Okay folks, so there's three major things that I want to talk about in this video. Number one, Gary Gensler, the Chairman of the Sec, just went on Cnbc and talked about his thoughts on the Emc situation and what they're going to do about it. Number two: I want to talk about what it means that a ton of failures to deliver for Amc are about to come due, what is true and what is hype. And then number three, of course, I want to talk about an update on the state of the market outside of Amc.

The only thing that I ask in return is that you hit that ravishing like button and also don't forget to subscribe either. Okay, Amc, Let's go ahead and start with watching Cnbc's interview with Gary Gensler. A whole new generation of investors going on tick-tock going on Reddit, going on, all sorts of other places promoting either cryptocurrency or promoting a stock. Where does the Sec see their role in that conversation? I think it's it's the same it's been for decades.

It's trying to foster good debate and dialogue. Uh, just just like on this program here, uh about uh. investing and the retail engagement is is positive Um, but also to guard against fraud and manipulation and whether that's from big actors, big hedge funds in the markets um, uh or not and also to promote transparency. We are taking a real close look at market structure and I recently started uh, you know, engaging on Twitter and to some of those Twitter followers that are writing about dark pulls, we are looking very closely at this market structure that so many of our orders retail public orders are not going to the lit markets, but are going to internalizers going to wholesalers who are taking the retail public's trades rather than sending them to the stock exchanges.

Okay, two things. First of all, it's great that he's finally airing concerns that retail traders have about this whole system. Truth be told, the financial media as a whole still thinks that retail traders were buying these stocks as jokes. Retail traders are buying it because they're frustrated about this system and how it disproportionately screws them over.

We have a system where largely the people screwing retail traders are also meant to be the judge of whether retail traders are getting screwed. But it is honestly pretty nice and it's a breath of fresh damn air to see the Sec Chairman actually talk about and air the concerns of the retail trader. While the interviewer seemed very, very biased against retail traders, how did the Chairman respond? Well, He said, hey, dialogue is good, we want dialogue, we just want to prevent manipulation and we also want to make sure that there's transparency in terms of where these orders are being routed and what's happening over there. We have to look at the market structure and see what is wrong and how we can fix it.

One thing that I do want to remind you if you didn't watch last week's video, We talked about the structure of sending your orders. If you use a direct broker, it goes directly to the market and you get your shares. If you use the average retail broker, one that sends out your order flow to a middleman. It basically goes to a wholesaler.

And that wholesaler then has the advantage of not just privileged information on what you're buying, but they have the ability to front run you, create against you, take part in a million different ways to manipulate the price. And the thing is that wholesaling itself is not really a problem. Wholesalers exist in many industries, but the problem is the market structure is such that these warehouses. They have so much privileged information, so many inverse incentives.

And guess what? They have no transparency, can't have all of those at the same time, and then not expect people to be upset, especially when you have symptoms of malpractice. For example, I don't want to rehash this too much, but if you have hedge funds that are short Amc and you also give those same hedge funds the ability and privilege to execute retail orders to buy Amc, how is that not a conflict of interest? How does that not give them an incredibly ridiculous balance of power in that relationship, even if they did nothing wrong, right? I'm sure there's some good guys on Wall Street, right? probably the broke ones. But just imagine that though. How can you have a system where you have a neutral party that's not even neutral? But overall, I'd say that this interview was a fairly big validation of the whole movement.

The main goal of this movement is to bring to light unfair practices and manipulation, and getting the Sec Chairman to discuss this and say that he's looking into it well, could just be Lip service actually does raise the bar and the awareness quite a bit. Okay, next, failures to Deliver. Or as the Spanish say, failures to Deliver Rito. So Amc is a stock that has a substantial number of failures to deliver.

and Rule 204 of Sec short selling regulations states that firms have up to 35 calendar days following a trade date to close out failures to deliver, and with that deadline around the corner for a massive amount of failures to deliver, well, you may be asking. hey, a lot of buy orders are about to come in. Well, it's a little bit more complicated than that, but backing up for a second. When you're a hedge fund and you want to go and sell a stock, you have to find a borrow in order to borrow a share to dump onto the market.

