miami new drummer is doing that is not just reviving the arts safely also bringing people much needed entertainment as they pay for fresh produce for those starved of in person artistic entertainment this theatrical production and troubling times has been a hit it's been a while since anyone's been able to go to a show or see anything live in a long time so it's kind of cool to see people getting creative and doing things outside and making things happen with the current situation. and i hope it keeps going. on here i don't know whether to tell everybody that while the immediate future of live entertainment remains in flux here or at least is proof that the show can go on. and gallacher al-jazeera miami florida.

there with al-jazeera these are our top stories the world health organization is warning against hording current virus vaccine supplies and follows the move turn pays export controls on vaccines manufactured in the block the controls will affect only 100 countries if we hold vaccines and if we have not sharing there will be sorry major problems one i say that it will be a catastrophe more than failure and 2 it keeps the pandemic bettany and 3 there the slow economic global economic recovery so it's morally wrong in terms of our esteemed the pandemic it will tell. it wouldn't also spoke out what we want. mexico says it will be importing the astra zeneca vaccine from india has already begun giving out the fines

a biotech shots to its people present manual labor is over door says he's also expecting deliveries of russia's sputnik vaccine next week obrador tested positive for cobra 19 a week ago but says his health is improving. man miles military says it will abide by the country's constitution amid concerns the armed forces might attempt to coop previously said it could take action over alleged irregularities in november's election which the governing party when a majority of seats in parliament more than a dozen countries including the u.s. and the u.k. urged me to adhere to democratic norms. game stop shares have shot up again the stock has risen by around 70 percent clawing back most of thursday's losses not as investors have been pushing up prices in a bid to damage hedge funds. those are your headlines we're back with more news here on al-jazeera that's after inside story. we know what's happening in our

region we know have them get the faith is that others and not i was just thrown here down by the putting the only part that i did the around that time any programming can go lie on the go live the way another story that may not be mainstream i think the fires missed out on the enormity of. the way that you cal the story is what can make a difference. armchair investors and wall street into a spin hedge funds lose billions of dollars when their bets on failing companies come up short so what's behind this and who will be the winners and losers of the battle for the stock market this is inside story.

hello and welcome to the program i'm a homage i'm sure i'm the hottest investment right now is a failing chain of shops selling video games in the u.s. game stop shares have soared 700 percent since december it's made amateur traders rich while wall street investment firms betting against the company have lost billions of dollars game stop used to be a feature of american malls but the downturn in traditional retail and the pandemic forced many shop fronts to close as its share price fell people want to read it chat group banded together to buy the stocks using amateur trading platforms like robin hood so how did a retailer on the verge of collapse suddenly become the center of attention and mature investors poured money into game stop to raise its share price the retailer is regarded as the most shorted stock on wall street shorting or short selling is one investment firm such as a hedge fund tries to make money by betting that a company's share price will fall. the hedge fund borrows shares in the company from other investors and sells them on the markets at a higher price then waits for the price to drop and buys them back pocketing the

profit the surge in trading drove game stop value up by more than $10000000000.00 on wednesday alone robin hood has temporarily imposed restrictions on buying the stock we absolutely did not do this in the direction of the market maker or hedge fund or anyone we were out to or other market participants so we're really unprecedented. in order to protect the firm and protect our customers we had a few limited buying in these stocks investors are angry that robin hood also blocked trades in companies such as amc black berry and nokia which were rising because of the chat group you know when the big man when the quote unquote suits don't get their way they start losing they just shut down the game and change the rules i think it's extremely unfair and this he's put in place to protect the little man from things like this happening so hopefully you know regulators and

politicians are taking a strong look at this and they get down to the bottom of it well u.s. politicians and regulators are taking notice republican ted cruz tweeted support for democrat alexandria cacio cortez's call for an investigation into robinhood actions the u.s. treasury secretary says she's monitoring the situation and massachusetts state regulator wants the new york stock exchange to suspend trading in game stop for 30 days. all right let's introduce our panel joining us from london chief market analyst at a v.a. trade from houston texas josh young the chief investment officer at bison interests and also in london and also in london ash sarkar contributing editor at novara media welcome to you all name let me start with you today what is driving all of this is what we're seeing play out in this game stop story essentially a battle of the new kids versus the old guard hedge fund managers.

