of kilometers away. ♪ >> you're watching al jazeera. the european union has reversed this it -- a decision to impose export controls on vaccines made within the u.k. drug companies including johnson & johnson have introduced vaccines to fight the pandemic. johnson & johnson's inoculation is a single dose. mexico's economy last year suffered its biggest contraction

since the great depression of the 1930's. it's coronavirus death toll has passed that of india this week and it now has the third highest fatalities in the world. we have more from mexico city. reporter: the big difference between mexico and other countries who may have fared better in their economic downturns as a result of the pandemic of 2020 is that mexico was already on the precipice of an economic crisis even before the pandemic arrived. the big concern is that any economic recovery that could've been predicted for the first quarter of 2021 will be wiped by this ongoing srurge of cases here in mexican capital and nationwide. host: u.s. stocks remain volatile as concern grows over an online revolt over wall street focused on gamestop. small traders have been trying to push up prices in a bid to

thwart hedge funds. china has exit q did a former -- china has executed a former top banker. he once headed one of china's largest asset management firms. he was put to death on friday. hundreds of officials and executives have been prosecuted. those are your headlines. back in half an hour. "inside story" is next. ♪ host: investors send wall street

into a spin. investors lose thousands of dollars. what is behind this? who will be the winners and losers? this is "inside story." ♪ host: hello and welcome to the program. the hub is investment right now is a failing chain of shops selling videogames in the u.s. gamestop shares have soared 1700% since december. it is made amateur traders quit -- rich. name stuck used to be a feature of american malls but that downturn in retail has forced many storefronts to close. using amateur trading platforms like robinhood, amateur traders

purchased the stocks. how did this become the center of the attention? amateur investors poured money into gamestop to raise its share price. it is regarded as the shortened -- as the shortest stock in history. the hedge fund borrows shares of a company from other investors and sells them on the market at a higher price. it waits for the price to drop and buys them back pocketing the profit. the surge in trading pushed gamestop's value of nearly $10 million. >> we absolutely did not do this at the direction of any market maker or hedge fund or anyone we route to or other market participants. we are in unprecedented times. in order to protect the firm and our customers, we had to limit buying in these stocks.

host: investors are angry that robinhood locked trade in companies like amc which were rising because of this. >> when the big man, when the "suits" don't get their way, they shut down the game and change the rules. i think it is extremely unfair. the sec is put in place to help prevent this from happening. hopefully, the regulators and politicians are taking a strong look at this. host: u.s. politicians and regulators are taking notice. ted cruz tweeted support for the call from aoc for an investigation into robinhood's actions. massachusetts state regulator wants the new york stock exchange to suspend trading in gamestop for 30 days. ♪ host: let's introduce our panel.

joining us from london, a chief markets analyst at a be a tray. josh young, the chief investment officer. and also in london, our contributing editor. welcome to you all. what is driving all of this? is what we are seeing played out in this gamestop story of 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 creditors have decided that they are ready to take on wall street. we know one thing for certain -- for decades, wall street hedge funds have taken positions competing against retail traders. this is one of the first time through this particular platform that retail traders have been able to come together and are taking a position against wall

street. and it is not only retail traders that we are focused on. we are seeing a mammoth amount of volume coming from retail traders. but the sentiment which is strengthening this move is coming from some other big billionaire names such as elon musk and several other major industrial individuals. in their old capacity, they were very much beaten up i wall street. if you take the example of elon musk. tesla was one of the shortest stocks on wall street. now, by putting his weight behind this particular move and on the other side, we have another. we're coming to support you guys so don't worry. we are seeing an immense amount of pressure but the biggest risk is not about this speculative move. the biggest leveraging of hedge

fund positions, in order for them to barter against this collateral they have to submit. host: i what to get your thoughts. there are those out there who are framing this as this being a populist movement that is going after capitalism. there are these small investors that drove up the stock of gamestop and they felt taken advantage of why the financial system, by financial inequality. they are driven by anger about the financial crisis and how big things were bailed out in 2008. is that a component of all of this as well? >> i think you have provided some really good use -- some really useful context. what i make of this is that it is a new expression of economic populism. what that economic populism is,

whether it is anticapitalist or pro-free market, is very mixed. what unites a lot of these small retail traders is that they have a real loathing and disdain for wall street. there is a sense that these big-money firms have gotten away with terrible shape. , they escaped the financial crisis scot-free while wall street and the city were able to recover from the financial crisis, ordinary people were not able to. and then you see this kind of gatekeeping and market manipulation to keep these retail investors out of the market, to keep them from being competitive. that has brought a lot of people together from both the left and the right. you have a mix of people that think that this phenomenon is actually in favor of real free market capitalism by breaking up the kind of oligarchy at the top of wall street.

