Macro – Newsflow exposes faulty pipelines
10 February 2021
Bottom line:
An army of small traders squeezed short sellers on defunct companies causing their prices to skyrocket beyond imagination. The retail flows should not be underestimated and can come in force following the stock market performance of the past decade and the stimulus checks. Fed actions limited the short-term damages post-GFC but resulted in relative bubbles across asset classes. Unfortunately, they did not translate into the expected wealth effect across the population, rather increasing inequality and the disconnection between main street and wall street.
The new investing tools for the retails are showing the limits of current market plumbing at times of stress. Fintech, blockchain and other new technologies can all contribute to improve a legacy system that desperately need to be upgraded.
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