 Hello and welcome to episode 57 of the market maker podcast and to quickly give you an overview of what we're going to cover in today's episode really three major things. First one is the incredible move that we've had in nickel, probably something that not many of you I'd imagine listening are actively investing in that as a metal, or trading it, but there's been some insane price movements in that product. The mother of all squeezes, some would call it and we'll explain what is a short squeeze. I'm sure many of you are familiar with probably GameStop is the dictionary definition of that in recent history, but we'll go back into that. So why did that price surge happen, what does it mean, and also the fact that that particular product is traded in the London metal exchange, which is one of the only remaining physical pits that exists from way back in the day when there's just a bunch of people in literally a ring shouting at each other and we'll explain a little bit more about how that actually works in practice so we'll talk about that. Amazon probably caught the news they have announced a 20 for one stock split and a $10 billion buyback since the first split since 1999 and the fourth since Amazon IPO in 1997 so we'll talk a little bit about stock splits. Why would they do that. How does it work. Is it actually important. Their shares actually dig up 6% which I'm quite keen to put peers the theory to work to see if if it doesn't change a stock price in itself or the company's valuation nonetheless shares were rallying on the back of that so we'll look to pick that apart. And then the final one we want to delve into is the fund manager PIMCO apparently has billions of dollars riding on the economic fallout from Putin's invasion of Ukraine after amassing a wager of at least $1 billion in derivative markets that the country will not default. Also holding around one and a half billion US dollars of sovereign debt tied to Russia so brave or tactical well I'm sure we'll find out but peers how's how's your week been how you doing. Hi yeah it's been a rollercoaster of a week from a markets point of view I don't know what the guys listening if you've got any positions on if you've got any trades on but certainly the sort of Well the energy space has been up and down so certainly some some PNL swings let's say but you know outside of that yeah it's been a really busy week we've been getting stuck in on a load of stuff we actually were running out well an FX trading competition for UBS. Yesterday where we got some students that UBS well they want to find some talented students to hire and so we decided that we'd put them through a test of trying to trade live the ECB press conference and the US CPI data simultaneously. So yeah to say it was a bit of a baptism of five of them was was quite interesting but yeah good to work with with UBS out in the Switzerland office actually so that was interesting. Yeah I mean that certainly we should not not mention the fact that US CPI and ECB meeting also happened this week because you'll probably notice I've excluded them they didn't make the top three finish this this week and that's because US CPI. And for the month of February came in at a 40 year high I never thought I'd be sat here talking to you going. Oh yeah CPI just nearly 8% came in at a 40 year high 7.9% now let's not talk about that's pretty boring right. Well and and on the ECB although mainly Dallas as normal it was if anything a slight hawkish surprise. Now I don't know when when was the last time you spoke a sentence that included ECB and hawkish surprise in the same sentence and that's going to be the first time. Well that was when my man Trichet Hike raids. Well yeah 2011 right so probably the most hawkish meeting since 2011 and actually you know what it's not it doesn't even make the top top five talking points for the week yeah it's quite remarkable what's happening out there. And then and just to put this into perspective for anyone kind of now having that question in their head well what was hawkish about it in summary they unexpectedly accelerated its winding down of its monetary policy support that it's had in place so to put it in its most simple terms and actually they had this emergency bomb buying program called the PEP the pandemic emergency purchase program and that's sat on top of their existing QE program called the asset purchase program so not too many acronyms going on here but you've got a PEPP sat on top of your APP. So the PEPP basically has been signalled for a while that's going to end this month which is the emergency one because as we know we're coming out of COVID and X Russia things were improving. So that's already in the in the timetable but the asset purchase program is actually going to bump up temporarily they're going to increase the base QE program to facilitate the smoothing out of ending the emergency one. And then what they're going to do then is then they've outlined a specific timetable yesterday. And they basically said we're going to decrease now to the tune of x and each month will go down incrementally by 10 billion euros essentially. Yeah, you, you lost me at PEP. I mean, these sorts of things are. I mean, the market hasn't really reacted in a sustained fashion at the time yesterday. There was a brief move when all this came out because as you as you said it was a bit of a bit of a surprise. It's a surprise being the fact that they're so definitive in their communication. Normally they're a lot more