whatok

Robinhood cannot easily expand its product base because a majority of their current revenue is from selling order flow. Most of the products you listed as well as other seemingly easy to offer products are going to be tough to sell to someone because there's no easy way to offer free/cheap transactions. It's very tough to convert a non-paying customer base to a paying one. Additionally, at least for mortgages and bonds, I don't see how Robinhood would ever be able to be competitive in either of those spaces.

The 2000XL is nearly 25 years old. No idea how recently you tried one but I can see someone familiar/comfortable with some sort of DAW workflow not being able to easily adjust to one. Just sample load time or dealing with floppies (or zip disks!) in 2020 is kind of a non-starter for me. That said, it's still very hard for me to write these things off when you can go on YouTube and see people create absolute magic.

Ah, that's right. I would have expected a refresh of that by now but the company has gone in a different direction with lower priced devices so who knows.

The VST integration is called Overbridge [0] and is available for all of the modern non-Model Elektron hardware.

I understand the appeal for display options but to me besides sound, the whole point of hardware (especially drum machines) is workflow which is kind of at odds with looking up and down at a screen or using a mouse to to control things. Drum machine muscle memory is an extremely powerful force but I guess it also depends on what kind of music you're making or how many tracks you're using.

I bought an Analog Rytm on the cheap a few months ago and have yet to plug it into a computer. Previously owned a Machinedrum UW and Monomachine nearly ten years ago which definitely helped with Elektron workflow familiarity. I've always found Elektrons to be easy to dive into but some of the other features definitely take some time to learn. Worth the time investment though.

[0] https://www.elektron.se/overbridge/

Outdoor dining is a bandaid fix that does not work for all restaurants. Several of the restaurants in my neighborhood that actually have decent sidewalk space are probably serving 50% of what indoor dining would have been. Even with saving money by not employing as many people for solely dining, you have increased costs through constructing bespoke outdoor dining spaces and additional cleaning.

Meanwhile, DeBlasio was encouraging people to see movies while SF Mayor Breed was actually prepared [0]

City Council chair of the Health Committee was encouraging Chinese New Year's crowds [1]

[0] https://www.sfgate.com/bayarea/article/de-Blasio-London-Bree...

[1] https://twitter.com/marklevinenyc/status/1226566648729133056

VaR is a fake number for way too many reasons to get into and anyone who paid attention to VaR these past few months would have lost a ridiculous amount of money. I only have experience working for hedge funds and how risk is managed greatly differs from fund/strategy/assets traded. Banks no doubt manage to VaR but banks also supposedly don't have prop trading desks anymore so they function much differently now.

Agree with a majority of this. US bank balance sheets are in a whole different universe than they were during the last crisis. CLOs are not only a minuscule portion of their holdings but they also hold a tiny percentage of outstanding CLOs.

Japanese co-op banks on the other hand have huge CLOs holdings and would be extremely exposed if these went sour.

> That means that investors' internal risk limits are the binding constraint, not repo haircuts.

While part of risk, expected return is a larger binding constraint in most cases over risk limits. I'm probably not going to lever up 20x for an tiny expected return. On the other hand, I may very well lever up 5-10x on something 50x more risky than treasuries if the 10yr is yielding 0.725%.

Reserve requirements != capital requirements. Reserve requirements are vs deposits, capital requirements are vs balance sheet items. Big difference between the two.

> The rules about comedy don't apply to professional comedians, because you know if they break them they're still trying to funny.

This was the original notion that I was disagreeing with. If you can't think of a single comedian fired for social media posts or previous material then you really aren't educated on the topic that you are arguing about. Also, complete exaggerations like:

> dreadful modern scourge

> not some important social ill

are not conducive to conversation. I never once claimed that changes in societal norms are negative so please don't put words in my mouth. What I'm saying is that there is a complete lack of nuance or context with many of the modern forms of evaluation and nuance and context are kinda important for appreciating any artform. Some of that evaluation takes place on social media and ends up having outsized real-life effects.

Cov-lite loans are at the largest percentage of issuance of all-time. 30-40% with a complete lack of meaningful covenants in a lot of cases is wishful thinking.

