled. It's a fascinating area in terms of competing claims. But it did require a lot of attention to detail

That opportunity disappeared as more and more firms got into DIP financing and collateralized lending thus eroding the margins for "vulture" firms (like my clients) who provided the DIP. It did show me the "whys" of the bankruptcy process being so expensive, and equity - destroying.

Anyhow take a quick look at the bk docket for HTZ. It's pretty complex.

[retirwntm]

Lee,

Were your vulture funds participating or buying bank debt from the syndicated loan desks? How were they getting access to the companies debt?


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[LeeLau]

Lee,

Were your vulture funds participating or buying bank debt from the syndicated loan desks? How were they getting access to the companies debt?

It was prepack so the dealflow could be lined up pretty quickly if you were on a list of interested parties. The banks would lead the DIP and syndicate it via loan desks. Loan desks would then get hold of whoever they knew would participate. Back then the originations also handled DIPs (for a time the DIP desks would be separate as there was so much business but maybe they've consolidated now). Our funds would short against a box and often would negotiate for new equity and double dip to get the interest from the DIP loan, get the right to convert to new equity and crush the old commons.

It was all individualized because some bk companies had lots of cash flow generating assets and could collateralize. Some had just intangibles that would be sold as a discounted asset. Basically some had residual value but many didn't. Like I said it became a pretty crowded field very quickly. That field has also changed a lot since then; there's now standard paper to work from and a formula to follow. I'd not be surprised if HTZ is using that standard paper but with twists due to the international structure

[retirwntm]

Back in the day before and during the time you’re talking about I worked for Citibank the the Solly/Citi syndicated desks mostly on the trading desks.

Then I got into synthetic CDO’s and really fucked up times. I know we spoke at some points in the past, just wondering if we’d ever have crossed paths.

Damn, I got old.

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[ICantLogIn]

Users of Robinhood, the US-based stock trading app, have bought more shares in Hertz over the past three days than in any other listed US company, doubling bets in a week, according to data tracking holdings on the platform.

'When the retail investor starts to view the market as a one-way bet it's usually an alarm bell and that does seem to be happening,' said Paul Markham, global equities portfolio manager for Newton Investment Management.

Hertz filed for Chapter 11 bankruptcy protection in May, sending its shares down 80 per cent. But since then the shares have gained more than 800 per cent as retail investors shrug off news that prompted professional fund managers to sell. The company has $18bn of debt, and faces the prospect of selling its fleet of used cars into a shaky market.

[Kevo]

I feel kinda disillusioned with everything right now. I'm not informed enough to fully understand the implications of everything, but it seems like there has to be some kind of long term ramifications for all of the money printing that the US is doing. Makes me want to diversify into Bitcoin in addition to gold.

[old goat]

I don't follow this thread so forgive me if this has been discussed. Are professional investors stupid or do they think everyone else is stupid? Hard to rationally explain a huge run-up in stocks based on a dismal but slightly better jobs report or a huge crash based on a totally anticipated spike in cases and a statement from the Fed. Are investors dumb enough to think that either of those events change the overall trajectory of the pandemic-related economy, or do they think other people are dumb enough to think that so they better buy or sell before the other people do.

It is said that while individual investors may be wrong the market as a whole is always right. To me it seems the opposite--individual investors may be smart enough to understand the pandemic but the market as a whole is stupid because everyone is guessing what everyone else will do rather than acting based on their own understanding.

It is said that the market weighs and accounts for all known factors. Then why the crash based on a spike in cases when that spike had long been predicted and should have been already accounted for?

[billyk]

I was going to buy the dip today, but decided I better take a look at the graphs. Took everything out but 1 share of each ETF I’m in (so I can watch them easier in my trading tool).

I’ve been second guessing that decision all day, especially when the market started to bounce, but now pretty happy I did.

[LeeLau]

OG - if there's one thing that dotcom and 08-09 and now COVID is showing it's that being a pro isn't a guarantee of anything. Speaking just for myself I tend to avoid what I don't understand. I also tend to work in small micro-markets I do understand. It does mean a lot of missed opportunities - eg 4matic's mention of missing the buying opportunities of April (same here); bro's constant yogababble about BTC (which actually turned out to be a decent hedge against inflation but my biases made me mistakenly tune out).

As to the general market. I'll come back to the old axiom that its a tug of war between the relative aggression levels of buyers vs sellers. And as many have said the general market is fairly disconnected from the general economy. So I'm what anyone can take from that other than who the hell knows?

