Each week, BIV staff will share with you some of the interesting stories we have found from around the web.
Glen Korstrom, reporter:
The biggest market-moving story this month related to the private-equity firm Archegos’ collapse. Archegos’ was involved in derivative swaps, or essentially paying fees to banks that owned stocks in exchange for Archegos being entitled to pocket the market return of those equities.
When the investments declined, the banks asked for higher fees to compensate for more risk. Archegos couldn’t or didn’t pay, prompting alarm at the banks, and inciting the bankers to liquidate large positions in blue-chip companies in block sales.
That prompted shocking declines in the share price of gigantic media companies, such as ViacomCBS, which saw its share price fall 56% between March 22 and March 29.
Archegos made highly leveraged bets on these companies, and it did it with more than a handful of banks. This raises the specter that other private equity firms have done the same thing, and that the stock market is full of potential landmines.
Banks that didn’t sell shares in Archegos’ investments fast enough, such as Credit Suisse, also saw stock prices plummet. Here’s a good primer on what happened. – Wall Street Journal
I joined the drop-in audio social network Clubhouse a month or so ago, and for a while avidly entered rooms to hear chat while I made dinner or put away laundry.
Anna Weiner writes about having had a similar experience. Clubhouse rooms are less focused than podcasts but for me their charm is in the unpredictability. They can also be niche, and bring people together for discussions that otherwise would have been panel discussions that organizers would try to charge a pretty penny to attend. – New Yorker
Mark Falkenberg deputy managing editor:
The Biden administration has done a lot in a hurry to repair Trump-era damage to U.S. credibility around the world. One big thing left to do, says former secretary of state Madeleine Albright and two other former high-ranking State Department officials, is to make good on the $1 billion-plus tab for UN peacekeeping fees left unpaid during the last four years. – Foreign Policy
Nearly four out of five Canadians have spent money on “self-care” activity since the start of the pandemic, shelling out an average of $282. The most popular self-care pursuits are baking and cooking, home exercise and online shopping. – Bloomberg
Timothy Renshaw, managing editor:
Billions up in smoke still, according to the Federal Trade Commission's latest cigarette report. Dollars invested in cigarette advertising and promotion were down in 2019 compared with the previous year, but only marginally to US$7.62 billion in 2019. Smokeless tobacco revenue hit US$4.53 billion in 2019; that's up from US$4.37 billion in 2018. More evidence that humanity's overall IQ is deteriorating.
From the unfortunate headline file courtesy of Neatorama:
NASA Discovers Gas Emanating From Uranus