flexible with the wording says. They increase the inflation forecast up and dramatically so but remember markets are already expecting that and that was really the take home point of why we're kind of dismissing CPI if anyone's going 8% what are you guys talking about it's the fact that markets are expecting the direction of travel is well known and this figure is going to go even higher because inflation was already moving. It's going to go well north, even before this commodity squeeze we're getting now across the board which is going to just pump it up even further so hence we brush that aside but yeah the other thing I wanted to mention was kind of two things one. I actually met up with friend of mine from university last night. One of the one of the chaps that we've had on during our summer analyst training program where we get people in from different companies different industries and he's been a Goldman Goldman Sachs for the past 15 years and he was over from the states he lives out there now Colorado. He came back, something I was him yesterday and met some of his colleagues actually and it was really interesting because I was telling them about what amplify does the Amphibian missions stuff like that. And one guy was saying, he reckons that about 20% of the new people who work at Goldman's are in the wrong role, or not probably the role of which he sees that they probably would flourish in and be the best performing in. 20% that is interesting. And that's because I guess they don't well up until this point banks haven't been able to necessarily measure someone's potential skill set, right, your potential to possibly be able to do a role well in the future. I mean, had you right so that I guess that's what our simulations do is basically measuring someone's potential to do a role that they've never done before. Yeah. So yeah, I mean, it was it was just quite quite eye opening it was just like, it's just reinforcement I guess of what we do and it's kind of like. Yeah, this is got to it's got to change so yeah anyone listening if you've not taken part in one of the finance accelerator simulations, we run them weekly, and it's open to anyone and everyone. I'll drop the link, if you want to take part in the show notes so check that out and the second thing is I'll drop a second link, which is yesterday I put out a super comprehensive guide to LinkedIn. But the reason why I did that is because I did a session with Birmingham City University, which is not a target traditional target university, but they're the students I love talking to the most, because in my mind they're the ones who, you know, need the mentoring the assistants to support almost the most and some of them, a lot of them didn't even have a LinkedIn account so if you're a student. Yes, I know a lot of you are very astute you've got it all, you know rocking and rolling on that front for many of you who don't super important, but I guess the best thing is all the next question is, where do you start and so go on my LinkedIn I'll drop the link again in the show notes of this episode. There's a 17 page guide and it's all visually driven it's not text so don't worry it's not 17 pages of boredom. But it will, it will basically guide you through every single step and you know people think about what just stick a photo up and put your job title. Now I'm talking like the secret source that will get you noticed that will make your profile stand out. So check that out I didn't put it together I just sourced it from actually it was a recruitment company. But yeah, even I learned old dog like me learned a few new tricks this week from that guide so definitely check that out. All right, well let's talk about then the first thing, which is this this nickel move. So nickel, which is, I guess when we talk about these metals, because I was doing a little research of okay what metals get traded in the ring which we'll get to the moment and it was like cobalt lithium molybdenum. I can't even say that one. Don't make me repeat that one. But there's lots of metals I guess that people wouldn't encounter in a normal sense like gold like precious basically so so I suppose top level the division of metals being base or precious precious being the ones we're more familiar with, heavily using so gold, silver, platinum, palladium, these types of things, but we're talking more on the base industrial metal side. And I guess where this fits into the equation is stainless steel. When we're talking about nickel, that's the predominant factor but then also electric vehicle batteries and the price of nickel this week searched as much as 250% in two days to trade briefly above 100,000 bucks a tonne. So, yeah, just wanted to get a bit more delve into this about this insane move that happened. Yeah, what are your thoughts and what was really driving that. Well, it's a fascinating. Well, I guess, nickel prices are on the up anyway. Right. So let's start let's say from the fundamentals. I mean the biggest part of this movie has got nothing to do with fundamentals at all. So we'll get to that in a second but nickels on the up anyway for broadly two reasons and that's number one, the whole shift to electric vehicles and nickel being one of the key components in electric vehicle batteries, although not all batteries right when we talk about Tesla in a minute, but so batteries for electric vehicles right and obviously that that that demand side function has been increasing pushing up price but then obviously more