Although January passed, but the new phenomenon of retail investors sniping short-selling large potential continues to affect the market, some investors worry that if the video game retailer GameStop (GME) continues to fluctuate, may lead to losses in brokerage firms, short-selling hedge funds may also be forced to sell other stocks to finance, and then drag down the market.
Goldman Sachs warned that if the “short position” continues, the entire financial market will collapse. The bank pointed out that in the past 25 years, U.S. stocks have occurred a number of serious “hold short” event, but not as extreme as the recent occurrence. The bank pointed out that hedge funds in order to cover short positions, or additional deposits, had to reduce some good positions, resulting in the bank’s statistics of a basket of the most hedge funds favorite stock portfolio fell 4% last week. Compared with the 2000 U.S. stocks before the peak, the current size of U.S. household savings at a high level, and will also usher in more fiscal stimulus, meaning that retail investors have plenty of ammunition, if the “hold light position” continues, U.S. stocks will be in jeopardy.
Bank of America warned that the stock market adjustment 10% is coming, the key to the bull market and bubble burst is the “3Rs”, respectively, “interest rates” (rates), “regulation” (regulation) and “regulation” (regulation). (regulation) and “redistribution” (redistribution). Interest rates, Bank of America analyst Michael Harnett believes that the U.S. economy may grow 5%, corporate earnings growth or more than 20%, Inflation or rise to 3%, as well as a large number of Wall Street speculation, for the Federal Reserve to bring pressure. On the regulatory front, he said investors should keep an eye on whether the People’s Bank of China will tighten liquidity.
Kynikos Associates, one of the world’s largest hedge funds, said that the GME incident was the most “surreal” experience of his career, fearing that things would become politicized. He continued that the inevitable result is that short sellers will be blamed, and they are the ones who have been hit hard in this incident and have suffered a lot in recent years in the unusually strong market conditions.
Other highlights this week include Friday’s U.S. employment data for January, with non-farm jobs expected to rise slightly and the unemployment rate remaining at 6.7%.
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