Leading US investment banks and investment companies, whose headquarters are located on New York’s Wall Street, believed in the future of the American economy and massively open long positions (to buy assets), preferring them to short ones (to sell), writes Bloomberg.
According to the investment bank Goldman Sachs, the average cost of short positions on the main American exchanges is only 1.6 percent of the total volume of transactions, which corresponds to a 17-year low.
At the same time, the volumes of long positions opened by hedge funds are close to multi-year highs.
Analysts see several reasons for this. The main one is the large-scale stimulus measures from the government. In early April, President Joe Biden announced a new $ 1.9 trillion aid package for citizens, banks and companies.
Another reason is the bullish market orientation following the January crash of the Hajj funds, which massively took short positions in the GameStop computer games store.
Users of the Reddit resource decided to “punish” investment banks and massively bought back GameStop shares, and call options issued by financial institutions (contracts giving the right to buy an underlying asset at a predetermined price) on them. This forced banks and hedge funds to urgently close short positions and buy back securities, as well as purchase them to compensate for possible losses on issued options.
As a result, short holders suffered losses and several funds went bankrupt. Analysts believe this event has shaped investor behavior for some time to come.
#Wall #Street #believed #future #economy