recently Russia, Russia has 17% of global nickel. And so clearly like all other come on like all other commodities that Russia produces, you know prices have been surging anyway right so that that's the backdrop to this price rising but then the price just well actually on, it was on two or Monday, just absolutely started to rock it and then Tuesday just went stratospheric and the two steps to that move Mondays massive move up and then the stratospheric move on Tuesday has actually got nothing to do with fundamentals at all and it's kind of this comes down to market functionality more than anything and so what's unusual about these metals and the prices of these metals and what determines the prices is that it's yeah it's kind of taken a spot prices on in the LME the London metals exchange pit. So, or ring as they call it and this is an open outcry trading for us the only one left in Europe, obviously what's happened over the last few decades is that trading has evolved and it's gone to screens right and it's mostly screen based trading and I was actually part of that evolution when I started trading back in 2001 or sorry 2002 actually I started trading I was trading futures. Okay, and I was trading in the aftermath of what was called the life floor closing. So life li double F E was the big open outcry futures trading exchange, just by Canon Street was actually just down the road from our office in the in the city of London that closed down at the end of the 90s and everyone shifted onto screens and I joined the industry in 2002 straight as a screen based trader and the thing about trading in a pit. I don't know if anybody's in a life you go to Chicago you can see the Chicago Board of Trade they still do it there. If you ever if you ever seen movies like trading places, I mean I guess most people listening to this way too young to maybe even know what what that movie is but it's an absolute classic Eddie Murphy Dan acroid classic but anyway there's a lot of open outcry trading in that movie and it's basically. Yeah it's basically a room full of mostly large men and basically shouting and screaming and gesticulating and if you didn't know what was happening you think what it's just insane. It's like a bunch of boys in the playground at primary school. Yeah, it's just chaos but actually out of this chaos comes the pricing of assets globally and has a massive impact on everyone around the world who's producing or buying any of these kind of assets right but I mean from my point of view I'm a trader by profession but if I had been born probably five years earlier if I was five years younger, I wouldn't be sat here talking to you about markets. I don't think I would have been a trader. If I was born five years earlier because I don't anybody's ever met me. You'll know that my stature isn't quite. I would say peers is like Tom Cruise. It's like when you see him on on TV like wow this guy is like a superhero. And then you're like Tom sketches with an extra two inch in the summer. Put it this way I think in a trading pit physical presence is one of the really key attributes of success and let's just say my physical presence is and perhaps large enough to have you know I'd have just been swamped so literally I don't think I'd have been a trader if I was five years but anyway. So that was back but that was in 2002 when I started trading and that's when the futures markets were all screen based. Here we are 20 years later and the London metals exchange is still living and operating in what most would describe as the dark ages of this kind of weird archaic method of trading so the ring is literally they sit in a round circle the traders this is and they they gesticulate at each other and the weird thing I mean what's interesting about the way the LME operate is that each metal has five minutes of trading per day. So if you wanted to trade nickel like on the enemy floor you've literally got a five minute window to do it each day that's it you can't trade it outside of those minutes right and the one and the reason for that is liquidity. So right when markets operate efficiently and they function well and price is the price that it should be based on supply and demand fundamentals. Then you need liquidity for that that means you need lots of buyers and sellers all the time okay so if you want to buy you can buy if you want to sell you can sell and there's always counter parties available and the spread between the buying price and the selling price the bid and off of the spreads quite quite tight. So what they do is they cram all the trading into a five minute period so that there's lots of it relative to time and so the liquidity is better. Right, so that's why they do it like that. Interestingly, so this is a lot of futures so this is a futures exchange right now this exchange actually opened but I think it was 1871. The LME opened and here's an interesting stat I was reading up about that I learned today that I never knew. So when we talk about futures contracts we talk about expiry dates. So basically, I mean most people may be listening to this will know what a futures contract is but just for the benefit of those that don't. It's a derivative contract where essentially you're with a counterparty you're agreeing the details of a future trade. You're agreeing a transaction in the future you're agreeing the details today and you're agreeing price and you're agreeing the date when you're going to do the trade and you're agreeing volume. Okay, now