thank you for having me exactly that is the narrative in the market because now retail traders are you ready traders have decided that they are ready to take on wall street and we know one thing for certain but for decades wall street hedge funds have taken positions which were completely against retail traders this is for the 1st time to this particular platform reddit retail traders have been able to come together and taking a position against wall street and it's not only retail traders that we're more focused on because yes we are seeing a mammoth amount of volume coming from retail traders but this sentiment which is really strange thing this particular move is coming from some other big billionaire names such as master justin sun and several other major industry prominent individuals who were in there or capacity they were very much beaten up by wall

street by for instance if you take an example of a man musk task that was one of the short test stock on wall street now him putting his weight behind this particular move and on the other side we have a just a son who came that ok look asians are also coming to support you guys don't worry so we are seeing an immense amount of pressure on intent of a game stop but the biggest risk is not about this battle it's your view the biggest risk is that deal leverage it hedge funds positions which they pulled in there put for use in order for them to borrow against this collateral that they have to submit ash i want to get your thoughts on this point too because there are those out there who are framing this as this being a populist movement that is essentially going after capitalism that there are these small investors that drove up the stock of game stop and that they really felt

taken advantage of by the financial system by financial inequality that they're driven by anger about about the financial crisis and how big banks were bailed out in 2008 do you think that that is correct is that a component of all this as well. i think you've provided some of really useful context the what i make of this whole game stop phenomena it is that it is a new expression of economic populism now what that economic populism actually is whether it's anti capitalist the pro free market is actually very very mixed what unites lots of the small retail trade as is that they have a real loathing and disdain for street there's a sense that these big money firms have got away with terrible behavior they escaped the financial crisis you know scott's for a while all street and the city were able to recover from the financial crisis

ordinary people want able to and then you see this kind of gatekeeping and indeed market manipulation to keep these retail investors out to the market keep them from being competitive so that's brought together a lot of people from both the left and the right you've got a mix of people who think that you know this phenomena is actually in favor of real free market capitalism by breaking up the kind of oligarch at the top of wall street and you've got others who take a more traditionally left populist line who think that what this exposes is a kind of ford and a certainty at the heart of our financial lines to call me and even if they all table to make money from their investments they're quite happy to fork out a bit of cash if it means making a hedge fund manager cry josh i want to look at some of the underlying causes of this moment that we're in i mean there are some who suggest that perhaps some of

the root causes of this are the fact that you know people have been forced to stay at home that there are low interest rates that because people have a lot of time on their hands and maybe have disposable income that they've had more time to be able to look at these types of platforms like these types of pages on reddit in that that's encourage them to go ahead and start investing what do you say. so i'm the portfolio manager for an investment fund and we're long only in concentrated partly because of my past experience shorting stocks and observing similar phenomenon over time and so what we're seeing with game stop and kind of some of these eco stocks like and see is bigger from a scale perspective than some other things that we've seen before but this is certainly not unique and i think what's driving the scale is some of the things that you just mentioned that was really helpful context kind of this combination of people being forced to stay at home to do kind of very aggressive and failed

government policies extremely low interest rates which are sparking a speculative boom. and then i guess just as a little part of that it's kind of ironic when that speculative boom pushed test the stock 10 x. roughly last year there wasn't this tremendous push to shut investors out of their ability to speculate on tesla stock even though ironically i think tesla has similar amount of revenue to game stop but the valuation is like $100.00 times the market capitalization perspective of game stop so it's kind of this interesting thing but that speculative fervor was considered a good thing when it was like in a kind of popular or whatever name like test but you know as one of the other analysts was saying with a game with game stop which was kind of a more retail focus type name there's been this push to kick customers out of their accounts to prevent them from being able to trade and so definitely there's more of

that for from people being forced to stay at home as well as extremely low interest rates for a long time name how were investors on reddit able to pull this off is there a precedent for this and is this a phenomenon that's going to continue. ok so the question is and number one we as an image as a meter approaches though as recently as we're always be looking for a way to join the bind power together so this is the 1st time in history that we have seen the retail trade is taking a particular narrative or stance on one particular star which is massive is shorted by hedge funds so we have no president of that and hence we have seen the one the biggest one day sell up but the dow jones industrial average on wednesday since october last year because these hedge funds have to liquidate their positions now