Borrows cost money, they're hard to come by and there's a limited supply of them, which means that organically, you don't have just unlimited shares that you can short onto the market. However, the regulation is such that you get two days to prove that you actually found a borrowed to short sell, but you get the short sell immediately nonetheless. But again, because hedge funds have two days to show that they borrowed a stock. That means they have basically reasonably unlimited firepower for those two days.

So if they want to do a short attack on a stock that just started rallying massively, they can go and screw with the supply and demand by dumping a ton of shares onto that stock, inducing panic selling. In a lot of retail traders and in a lot of institutional funds that have algorithmic risk protocols to sell out during massive, massive sell orders. And depending on how powerful the fund is, they could really induce a lot of damage by doing this. And keep in mind that they're able to do this, and it can all be fake because they don't have to actually have the shares to borrow for two days.

Stop non-existent shares onto the market, achieve your end game. Get the profit, get out done. But in some fluke scenarios such as Amc's June and January rallies, you're not going to be able to close your position nor find a borrow to deliver on. So you're gonna be in a crunch when a stock goes up dramatically.

Not only is the stock price going up dramatically, but demand for short sellers is also going up. So you have a lack of borrows and you have a lack of actual being able to buy the shares to cover with? Okay, great Well, what happens when you fail to deliver? Does the post office leave you a little letter on your door saying we'll be back tomorrow. No current Sec Regulation rule 204 paints the closeout requirements in very specific language. It requires brokers and dealers that are participants of a registered clearing agency to take action to close out failure to deliver positions.

And this is the important part. Closing out requires the broker or dealer to purchase or borrow securities of like kind and quantity. Okay, again, emphasis on the purchase or borrow security parts. Those are the two ways that a failure to deliver short seller can fix this problem and close out their failure to deliver.

So think about the borrow part. Say you got caught borrowing a share that didn't exist, Then you didn't have the right to borrow and the Sec says, okay, well we caught you And the way that you can get out of this is by going and borrowing another share. You fake borrowed the first and they're like, hey, you can get out of this by borrowing another one. We trust you this time.

You know none of that fool me. Wants shame on you for me twice, shame on me type of thing. But think about what this really means. What does this really do? You're deferring that same position.

Imagine for a second robbing a bank. The authorities catch you and they tell you there's two ways to get out of this. You can either pay back the bank using your own money, or you can go and rob another bank and pay them back using their money and you're like what? this is great. I love this.

As long as I don't run out of banks, I can keep deferring this for as long as I want. Now, of course, that situation isn't exactly apples to apples, but it's very close. And to be fair, there's reasons that these regulations are very, very tricky in the first place. And the reason is because not all failures to deliver are the results of malpractice.

In fact, in a lot of cases, they aren't at all. It could just be a technical glitch. It could be a million other things. But when you have failures to deliver in combination with massive, massive, massive short selling, and a lot of other symptoms of naked short selling, it's not super hard to connect the dots.

But the thing is, because there's honest failures to deliver, they have to put the stipulation in that you can borrow to pay it back, but they have to also, at the same time enhance regulation for companies and institutions that violate the good faith argument. In this, you have to have the proper oversight of suspect parties that have inverse incentives, and when you consider they get like 35 days to decide. hey, they could do it very slowly. They could do it all at once, they could repackage it a million times, and we never even know about it.

And keep in mind that their goal isn't to fail to deliver. The only time they really fail to deliver is when a crisis comes. Like for example, the stock price goes up to a crazy amount. It's at those times they can't find borrowers and they can't find shares to buy.

So they get put between a rock and a hard place and they have no choice but to fail to deliver. But when they screw up royally in a fail to deliver, what happens? well, they can just keep rolling it over. But anyways, let's go ahead and take a step back for a second and envision a really stupid scenario. just hypothetical scenario where for whatever reason, you, a hedge fund who short sold something is also given the ability to fulfill orders.