Additionally, what's new about this cycle is tech companies being a massive percentage of issuance. What's the recovery value of a tech company with little to no real assets? Additionally, what's the recovery value of an energy company when oil has dropped as much as it has? Both of those sectors make up a huge portion of outstanding and will move the needle meaningfully even if other sectors are fine.

I probably agree with your overall point about the Fed and and govt but you really cannot use historical assumptions for recovery rates this cycle.

> Who has been fired for 'one off remarks'?

Google "comedians fired social media" or "comedians fired old material". If not one-off remarks then a tiny percentage of overall material.

> Older work getting re-evaluated, viewed from a different angle, etc, is more or less how culture works.

I have no problem with anyone taking a nuanced look through an entire piece while also considering the time and place when it was published. What I do have a problem with is cherry-picking through an hour plus of material and branding an entire work "problematic" or worse for a handful of jokes that were mainstream funny at the time and clearly jokes; the whole point of the profession. Most of this is amplified by social media and its ability to share short, out of context clips of anything but unfortunately there are real consequences that arise from that.

> Murphy or Seinfeld don't seem to be any worse for the wear at all.

Both of those guys are some of the greatest to ever do it. They also both have a lot of money. They're well-insulated from the consequences that others may face for similar actions; whether they be too big to blacklist or not suffering the loss of income that may devastate others.

Name one notable comedian who has made their career from solely "punching down" and not from being genuinely funny. This is a borderline non-existent problem that has its own self-filtering mechanism; no one is going to pay money to see a set of someone solely "punching down".

> The rules about comedy don't apply to professional comedians, because you know if they break them they're still trying to funny.

I don't think this is true in the modern age. Countless non-established or up and coming comedians and adjacents have gotten fired for one-off remarks in old material or social media posts. If there's a constantly evolving list (which no one person on Earth is completely aware of in its entirety because of constant evolution) of "problematic" topics that will get you fired, all you will end up with is bad comedy.

More than 30 years after its release, Eddie Murphy was basically forced to apologize for Raw; undisputed one of the greatest standup specials by one of the greatest comedians of all-time. People were calling for a boycott of Netflix because of Chappelle and Seinfeld gets shit for his remarks all the time. If these were up-and-coming comedians, they would not have a career.

Yes, that's correct. In his case, specific quotes were selectively disclosed and context on his overall point (whether you agree with it or not) was completely lost in the process.

Most modern successful comedians are not known for one-liners. Selectively quoting through text/audio/video effectively reduces all comedians' material to one-liners and completely eliminates all the nuance and context of the original performance piece.

"Punching up" is a rather new guideline of comedy touted within specific groups and hardly an agreed upon "basic rule". While standards have changed over the years and deplatforming happens much faster now, unless you want to invalidate entire careers or widely renown material, "punching down" can and always will have the potential to be funny.

I truly believe that it emerged as a bureaucratic screw-up and can see how it evolved to its current state. I think it makes sense that they have a certification process for primary issuance and given CARES act strings attached, I can see how that also got attached to the secondary facility. Requiring issuer certification for secondary purchases was a complete surprise to everyone and the base assumption was that they were going to just follow some sort of index approach. Mentioned before but the ECB does not have any sort of certification process for their corporate program but that corporate program was also not launched at the same time as a huge fiscal program, so politics.

I do agree that buying ETFs is "cleaner" for all sorts of reasons. The certification process for bonds vs ETFs is slightly inconsistent but given that they're not going to participate in the create/redeem process, I don't have too much an issue with it. If they were buying ETFs, redeeming them, and then actively managing the bonds from there, then it would be a little more murky. Besides the fallen angel ETFs, none of the ETFs they've bought so far (and everything that qualifies as well) does not have any real issuer concentration that you could argue tremendously favors any particular issuer beyond reflecting the actual bond market.

To further expand on the overall topic, if all the Fed did was buy ETFs, there's a real risk that would not be enough. During any crisis, in order to be effective, central banks need to make big moves. To use a crude metaphor, individual bullets fired separately don't have nearly as much impact as a single bazooka round and sometimes you only have a chance for one shot. Bond markets aren't as efficient as equities and without secondary purchases, there could have been a real chance that you had ETFs more or less stabilized but several underlying issuer/sectors/whatever aggregate group continue to be dislocated. For another crude metaphor, sometimes the tail (ETFs) wags the dog on this stuff and vice versa. In order to have functioning markets, you need complete control over the entire animal which would be primary issuance, secondary bonds, and one of the more liquid proxies.