back in the 1871 the two metals traded on the LME is basically copper and tin and that was it and all the copper would come from Chile, which to this day Chile is the biggest copper producer in the world right. But in 1871, it took three months for a shipment of copper to get from Chile to London. Now what all the manufacturers who were wanting to buy this copper what they were doing was they were as soon as the ship left the port in Chile. They wanted to fix the price that they were going to buy at when that copper arrived in three months time. So the expiry date of those copper futures was three months. And that till this very day is the most common futures expiry date on all assets. And that three months period was set because that's the amount of time it took a ship to get from Chile to London. So there you go. Right, back to the story, back to the point here. The thing about this open outcry pit is it still allows for a bit of market manipulation. Let's just say there's plenty of stories you see. So let's say you're sat in a room and let's say you wanted to buy a load of copper or nickel or whatever it is right. Let's just say your client has placed an order for you the broker in the pit to buy a load of this stuff right. Now, if everybody else knew that you wanted to buy a lot. But well then what would happen to price well they if they're the sellers right well they're going to say well I know you want to buy a load so you know what if you want to buy you're going to have to buy right up here and I'm going to raise my offer price. Okay, so if people know what you're going to do or what or what you need to do then obviously that's an advantage for them and price shifts as a result of that information. Okay, and there's plenty of stories in the pit where people have got a massive buy order to fill but what they'll do they'll go into the pit and I'll start selling. And they'll start selling and selling they want everyone to think you're a big seller so that then the price goes down. And then you start buying subtly start buying small, small lots and small lots and you can in the end, get your large buy order done a much lower price because you've manipulated price down by essentially. You know, well yeah you've manipulated the market now this is illegal in on an exchange electronic exchange you can't manipulate the market. It's actual market yeah market manipulation is illegal on exchange but this isn't on exchange. And so that's why it kind of happens so what happened this week with nickel which was going up anyway. There's this guy. Big shot is his nickname. That's a good one. I mean of all the nicknames are back in the day the big shot. I mean the big shot up to the hype though. Well this is it. He hasn't quite lived up to his height this week. Unfortunately this big shot well his name is actually Zhang Guangda. Okay, happens to be a billionaire. He's the founder of China's leading stainless steel producer. Singhsang Holdings Group. Now most of the people who are trading in the LME are the big producers. Okay, and they're trading on LME because they're wanting to hedge off their risk. So this is the metals futures product where they can hedge risk. Okay, so anyway this guy is one of the biggest players and actually China accounts for the high the biggest volume of trading activity through the London metals exchange. One of the reasons why the Hong Kong exchanges and clearing company bought the LME. So the London metals exchange is now owned by the Hong Kong exchange. And they bought it because they resented the fact that most of the world's kind of metals futures trading actually went through London when actually most of the volume was coming from China and anyway they so they wanted to get a little bit of a piece of the action. But anyway, turns out big shot turns out he's got a massive short position. Okay, in nickel futures. And what happened was the nickel price was going up. So if you're short, obviously now you're losing money. Okay, and you're losing money and what happens points you get what's called a margin call. So that's where you are requested by the exchange to post more cash on into your trading account to cover these losses that you're taking on with your short position. Okay, anyway word got out. So basically, I don't know how but word got out that hang on big shots got a massive short position. So what do you what do you do if you're a trader on the LME knowing that someone else has got a massive short position where you squeeze them. Which basically means you start buying you start forcing the price up, you manipulate price higher to make it even worse for big shot with his massive short position. And actually what you're aiming to do is force price so high by buying that you force big shot to cover his short position I close out that position by buying himself. But because he had apparently had a position up to 100,000 contracts, which is monstrous position, what happened was when he started to buy, well then the price just shot through the roof. So if you've been buying before that, then you're long, forcing big shot to place a massive buy order spiking the price higher you're already long, you make a profit. So market manipulation with insider knowledge of how someone else is positioned. And really, this can only happen on there aren't many markets you can do this on still the LME is one of them, and they don't have any kind of checks in place that an electronic on it, you know, exchange would have like circuit