To buy that something, you hold the liquidity pool. You have no transparency in how you're fulfilling the orders. Well, in that situation, without some massive massive spikes in demand for that stock, how hard would it be to use that liquidity to finagle your way into repackaging, reselling, and basically deferring your inevitable short position? You do have to get out of your short position and you're paying margin fees. But hey, the margin fees are a lot cheaper than trying to buy in during a mosque.

So you're like, okay, well, I'll just wait and I'll repackage and I'll repackage and I'll defer and I'll manipulate and I'll defer distort and eventually retail will walk away and I'll be golden. I would have paid some margin fees, I would have waited for a while. It was kind of a stupid play, but at the end of the day, they walked away and I feel good about myself. And that's exactly what we've seen happening.

And because there hasn't been that same buying pressure, they haven't really been put in that hot of water like we saw a few months ago. Now again, I understand that a lot of people are like Yo Charlie. There's a lot of buying pressure that's taking place in the dark pools, but the buying pressure that would have forced them to move up that time skill a lot faster isn't there anymore, so they're now able to play the defer game. It's sort of like when powerful corporations get caught doing something and they're in the wrong.

and instead of actually going through and settling with the case, they just tie it up for years until the individuals who are suing them give up. And in a way it's like, hey, that's kind of what's happening here. they're deferring it until people give up and go home. So very, very interesting situation that we're in right now and it'll be interesting to see if we get another one of those retail rallies.

We will fight them on the beaches. Based on the cultural trend that I've seen, I would not be surprised to see that, but hey, anything is possible and this is an active battleground so I would treat it as such. Okay, lastly, the state of the market. We are starting to see indication that consumer behavior is changing in response to rising cases Stay at home.

Stocks like Zoom are starting to see strength as conferences get cancelled and more workers are being asked to stay at home. Major companies like Amazon and many others are prolonging or at least backtracking towards remote work. And like most things I understand, the media kind of sensationalizes every little piece of bad news out there and I don't want to contribute to that. but I just have to say hey, cases are one thing.

But if you start looking at those hospitalizations and deaths, you know if they start picking up. that's when the market's going to start looking at it and being like now, it's getting a little bit more risky. Maybe we should get a little bit more risk off if you look at a lot of the reasoning in terms of lockdowns. Last year, it was all pinned on hospitals filling up and if they fill up again, why wouldn't they lock down again? That was the rationale last year.

If you can't actually get people into a hospital bed, that's a massive, massive problem. When you're talking, are you worried about lockdowns? Well, I would be very, very worried about lockdown. If you started seeing those hospitalizations climb quite a lot, then you have an executive order from the White House pushing for electric vehicles to make up half of U.s auto sales by 2030.. most of the usual Ev stocks had a good day today, but mostly back and forth for the last couple of weeks.

It seems like there's a lot of money on the sidelines right now. They're like, okay, I want to see what's going to happen with the inflation situation. I want to see what's going to happen with this virus situation. I want to see what's going to happen with Charlie's ravishing like button and especially that last one.

They're like, okay, if it didn't get to a certain number of likes, the market is not a safe place to invest. They're going to pull out of the S P and they're going to put it all into cryptokitty Nfts. Anyways, folks that caps off today. If you have any questions, feel free to reach out to us below or join us on the lovely Ziptrader Circle Facebook group if you'd like to learn how to trade.

With our step-by-step lessons, our private chat, and of course our daily morning briefings where we brief on all of our favorite catalysts each and every single market open morning. Well, we'll go ahead and put a link to Zip Trader you below. Fudstopper50 will get you 50 off before checkout. And if you're wondering what brokers to trade these stocks on, well we like to send new traders over to Weeble.

They have a great free stock promotion, They have a great platform and you can get all of that just by clicking the link below. Anyways, that caps off the video and I'll see you in the next one.