> First, I think you're missing a "not" in your second sentence?

Yes, thank you for pointing out.

> The certifications are an interesting additional detail that I wasn't aware of. So if I understand correctly, the program wrote one set of rules for purchases of individual bonds, and then a different set of rules for purchases of ETFs. It allocated more money for individual bonds, but the Fed discovered that those rules meant that no issuers wanted to participate. So the Fed instead purchased ETFs.

The rules were not spelled out at the time of the announcement; including the part on personal certification by the issuer. If you look to the ECB corporate program for example, they do not require issuer certification and that was seen as a model for the operations of this.

Without getting too deep into things, Congress wanted to make sure that US companies benefited from this and that's part of the certification process. Additionally, certification requires attesting that the issuer has not received money under the CARES act and while it's not been publicly stated, it's suspected that's one of the reasons why personal issuer certification is required.

While all of this was evolving, PPP launched and there was a lot of backlash on large corporations receiving money. Between the logistics of having individual issuers certify and issuers being reluctant to certify, the bond purchase portion of the program has been stalled.

So yes, the Fed made its first corporate facility purchases through ETFs as a result of all of this but also took two months to do so. If the main goal of the facility was to buy ETFs and they really wanted to get it done, they could get that up and running within a week max if not sooner.

> I think I'd still say that makes the ETFs more convenient? Certainly that's true under those rules; and to the extent those different rules exist for good reason (e.g., because with a diversified and liquid index, it's easier to avoid both the appearance of political favor and the actual thing), that seems fundamentally true too. So I don't see what that changes in my initial statement, though it's interesting that it happened "by accident" instead of by design.

I take issue with saying that they're making ETF purchases because they're more liquid and convenient for a few reasons. One of the main reasons is that only reason why they're buying them right now is because it's the only thing they're actually able to buy. Liquidity and convenience really mean nothing when you only have a single option.

As far as avoiding anything with politics, there was no consideration given for that when the facilities were announced and I doubt there is any now. They changed purchase eligibility retroactively to include fallen angels and the cutoff date magically included Ford while excluded several sizable issuers by a day or two. It's also very tough to hand out favors through bond purchases in a way that would materially affect funding costs for a specific issuer AND have it slip under the radar. While that doesn't escape the appearance of political favors, I would argue that by selecting Blackrock as the investment manager they really don't care about the appearance of politics. In fact, by selecting Blackrock, it shows that their primary goal was bonds rather than ETFs as you can easily find an investment manager to manage a few billion in ETFs; it's much harder to find one that can manage few hundred billion in bonds.

> If no one wants to sell to the Fed, why do they need a certification?

I don't understand your first question. The certification process covers both primary and secondary purchases. The Fed's terms for primary purchases are pretty punitive and most issuers that qualify for it would easily be able to raise in syndicated markets. Markets are open right now so this does not present an issue.

The problem is the Fed is also unable to make secondary purchases unless issuers go through the certification process. The main purpose of the SMCCF is to buy secondary corporate bonds and they're unable to move on that because of the certification process.

Issuers would love to sell to the Fed but your understanding is only a small reason why none have certified yet. A lot has changed since these facilities were announced and there was extreme backlash against larger corporations taking advantage of PPP. There's a similar fear attached to this.

> Also they're buying ETFs of bonds, are you saying this is materially different than buying the actual bonds?

Yes, there absolutely is a material difference for the purposes of this facility and in actual trading. For the purposes of this facility, there are still many sectors/subsectors trading pretty wide to pre-covid levels. If you believe that these bond purchases facilitate the Fed's mandate of maximum employment, then targeting specific sectors that are having funding pressures would be one of accomplishing that.

> If there is something preventing you from making trades it means you have lower liquidity.

That's a really bizarre definition of liquidity for the context of this; especially when you're talking about the Fed. The discussion was on ETFs being more liquid than the underlying bonds. Something preventing me from trading does not mean that the thing being traded is illiquid. For example, there are many securities that require an ISDA to trade and offer way more liquidity than other similar options.