you of others that take a more traditionally left populist line who think that what this exposes is fraud and absurdity at the heart of our economy. even if they are able to make money from their investment, they are quite happy to fork out a bit of cash if it makes a hedge fund manager cry. host: i want to look at some of the underlying causes of where we are. some would suggest that some of the root causes are that people have been forced to stay at home. there are low interest rates. people have a lot of time on their hands and have disposable income so they have more time to look at these types of platforms and pages on reddit which has encouraged them to go ahead and invest. what do you say? >> i am the portfolio manager of an investment fund.

we are concentrated because of my past experience shorting stocks and observing similar phenomenon over time. what we see with gamestop and some of these echo stocks like amc is bigger from a scale perspective than what we have seen before but this is not unique. what is driving this scale is some of the things you just mentioned. that was helpful context. a combination of people reinforced to stay at home due to very aggressive and failed government policies, extremely low interest rates sparking a speculative boom and as a little part of that, it is kind of ironic when that speculative boom pushed tesla stocks up 10x roughly last year. ironically, tesla has a similar amount of revenue to gamestop

but the valuation is 100 times from a capital valuation perspective. that speculative fervor was considered a good thing when it was in a popular name like tesla. but as one of the other panelists was saying, with gamestop, a more retail focused type name, there is an effort to push customers out. there is a fervor from people being able thto stay-at-home. host: is there a precedent for this? is this a phenomenon that will continue? >> number one, as a retail firm, we are always looking for a way to join that group.

this is the first time in history we are seeing retail traders take a particular position on one particular stock which is massively shorted by hedge funds. we have no president of that. we have seen the biggest one-day selloff on wednesday since october of last year. these hedge funds have to liquidate their position. can this phenomenon continue? yes, certainly it cam. because now, robinhood and other stockbrokers in this space have allowed once again for these retail traders to come act and start treating these stocks. as of today, the stock is already up more than 70% in a premarket trading. that really puts that stamp -- this particular move may not be

stopping at 500 because the number touted on the reddit for um is $1000. [indiscernible] retail traders -- i think that $1000 mark, even though it is as ludicrous as it can be, but that looks very realistic now. host: i want to look at the potential contagion effect when it comes to hedge funds absorbing big losses as they have been doing in the middle of this gamestop saga. do these funds selloff funds and other companies to cover the losses? does that have the potential to become a market downturn? will this affect many more sectors of the economy than many

people might think it would? >> that is a great question. there are a few parts. what is the potential impact short-term to the stock prices? and what is the effect on the economy? we are at a position -- i think we might be at all time high leverage in retail accounts as well as investment fund leverage provided by investment fund brokers. when there is volatility, volatility in either direction reduces the amount of leverage that investment fans -- investment funds are able to put on. the amount of exposure is driven by input to volatility. at the end of a very long bull market, people's exposure is pretty biased to the long side. there is the potential for other

popular names to get sold off quite a bit. both because of this value at risk measure which is for any fund whether they have any sort of margin, whether they are long or short gamestop or other stocks, that could have a big impact on their other exposure. from an economic perspective, it is interesting and unfortunate. i disagree with one of the other panelists. i don't think this is unique. there have been many speculative bubbles in the past and there will likely be many in the future. and many of those involved capturing the imagination of the individual investors. the downside to this is that there is a risk that gamestop stock at some point, after going up enough, collapses and it is down 90% or more and investors that own short-term call options

or gamestop on margin and of getting margined away and end up 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 affect spills over into the broader population. host: now, the big boys on wall street are complaining that the free market has been a bit unfair to them. how ironic is that -- that we are at a moment in which the big boys of wall street are complaining that the free market is unfair to them? >> this is precisely what has motivated so many people to buy shares in gamestop. this is exactly the outcome they wanted. people are driven by a real anger at wall street. a sense that for too long they have shaped the rules in their favor and nobody else's. on the one hand, you have very influential people calling for

further deregulation of the financial sector. the minute they stop losing money, they go crying to legislators say -- can you make this stop? you can see how underhanded this could be when you look at the reactions of the robinhood trading at. there is a -- trading app. there is a sense that they had their head sat on by various capital firms and they changed the rules in order to disadvantage their users. they were restricted from buying stock. i could only sell it. there were also complaints about stock being sold off without their explicit consent. you can see how these rules are very much tilted in the favor of establishment players. i think this is going to result in a feedback loop. the more you see platforms taking this action, the more it will motivate people to see these very -- to take these very

aggressive, anti-short positions in the first place. a tweet i received from someone that bought stock in gamestop literally reads -- i put in the amount i would pay to punch the hedge fund manager in the balls. this gives you an insight into what is driving people forward. they feel that our financial lives economy works in a very unfair way. that hedge funds a particular have had a cure acidic relationship to the economy and they want to give some of these very wealthy individuals a bloody nose. host: has investing really been democratized by no fee trading apps? >> i completely concur. these platforms where you have a fee for trading.

