Preview: The Repo Man Cometh... With Scott Skyrm

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🎵 Theme Song: Starspeed by MILANO

0:00 - Introduction to the system's leverage and its implications, and Hugh's advocacy for change in the financial world.
2:35 - Insights into working with large financial entities in the securities financing business, and Curvature Securities' role in this space.
4:35 - The prerequisites of being a dealer in the repo markets and the motivations for writing a book on the subject.
7:45 - Understanding the impact of regulations like Dodd-Frank and Basel III on large banks' participation in the repo market.
11:18 - The aftermath of banks' retreat from securities financing, the challenges of making returns, and the effects of the debt ceiling crisis on short-term US securities.
15:41 - Explaining the similarity between the repo market and pawn shops, and clarifying the numbers specific to the repo market.
18:09 - Discussing the increasing risk-taking as banks reduced or eliminated haircuts on repo transactions and the struggles smaller institutions face due to margin requirements.
23:52 - Delving into the repo market shortages and squeezes, with tales from the field.

[JimWemm-qlge]

Thanks Hugh for allowing me to sit in one of the cheap seats. Appreciate it.

[steviechang]

Repo Man and Hugh got into the pawn shop characters in a split of a second and start haggling on the collateral value and margins. Hilarious to watch

[DTrent-uywl]

Hugh, you’re one interesting rich person

[dalerussell]

50% eminem 50% brilliant, Thanks again hugh

[TimothyDaniel]

High is real and very smart he is no sheep... Nice hat

[cyberpunkalphamale]

I have Scott's book. It is REQUIRED reading if you want to be literate in the financial markets.

[emmanuelmiranda]

Clockwork Orange. More like the artful dodger.
Keep those insults coming. We're so far from the stage that it doesn't matter

[MissMyRyan]

Hugh’s (former hedge fund manager) hostility towards repo dealer can only be interpreted as….[draw conclusion here]

[evanroberts]

however yup nice reference to fiats struggling central bankster droogs and politicos

[pfrohwein]

​The Repo Man Coneth ??? But Hugh car is paid

[brad]

In the pawn shop example, I was offered a $50 loan on $200 worth of silver. Think again if you think silver is money lol. If your assumptions are this far off about pawnshops, who knows what mis-assumptions you could potentially be making about the overnight repo, namely in the fat-tail risks, i.e. default, USD mini crash during cashout, etc.
Here are some additional potential fat-tail risks associated with the overnight repo:

1. Counterparty Risk: There is a risk that the counterparty involved in the repo transaction may default on their obligations, leading to potential losses for the lender.

2. Liquidity Risk: In times of market stress or disruption, the availability of liquidity in the overnight repo market can decline. This can lead to increased funding costs or difficulty in accessing funds, potentially impacting market participants.

3. Systemic Risk: If a significant number of market participants are interconnected or heavily reliant on overnight repo funding, a disruption or failure of one participant could have systemic implications, affecting the overall stability of the financial system.

4. Market Volatility: Rapid and significant changes in market conditions or volatility can impact the overnight repo market, leading to increased borrowing costs or difficulties in rolling over repo agreements.

5. Collateral Risk: The value of the collateral posted in a repo transaction may fluctuate, and if there is a sharp decline in the value of the collateral, it could lead to issues with loan-to-value ratios and potential losses for lenders.

6. Operational Risks: Any operational failures, errors, or disruptions in the settlement processes or systems used in the overnight repo market can introduce risks and potential financial losses.

It's important to note that these risks are not exclusive to the overnight repo market and can be present in various financial transactions. Market participants and regulators actively monitor and manage these risks through risk management practices, collateral requirements, stress testing, and regulatory oversight.

[evanroberts]

nice top hat assuming not bowler like clockwork orange sociopath

[BradSchmidtPlus]

The subtitles are so distracting and awful. please provide a way to disable them. cant watch!

[skobeer]

hugh you are asking for them to stop the chinese from trading?
like its a floored game🤣 i never guess you was a scared racist honestly