breakers we call them. Where if the market price moves by a certain percentage then actually market closes. And then they have they have closed trading and nickel right for the rest of this week at this point. Well, well this is the dodgy thing. If you want to get the conspiracy theory. Basically they closed they halted trading. All right, nickel went through $100,000 a ton. They halted trading and you know what they did they canceled all trades that took place on Tuesday. And what's going to happen is they're going to reopen the market. They haven't said when, and they haven't said how they're going to do that. But and therefore we got no idea what's the price going to be. I think there's back backdoor conversations happening amongst all parties to find the common ground of pricing. Well, the Chinese will prevail. The Hong Kong exchange owns the LME and their biggest customers are Chinese customers. So who do you think is going to win? Because basically big shot. I said, look, I'm not closing out my position. He closed out only a small part of it, which created this spike. What his position is, I'm not, I'm staying put. You can do price can do whatever it wants. I'm not posting more. And just to give this some like a reference point in a monetary value. So he suffered apparently over $2 billion worth of loss at the moment. Yeah. I think it doesn't matter what happens to price. I'm not posting more margin and I'm not closing out my position. What are you going to do about it? So, so it's just for the benefit of people listening then. An exchange makes money through transactions, right? So just to make that clear about the, the rock and a hard place the exchanges in to facilitate Mr Big Shot. Yeah. I mean, they shouldn't have allowed that their mistake was allowing him to have such a large position. Because now basically his position. So the other thing about the LME is it's all physical delivery. I don't want to get into too much technical detail about derivatives here, but it's physical delivery of the metal. So in three months time, that future trade I was talking about where you agree in the details today, well then that trade actually physically takes place. And the physical delivery is based on the supply of metal that's in the LME's metal warehouses across the world, right? But Big Shot's short position is so large that actually, if it had to be physically delivered, there isn't enough nickel. There isn't enough physical nickel in the LME's warehouses to actually deliver on that trade. So they enabled him to take up a position that's way in excess of the actual physical amount available, which they should never have done. And here they are now where they're backed into a nightmare. And it'll be just really interesting to see how they get out of it. And yeah, as you say, they're obviously going to favor themselves and their biggest clients. And so the kind of second order impact of this is EVs. So manufacturers of autos like Volkswagen made a comment this week, there were others who are kind of stopping orders at this point of where we're trying to move, which is more adoption of electric vehicles. With emissions changes and government ruling and so forth. But this is going to be hugely problematic, right? We already have going through that supply chain shock of COVID. Throw in the mix now what's happening here, which is a, you know, there's so many different layers to the soft agricultural impact that that will have on food prices to many different countries, particularly those heavily dependent in Africa. But now you've got this as well for the auto industry. So what your used car and truck component of your CPI report might well get another little bump going forward. Well, that's right. Who would have thought, right? But remember last year, basically when we were talking about inflation being transitory, we were talking. And one of the reasons was well, and one of the biggest components that's going up is used cars, used trucks. Yeah, it's only going to be temporary because it's not, it's not, you know, this whole and also the semiconductor issue and even that can't last, you know, and the supply shortage will recover and it's all going to be fine. And yet here we are with a completely different set of circumstances that that's going to probably yet again, yeah, spike prices higher and keep this inflation situation, you know, you know, very high and concerning and yeah, central banks have got a real problem on their hands. And just to kind of wrap up this this segment on the nickel side so I mean you being an EV owner. I guess one of your purchase decisions when you're when you're picking which car to buy is the range of one charge. And so one of the main points here is the way that it works is that EV batteries are charged and discharged by the flow as lithium ions between graphite containing anode and cathodes. And what happens here is the late back in itself the cathodes contain nickel, and it delivers high energy density, allowing the car to travel further. And so the more you put in the further ago is kind of in a very simplistic way, there is like it gets very complicated like with any commodity about how refined and the purity of it as to its impact and how this performance and so forth. But what I thought was quite interesting was there was that when ESG's had a big move, since all this Russia stuff's been going on and that was kind of like the, the invo topic to talk about over the last couple of years I guess, and it