They’re quite different for the purposes of this facility and really trading in general. As I mentioned a few times here, the Fed is requiring individual issuer certification for bond purchases. They have not had any issuers certify yet so they have not made any bond purchases.

Liquidity and convenience in the markets means I can trade in size with tight bid/ask and possibly don’t need to deal with a scumbag dealer on the phone/chat. Operationally to me means there is something that prevents me from trading at all.

Your post says that they’re not buying bonds because ETFs are a better option. That’s exactly true and ETF purchases are not the main goal of the facility. There is way more capital allocated towards primary and secondary bond purchases than there is for ETFs and they’ve stated that ETFs are last in their purchase waterfall.

Operationally, it’s much more difficult to get the bond purchases rolling because they have to get individual issuer certifications before making any purchases. This is a restriction created by Congress and had it not been in place, they would be buying bonds right now. They are likely going to make some modifications to the facility in order to streamline this process because it’s preventing them from achieving the main goal of it: buying bonds.

A very small portion of pension or 401k plans are held in these ETFs. Pension funds invest in and 401k plans do offer mutual funds that have the same or similar benchmarks that these ETFs have so these facilities have helped to stabilize those.

> Admittedly, Congress—most specifically the Senate—is asleep at the switch, but that's not the Fed’s fault.

It absolutely is the Fed's fault. We are still paying for the sins of the GFC and Fed policy has enabled Congressional dysfunction. Without extremely accommodative Fed policy for the past 10+ years, Congress would be forced to do their job.

> What exactly is "not fully understood" about Blackrock's role in the "outlandish valuations" of Apple and Microsoft? Blackrock is the #2 shareholder in each, after Vanguard, and owns 6.3% and 6.8% respectively. Much of that is in index funds like the iShares S&P 500 ETF or the Russell 1000 Growth ETF.

I don't know what the original post's argument was on this but you could make an argument that the growth of passive investing largely caused by Blackrock and Vanguard has led to stretched valuations in a lot things. The mere fact that these companies make it easier and cheaper to invest means there's more money floating around chasing fewer and fewer shares given less public companies since Sarbanes-Oxley and the rapid growth of PE/M&A.

The Fed has not bought any corporate bonds yet. If you have some proof of that, please share your source. I work directly in this space, know everything that is going on and am unaware of any purchases so either I'm terrible at my job or you have some information no one else has.

The vast majority of issuers in both those ETFs (especially HYG) are US companies. A liquid ETF with substantial AUM that only holds US issuers does not exist. You'll have to blame the companies that created and marketed the benchmarks these ETFs track on that one.

Also, the Fed has not purchased a single corporate bond yet so the "majority of the money" has gone to ETF purchases so far; the vast majority of the facility's capital is currently sitting in Treasuries.

The mere announcement of investment grade ETF purchases re-opened the primary markets without the Fed spending a penny. High yield primary markets were completely shut for a week before the Fed said that they would purchase fallen angel bonds and HY ETFs. The whole purpose of these facilities is to make sure funding markets function properly and ensure that companies that would have been fine without the pandemic will be fine now; not bail out distressed companies that are going to go out business anyway.

I don't even know what you're talking about with bank failures on this. The Volcker Rule really gutted bank prop trading and banks barely have any of this stuff on their balance sheets. It's a big portion of the reason why there was a massive lack of liquidity during the first quarter of the year.

There's an additional liquidity transformation with the fact that a majority of trading in the underlying happens over the phone/chat. Lack of liquidity in the underlying is why all of these ETFs were trading at 5%+ discounts to NAV while something like SPY was much more well-behaved back in March.

Yes, that shows ETF purchases up until the date mentioned. The dollar value of purchases in there for Blackrock ETFs is around 48% which is around their existing market share for qualifying ETFs.

The Fed isn't equipped to do security selection so that's why Blackrock is managing this facility. Blackrock is absolutely going to do secondary bond purchases (on the Fed's behalf) once that portion of the facility is up and running.

The Fed has also said that they don't want to influence market share of ETFs so that's been interpreted as some sort of benchmark per manager. I believe Blackrock was around 50% of qualifying ETFs outstanding at the time. The Fed published purchases to date last week which has a pretty decent breakdown: https://www.federalreserve.gov/monetarypolicy/files/smccf-tr...