secondly, as you mentioned earlier, the public is sitting indoors and they have nothing else to do but to look at the crash that happened yesterday. last year. they really started to speculate, how can we get involved? perhaps this is the time for us to shift our career and we can make some quick box. i think it would be a false narrative if you think the stock market is where you can make a quick buck. it is an area where you have to have intensive research and you have to be fully dedicated to it. i agree with our colleague. this particular battle is primarily between retail and hedge funds. hedge funds have been notorious for end up deleting the system. -- for manipulating the

system. billionaires have thrown their weight behind this so they are feeling more confident now. there is some sort of an activity going on which is against morals. host: what are the rules and regulations when it comes to all of this? is it legal? how nervous is it making u.s. regulators and watchdogs? >> a great question and i am not a securities lawyer so it is risky as a regulated investment fund managemer to get out there. i would say the biggest single legal risk was that robinhood and other brokerages shutting off people's abilities to trade stocks without warning. yesterday, robinhood block

people from -- blocked people from trading with gamestop and other stocks. i think this opens up something that is more important than what we are seeing with dame stop which is tech companies that make people think that they are the customer when really they are the target and the customer is companies paying for ads, or paying for order flow. i think one of the interesting things we are going to see on the backside of this is additional regulation of what are essentially predatory companies that misrepresent how they interact with the public. there is a narrative of a guy versus small guy. i think it is wrong. i own stock in a company that owned a good portion of gamestop. they were a big holder of investment funds.

and the number of funds were likely big traders in gamestop in both directions. there is a narrative that is probably a little more complicated than what people were saying. and then there is another big problem. a problem with facebook, twitter , and robinhood. i think we will see that conversation evolved towards there. host: isn't what we are seeing a bubble? how long can it last? who pays the price when it worse -- when it bursts? >> people want to make a quick buck. people have put their money in anticipating there will be a very big correction coming. and yet, there is a collective rush of excitement. feels like a carnival. how long can it drive this train at full speed before it comes off the tracks?

i don't think people are going into this with a degree of naivety. this is an expression of an internet community which is a bit nihilistic. it is a way of expressing your disdain and contempt rather than necessarily wanting a positive, individual outcome for yourself. one of the consequences after will be a huge correction and people will lose money and they will take away that feeling of having been the trade by apps like robinhood and there will be a push, a movement towards decentralized finance. you already have people saying -- i made my first investment in gamestop and now i am interested in crypto currency. gamestop is kind of a gates way investment into further experimentation with how you

treat your money and where you invest it. one thing i want to say -- i know we have talked about the impact of people being at how because of the pandemic. i think it is more than boredom. you have a generation of people about my age who have been locked out of a lot of aspects of the economy. we are not able to purchase houses. we don't have assets likely to increase in value. we do have a bit of disposable income. and not really a sense of where to go with it. when you combine that factor of having a bit of disposable income that not enough to get you property as well as people being at home and being technologically savvy, you will see more of these speculative bubbles. host: how many people are utilizing forums on reddit like wall street bets rather than paying an analyst to purchase stocks? what are the numbers we are talking about? >> this phenomena is going to

become increasingly important among investors. remember, these investors are used to paying a lot of attention to social media sentiment including twitter. given the fact of what has happened in this particular stock and case study, it will force institutional investors and retail traders to pay more attention going forward to social media sentiment and really calibrating their trade. host: let me ask you this. shortselling is nothing new but we have never seen individuals making a dent like this, happily --have we? >> vets right. 9 million people are signed up on wall street bets. the degree of trading volume and interest are truly remarkable.

i would close with the fact that i hope there is not too much economic damage or personal suffering on the backend of this when this does inevitable fall. host: we have run and of time so we are going to have to stop our conversation here. thank you to all of our guests. and thank you also for watching. you can see the program anytime by visiting our website or by going to our facebook page. can also join the conversation on twitter. for me, and the holding, the by, friend. >ú■ogtataptúñ

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