has ESG concerns ESG being environmental social and governance, because most new nickel units suitable for EV batteries will in the future come from high pressure acid leach plants from top producing Indonesia. The problem that has of course is your super high carbon footprint in order to churn these things out, which is slightly contradictory right. The irony of buying an EV in order to lower your carbon footprint, but being completely ignorant to the point that the production of the battery that's in your EV has a monster carbon footprint. I mean, I don't want to be too controversial, but how this will, how this probably plays out is look, us in the West, that's Indonesia's problem. Yeah. See no evil here, no evil. Yeah, where's my, where's my EV but But what about Tesla you were telling me. Yeah, I mean I didn't want to delve too deep in the batteries because it looked like I was opening up a massive can of worms essentially and way beyond my pay grade of technical detail about how these things work. But apparently for Tesla, they have something called a lithium iron phosphate or an LFP battery which uses iron phosphate in their cathodes and no nickel or cobalt is required and the rationale there was that they were going to start using LFP batteries in its entry level standard range models last year. And that was seen as a move for the company to lower the cost of producing those models or to increase the profitability of those entry level vehicles without necessarily increasing prices so it was done as a tactical move for pricing and margin. But in actuality given just the underlying demand and lack of supply of for nickel. Now with this squeeze that's happening. It seems that others might actually have to adopt the Tesla Tesla technology, which is a coup for Tesla. So yeah, who would have thought we'd be talking up by Tesla. Yeah, if anyone who hasn't listened to previous episodes. Yeah, we're big Elon fans. But anyhow, let's move on and talk about the second area which was Amazon. So Amazon, early this week announced the 20 for one stock split they also said they're going to do a $10 billion US dollar buyback. So the first split they've done since 1999 and would be the fourth since the IPO of the company in 1997. In terms of figures then they were trading at the time just short of 2800 bucks. So that would put your Amazon share at about 139 bucks. And then that happens then on a split adjusted basis it's going to be on the 6th of June. There has been other recent big mega cap tech stocks that have done similar alphabet. They had a 24 one split when they released their earnings think back on the first of the fourth of February of this year not that long ago. I guess Apple did one just a few years ago as well. So I guess the main thing here is just say everyone's on on the same page peers. What is the stock split. How does that work. Why is it or is it important. The stock price would suggest it is but is that correct. Yeah so stock split is a kind of a technicality. If you like where a kind of company will alter the amount of shares in issuance and now they'll issue more shares. But the way they do it is that. So here this was a 20 for one. Right. So what what Amazon do is let me make the math simple here let's say there's a million Amazon shares right in issuance that there's obviously way more than that but let's just keep this simple. So there's a million shares right and let's say I own all one million again just to ridiculously simplify it. So let's say there's a million shares and issuance and I own all of them. Then if Amazon do a 20 for one stock split what it means is they issue 20 million new shares. And I get all of those. Okay so I've now got 21 million shares and the price of the share basically gets multiplied by 120th. So all that happens is in terms of the value of my shares in Amazon whilst the number of shares I own changes the total value of all of those shares remains the same. So the valuation of the company doesn't change. It's just so the valuation of a company is the number of shares in issuance multiplied by the share price equals market cap. Okay, so the market cap isn't changing. What is changing is the number of shares is changing but then the share price alters in the same proportions. Okay, now the reason why they do it is because over time if you take Amazon's share price right when it is quite remarkable with these kind of giant tech phones. Let's just say 10 years ago Amazon's shares were trading at $245 give or take right, 245 they peaked in the last year at $3,500 right. Now 10 years ago 245 bucks right if I want to trade Amazon if I want to own some Amazon shares great I can buy one for $245 right. If the share price is $3,500 then obviously the barrier to entry to own those shares is much higher doesn't matter for institutional traders who are wheeling millions if not billions of pounds right and these numbers are nothing like a retail trader and a retail investor if you're the little guy then you're buying one share for $3,500 it's a lot so it actually means that a lot of people can't afford to buy even one share of Amazon. Okay, so these stock split basically just corrects the share price dramatically back lower without altering the market cap or anything like that. And therefore, in theory, opens up the kind of demand for these shares to that little guy it makes it easier for the retail trader to get involved if you like if you think about the, the investor pyramid right and if you've got the