can this phenomena continue yes saturday it can because now robin hood and several other stock brokers within this space they have allowed once again the days retail traders to come back and then start trading these stocks and as of today just been in the the stock is already moving 70 percent in the premarket trading hours so that really puts that stand that this particular move may not be stopping this game stock price at $500.00 because the number which is touted rattled forms is 1000 dollars given the fact and this is very very imperative an important point that just isn't just putting his support behind it and saying that asians are coming behind this particular move to support retail trade is i think about one $1000.00 mark even though it is as ludicrous that it

can be in terms of animations and p. e. ratios but that looks very much less statement josh i want to look for a moment at the potential contagion effect when it comes to hedge funds absorbing big losses as they've been doing in the middle of this game stop saga do these funds. then sell off funds in other companies to cover the losses and does that then have the potential to become a market downturn and in other words does this affect many more sectors of the economy than many people might think it would. yeah that's a great question so i guess there's there's 'd like you said a few parts of that so there's like what the potential impact is in the short term stock prices and then there's a potential impact to the economy so from a stock price perspective certainly we're out of position i think we might be at all time high leverage both in retail accounts as well as in investment by and leverage provided by investment by brokers and so when there is volatility

volatility in either direction reduces the amount of leverage that investment funds are able to put on as a concept car value at risk and so the amount of exposure is driven by actually. an input of our is volatility and so the more volatility there 'd is the less exposure people can have and at the end of a very long bull market people's exposure is pretty biased to the long side so there is this potential like we saw a couple days ago when game stop stocks surged there's the potential for other kind of popular names to get sold off quite a bit both because of this value of risk measure which is just like for any you find whether they have if they have any sort of margin whether they're long or short game stop or any of these other stocks that have a big impact on their other exposure from an economic perspective it is interesting and kind of unfortunate so i disagree with the other one of the analysts i don't

think this is unique and there have been many speculative bubbles and burgers in the past and there are likely be many in the future and many of those involved capturing the imagination individual investors the downside to this is that there is a risk that game stop stock at some point after going up enough collapses it is down 90 percent or more and that investors that own things like short term call options or own game stop on margin on end up getting margin to weigh and losing. much if not all of their money and that could have a negative spillover effect into the general economy as people have less money and that negative wealth effect spills over into the broader on ash you wrote a piece in which you said it's thought that hedge funds are looking at losses to the tune of $70000000000.00 and now the big boys of wall street are complaining that the free market has been a bit unfair to them i mean how ironic is that that we're in

a moment in which as you said the big boys of wall street are complaining that the free market is unfair to them. but this is precisely what motivated so many people to buy shares in gang stop this is exactly the outcome they wanted people are driven by a real anger out wall street i suspect the 2 moaned they've shaped the rules in that favor nobody else has so in the one hand you've got very influential people calling for father to evacuation of the financial sector then the minute they start losing money they go to you know a crying to legislate a saying can you make this stop and you can see how underhanded this can be when you look at the actions of the robin hood trading app there's a sense that what's happened is that you know the operators of this platform had to head back to home by various capital firms and they changed the rules in order to

disadvantage that uses so they were restricted from buying stock they could only sell it that was also complaints about being sold off without their explicit consent see can see how these rules of area much tilted in establishment players favor and i think that this is going to result in a kind to feed back loop where the more you see platforms taking this kind of action the more going to motivate people to taking these very aggressive anti shorting positions in the 1st place a tweet that i received from somebody who bought some stock and gained so literally reads i put in the amount that i would pay to punch a hedge fund manager in the bulls and i'm saying this because this gives you an insight into what's driving people forward both feel about our fine not july's a clone of me what's in a very unfair way that hedge funds in particular have had the power phytic

relationship to the productive economy and they want to get some of these very wealthy individuals a bloody nose niamh has investing really been democratized by no free trading apps like robin hood and these forums on platforms like reddit. i completely can carry view i think it is because it will be everything to the particular platforms where you have a commercial trading and then you have still high leverage that these video traders have been able to do that secondly the kolo it doing this could eric as you mentioned earlier public is sitting in no they have nothing else to do but to look at the crash the crash the massive crash that happened yesterday that so last year and it is a really started to speculate ok how can we get involved because perhaps this is the time for us to shift our career and we can make some quick bust but i think it

would be completely false game if you think that this stock market is a good is a place where you can make it quick but because it is an 8 it is an area where you need to have intensive research and you need to be fully dedicated to it but i completely agree with our colleague when she is saying that this particular battle is primarily between retail and as funds and hedge funds have been the tory is barmy manipulating the price actions and that really driving retail traders out of the place now they have this particular platform and given the fact that major billionaires have thrown their weight behind it they're feeling a lot more confident now that look if there is a spot where they feel that ok there is some sort of air. going on which is against the morals they vote on that stock going forward judge one of the rules and regulations when it comes to all of this and 1st of all is it legal secondly how nervous is it making us regulators and watchdogs like the securities and exchange