[Benny Profane]

I feel kinda disillusioned with everything right now. I'm not informed enough to fully understand the implications of everything, but it seems like there has to be some kind of long term ramifications for all of the money printing that the US is doing. Makes me want to diversify into Bitcoin in addition to gold.

You could have seen that written a hundred times in 2009-10. How'd that work out?

[dschane]

I feel kinda disillusioned with everything right now. I'm not informed enough to fully understand the implications of everything, but it seems like there has to be some kind of long term ramifications for all of the money printing that the US is doing. Makes me want to diversify into Bitcoin in addition to gold.

While I tend to share this view (minus the interest in bitcoin/gold), here's the Modern Monetary Theorist's explanation of why it doesn't matter right now:

https://www.nytimes.com/2020/06/09/o...ronavirus.html

[Cono Este]

Back in the day before and during the time you’re talking about I worked for Citibank the the Solly/Citi syndicated desks mostly on the trading desks.

Then I got into synthetic CDO’s and really fucked up times. I know we spoke at some points in the past, just wondering if we’d ever have crossed paths.

Damn, I got old.

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You’re old? I still write calls and puts on paper tickets in my sleep. And I’m updating markets verbally as the underlying moves. No auto quote. That’s why I’m still single I guess.


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[4matic]

I don't follow this thread so forgive me if this has been discussed. Are professional investors stupid or do they think everyone else is stupid?

The vast majority (90%+) of professional investment is long allocation. They might make small changes to look smart but big bets are rare .

Edit: This is why it doesn’t take that many shares to create a big short term move.

[mcsquared]

I read a post on reddit yesterday that really makes sense to me. It was posted on wallstreetbets but actually belongs somewhere more scholarly. Devoid of hyperbole so it won't get any attention.
https://www.reddit.com/r/wallstreetb...ates_might_be/
tl;dr Deflation is coming. The Fed can't stop it and is just making it worse.

[Benny Profane]

I read a post on reddit yesterday that really makes sense to me. It was posted on wallstreetbets but actually belongs somewhere more scholarly. Devoid of hyperbole so it won't get any attention.
https://www.reddit.com/r/wallstreetb...ates_might_be/
tl;dr Deflation is coming. The Fed can't stop it and is just making it worse.

'29

[pureantigravity]

I read a post on reddit yesterday that really makes sense to me. It was posted on wallstreetbets but actually belongs somewhere more scholarly. Devoid of hyperbole so it won't get any attention.
https://www.reddit.com/r/wallstreetb...ates_might_be/
tl;dr Deflation is coming. The Fed can't stop it and is just making it worse.

IMO deflation might not be a bad thing. Unless wages keep even with the cost of living.
And propping up the price of oil to save the oil industry, even though demand has dropped and supply is good, is a sort of corrupt capitalism.
But I doubt deflation is coming. Unless rent goes down along with utilities and wages, fixed costs will remain the same and the shareholder expectations will only be met by increasing the profit margin on lower sales. Translation, everything is going to go up in price in the short term until losses are accepted as innevitable.

[Stu Gotz]

Did Hertz totally rewrite the bankruptcy playbook? If you make bondholders whole, then there is no issue?

[Ted Striker]

Panic sold it for 17... Watched it all day, creeped back down to my sell price and I re-bought. Heh, no harm no foul on my panic.

Don't know the tax status of your account(s), but if it wasn't exactly the same price have a look at the wash sale rule.

[pureantigravity]

What happens in Dubai affects us all.

Dubai stares at an economic collapse, pandemic leaves Dubai scrambling for money.
https://www.youtube.com/watch?v=WMzV-pD9iLA

[Benny Profane]

Did Hertz totally rewrite the bankruptcy playbook? If you make bondholders whole, then there is no issue?

Business school fodder for decades.

[Toadman]

What happens in Dubai affects us all.

Dubai stares at an economic collapse, pandemic leaves Dubai scrambling for money.
https://www.youtube.com/watch?v=WMzV-pD9iLA

Time for a shopping spree to Dubai!

[Benny Profane]

Time for a shopping spree to Dubai!

What happens in Dubai affects us all.

Dubai stares at an economic collapse, pandemic leaves Dubai scrambling for money.
https://www.youtube.com/watch?v=WMzV-pD9iLA

I never got it. Why is that place attractive?

[Benny Profane]

Fun to watch




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