giant institutions at the top of the pyramid this has no real impact for them, but the base of the pyramid with your retail traders has a huge impact so basically increases the base of your pyramid of demand, if you like, enabling more people to buy Amazon shares it also improves things like liquidity and so on right but in theory, a stock split shouldn't alter the value of your company in practice. It does, because the demand function ticks up because of the reason I just explained that increase in demand does typically lead to an increase in the share price when a stock split gets announced and that's kind of what happened. Yeah, the Amazon share price went up 6% was it by the way, other tech stocks were on the up that day also but perhaps Amazon more so than the others. Yeah, so, you know, historically a stock split typically does lead to the market cap of the company rising because of that whole demand argument. Amazon as a company, someone who sits in your portfolio. I've always missed the Amazon gravy train, you know what I've never owned Amazon shares, which I regret clearly, because it went up 10x in 10 years but so I've always been one well yeah I've missed it. But then it goes higher and then I've missed it and then it goes I mean, so I've never owned it. I prefer a couple of the other big tech giants to Amazon personally. But yeah, it has come off quite a bit because I'd say for Amazon, like the summer of 2020 we hit $3,500. And it just hasn't been able to get above that price since the summer of 2020. And we're now trading down below 3000. So it is like 15% off its high is 15% off its 2020 high. So if you think about relatively looking at other tech stocks, you know it's relatively underperformed over the last 12 months but it did have a much bigger. Let's call it COVID boost in the first half of 2020 because obviously lockdowns and buying stuff online and obviously that's perfect for Amazon's model but but yeah, possibly maybe a little bit more interested than I've been for a while. And just to caveat that this is not investment advice. This is just our shooting the hoops to discuss these things so take it at your own risk but yeah definitely will be interesting when that when that actually comes through and happens. I think the split adjusted basis I said it's going to happen in June the sixth and I think the alphabet one happens shortly after that as well so during the summer. But look, let's move on to the third and final section then which was which was PIMCO. I guess, perhaps a little bit of introduction about who is someone like a PIMCO, because people I think a lot of students are kind of always very focused on the sell side and they kind of think of investment banks. PIMCO, which is a huge company in terms of the assets under management, perhaps unless you're looking at the buy side you might not really be that familiar with them as a firm so maybe we could start with talking a little bit about who PIMCO are and what role they facilitate in an really wide sense, because to give it a career element, I think would be would be beneficial and then also just talk about PIMCO because they're in the news and they're taking a bit of a bold bet on Russia. Yeah, through CDS and derivatives and you know perhaps we can unpick that as well so to PIMCO first. Excuse me, they've got, well they're an asset management firm. So sit on the buy side what's kind of a, not unique but unusual is that they're a fixed income specialist. So actually right there, it's just not a sexy as stocks. So you know you often don't hear about PIMCO because they're more that it's fixed income. They've got a pretty sexy office location that HQ is near Santa Barbara or something like that. That's right. Yeah. Yeah, they're doing all right for themselves because they do have north of 2.25 trillion dollars under management. That's a trillion that was the trillion with a T. So look, they're doing fine right now. There's a guy you might have heard of guy called Bill Gross, who's a kind of very famous investor. He was the founder, founded this thing in 1971 back in Newport Beach. Obviously, not obviously, he's nicknamed the Bond King, or at least used to be, it's kind of lost his crown a bit in recent years I would say, but anyway, so this is PIMCO and they're an asset management firm and they specialize in fixed income. Now, it's not quite as simple as you think this story in that, oh, they're massively exposed to Russian debt. Well, why is that? Well, maybe they bought Russian debt because they like the yield that Russian debt gives you. And they, whilst they appreciate there's risk, because obviously when you're buying bonds, the risk to a bond holder is that they borrow a defaults, right? So this is what we call default risk. So they're obviously, you might think straightforwardly, well, they're buying Russian debt because yes, they understand the default risk, but they don't think Russia will default. And so therefore they're happy to take this quite high yield, despite the risk. Okay. And that may be true on the one and a half billion, so they hold one and a half billion dollars worth of Russian government bonds. Okay. And so fine, that is an investment and there is a high yield. They own that debt for a long time, by the way. It's not like all the Russian Ukraine crisis has kicked off. Oh, let's buy Russian bonds. It's, you know, they've been holding this for a long time, but it's the other side of this risk that's a bit more complicated. Only do they own 