commission. that's a great question and honestly i'm not a securities lawyer so it's a little risky as that regulated investment fund manager 'd to get out there and quote law i guess what i would point to which seems to be the biggest single legal risk from my perspective was robin hood and other brokerages shutting off people's ability to trade stocks without any warning so yesterday robin-hood blocked people trading game stop and a few other stocks it looks like to the benefit of their true customer citadel and maybe some of the other market makers that made them and i think this opens up actually something that's even more important than what we're seeing with game stop which is tech companies that make people like kind of the broad public think that there are the customer when really they're kind of the target and the customer is 'd companies paying for ads or 'd companies in this case paying for order flow and

so i think one of the interesting things that we're going to see on the back side of this may be additional regulation of what are essentially predatory tech companies that misrepresent how they interact with the public so there's this whole narrative of like big guy versus small guy which actually i think is kind of wrong i mean i own stock in a publicly traded investment fund that owns 5.5 percent of game stop and it's up huge because you know they were a big holder sigh on capital other investment funds aren't game stop may still own it and a number of funds likely were big traders and game stop in both 'd directions so like there's this narrative that's probably a little bit more complicated than people are saying and then there's this other really big problem it's a problem facebook it's a problem with twitter and it's a problem robin hood and i think we're going to see that the conversation of all towards there from a legal and regulatory perspective ash isn't what we're seeing essentially a bubble if so how long can it last and who pays the price when it bursts.

so i think that we've got to understand this is a phenomenon which is driven in part by people wanting to make a quick buck as others have said but that's not necessarily all there is to it people have put that money in anticipating that there is going to be a very big correction coming and yet there's a kind of collective rush excitement always feels like a callable of just seeing how low you can drive the strain at full speed before it comes off the tracks so i don't think that people on the sincerity going into this with a degree of naivety there's an element of trolling this is an expression of a kind of internet community which is a bit nihilistic as a way of expressing your disdain in your content sense rather than necessarily wanting a positive individual outcome for yourself i think one of the consequences after there will be this you know huge correction people do lose money is that they will

take away that feeling of having been betrayed by apps like robin hood and that will be i think a push on the sort of movement towards decentralized finance you've already got people saying you know i made my sussan vestment is like i'm stuck now getting really interested in crypto currency so i think there's almost a sense in which you know game stuff is kind of a gateway investment you know of our. experimentation with how you treat your money and where you invest it and just one thing i want to say because i know we've talked about the impact of lots of people being at home because of the pandemic i think of what's going on here is also more than borders and you've got a generation of people who are about my age who have been pretty much locked out of lots of aspects of the economy we're not able to purchase houses we don't have assets which are likely to increase in value but we do have a bit of disposable income and not really

a sense of west to go with it and so i think when you combine that. it's kind of you know fact having a bit of disposable income it's not enough to get your property but fluff to do something with as well as people being at home being technologically savvy you'll see more and more i think of these kinds of speculative bubbles now you know how many people are now utilizing forums like forums on reddit like wall street bet rather than paying analysts in order to buy stocks and what are the kinds of numbers we're talking about i think this particular phenomenon is going to become increasingly important among the masses because remember these investors they used to pay quite a lot of attention to social media sentiment and that includes your twitter medium read it now given the fact what has happened within this particular stop and this case study is going to force institutional investors and retail traders to pay more

attention going forward to social media sentiment and then really calibrating their trade and more importantly the position size based on that sentiment john roaming about a minute left let me just ask you this short selling short squeezes are nothing new but we've never seen individuals making a dent like this have way. that's right i mean you know i think it's something like 9000000 people now are signed up on wall street bets and you know just the degree of trading volume and the degree of interest is truly remarkable and you know i guess i would close that just i really hope that there's not too much economic damage and not too much personal suffering on the back side of this when this does it inevitably fall all right we've run out of time so we're going to have to stop our conversation there thanks so much to all our guests i am a slum josh young and ash sarkar and thank you too for watching you can see the program again any time by visiting our website al-jazeera dot com and for further discussion go to our facebook page that's facebook dot com forward slash a.j.

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