Watch the webinar replay below for unique coverage of equity values in the Big Tech sector and financial sector capital structures. We explain the negative spillover impacts of the recent market decline on Big Bank equities, debt, other securities, and counterparty credit exposures. Download the slides from the webinar here.
Moderators: David Trainer, Founder & CEO of New Constructs,
David Hendler, Founder & President of Viola Risk Advisors, LLC
Background to Evolving “Tech-Wreck” in Stock/Option Markets
New Constructs and Viola Risk Advisors have regularly reported on the prequel conditions that led to the break-out decline in the crowded Big Tech melt up during the last 6 months.
Recently, New Constructs warned subscribers of the imminent fundamental valuation disconnects in many Big Tech and related stocks and the S&P 500. See recent reports on: Tesla (TSLA), Uber (UBER), Beyond Meat (BYND), Wayfair (W), Carvana (CVNA) etc.
A Capital Structure Challenge for Big Techs, Big Global Banks, and other knock-on effects
We expect this market decline will not be limited to the Tech sector as many of the Big Global Banks have been complicit in offering the Japanese Whale access to equity derivatives that would amplify the returns of its funds and other fund managers involved in this crowded trade. For the last four years, Viola Risk has been reporting on the history of abusive and speculative use of equity derivatives to artificially pump up many global banks income and return, especially the French banks such as BNP Paribas, Société Générale, and Natixis.
These major French banks have many recent quarters of equity derivatives losses due to their difficulty in hedging these instruments for fat-tail negative market moves. And importantly, the French banks are overly exposed to negative moves on equity derivatives due to their overconcentration in relation to their extremely weak stock market capitalizations and economic earnings.
This article originally published on September 11, 2020.
Disclosure: David Trainer, Kyle Guske II, and Matt Shuler receive no compensation to write about any specific stock, style, or theme.
Follow us on Twitter, Facebook, LinkedIn, and StockTwits for real-time alerts on all our research.