1.5 billion of Russian bonds. They also have exposure of over $1 billion worth of credit default swaps on Russian debt. So this is slightly different. So this is where let's say I'm an investor, not PIMCO now. Let's say I'm an investor and I own Russian bonds. Okay. And now this crisis kicked off and I'm like, oh, wow, my risk has gone through the roof here because the default risk, Russia default risk has dramatically increased with all these sanctions being placed on Russia. You know, their ability to pay interest payments on time is now really a threat, right? Now, if I'm a Russian bondholder, what I could do is, well, I'm just going to sell my bonds then. My problem is the bond prices have dropped sharply. So if I was to sell out of my position now, I'd be taking a huge loss. So often some people don't want to do that. Instead, you can buy insurance against default. So this is what a credit default swap is. Okay. I, the Russian bondholder, I can buy insurance to hedge my risk. But buying insurance, you obviously need an insurance company to be on the opposite side of that trade, right? They're the ones that are writing these credit default swaps. They're the ones that are selling these credit default swaps. Well, in this case, the insurer, well, actually that's PIMCO. Yeah, I read this in the in the EFT, that the extract being should Russia default on its bonds, it would not automatically trigger a payout. Right. And therefore it goes to a determination committee. Yeah. And I couldn't believe it when I mean I didn't know about the composition of this committee. Yeah, basically made up of representatives of different financial institutions as big banks asset managers. And of course it includes, you have to include the biggest asset managers of course, of which PIMCO is. So they can just make a decision on themselves. It's like, how does that work in practice? Yeah, again, this is where the system, the systems been exposed as being flawed. I guess it's a quite, so basically, for a credit default swap, just think about it as insurance for the insurer to pay out, then you need a default. Now a default technically is if the borrower either fails to make a coupon payment, or fails to make the redemption payment, which is when the bond reaches maturity and they got to pay back the loan, right. Now Russia paid an interest payment last week on its rubble denominated local bonds, but they Russia did say the money would not reach any foreign investors. They'd pay their coupon, but only to domestic holders right now they've got another coupon payment due next week I think it's the 16th of March is it. And we're all like are they going to pay this or they not know the problem is is it a default Russia do have the money. But they can't access it because the West have sanctioned them and basically blocked their kind of foreign reserves right so what are you doing this case because they could pay if you let them pay, but you're not letting them pay. So, so is that a default or not now the problem in the end surely the sanctions are broken then because that all the people tied up in this are in the West. Yeah, well and this is such as the complexity of financial markets and their global nature that yes sanctioning Russia penalizes Russia but the secondary impacts are then global. Now with PIMCO. Yeah, if it's decided by the committee that there has been a default event, or then PIMCO are on the line for yeah a billion plus payout. But PIMCO are on the committee that decides whether there's a default event. Maybe PIMCO should hook up with the Hong Kong exchange and have a little have a little night out on on big shot. But it's quite reminiscent all this CDS tour is very reminiscent of like 2008 2009. And then while also 2010 2011 Eurozone debt crisis you remember like 2010 it was the Greek credit default swap was the number one financial asset in the on the planet in terms of what people were watching to gauge how this crisis was going. It was the Greek credit default swap. So this kind of Greek default swaps credit default swaps for kind of gone under the radar I mean they went completely off the radar after the Eurozone debt crisis and trading in that kind of stuff just was a more recent one wasn't it. Yeah, political instability. That's driving that but yeah cool well we'll wrap it there. I think we've been going on for a while so hopefully there's some good insights there just more broadly. I think Pierce does a always an awesome job of just deconstructing these into a nice digestible format of course any questions at all just feel free to feel free to just jump on any of our social channels. And if you just search for like amplify me on LinkedIn, you know you can follow us on there shoot as a message absolutely happy to to engage and help as best we can. I'm going to drop a couple of links, as I said into the show notes of the episode so that will include the finance accelerator if you want to get involved in one of those simulations is one happening next week. There's also the daily newsletter that I put out every end of European trading day and yeah and the LinkedIn post. Definitely check that out. Even if you you think you've got a pretty tight game on the LinkedIn front, you can always always be better worth worth a look at. I've had some good feedback from that and it's helped quite a few people so hopefully can do the same for you but yeah peers always a pleasure. Enjoy your weekend and yeah thanks everyone. Yeah, cheers and see you later.