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Softbank grabbing the headlines again!

What happened this time?

After getting lot of flak for its lavish investments in startups (WeWork), Softbank is back in the limelight although for a very different reason.

SoftBank aggressively bought billions of dollars’ worth of call options on tech stocks, betting that those shares would keep rising. This compelled firms that sold SoftBank those options to hedge their risks by buying the underlying stocks — and as those stocks kept rising, they had to keep buying to stay hedged.

One trader familiar with the positions taken by Softbank disclosed that the investment firm has poured billions into big tech firms. The investment giant was sitting on about $4 billion worth of paper profits as of yesterday, The Financial Times reported.

How did this go under the radar for long? How badly could SoftBank be hurt if this trade goes sour? We will know this in the coming weeks.

What else making headlines?

  1. Analysts are feeling more optimistic about corporate America:They raised their quarterly earnings estimates for S&P 500 companies for the first time since 2018, according to FactSet. It’s cautious optimism: Their third-quarter estimates are up 2.6 percent over the past two months; at this point in the previous quarter, they had slashed forecasts 36 percent.This could be an welcome news for the Wall street.
  2. Trump raises prospect of ‘decoupling’ US economy from China: President Trump raised the temper in US-China dispute by suggesting that US would decouple from China. Its a tall task due to overdependance on China for manufacturing and consumer demand.
  3. Uber vows to make N America and Europe fleets fully electric by 2030: Uber has pledged to make all of its rides in North America and Europe fully electric by 2030, after a new report found the ride-hailing company’s operations to be more damaging to the environment than private transportation.

Speed Dials !

  1. Tesla shares plunge after GM buys stake in Nikola: Tesla shares fell as much as 20% on Tuesday, the biggest one-day loss since early February. Declines started premarket and worsened as General Motors Co. said it would take a $2 billion equity stake in Nikola Corp. and partner with the fledgling truck maker to engineer and manufacture its Badger pickup. The news lifted Nikola shares by 46% while GM rose 8%.
  2. JP Morgan probing misuse of Pandemic relief funds: JP Morgan says it’s probing the role of some employees who may have enabled misuse of Covid-relief funds in what it calls potentially illegal activities.
  3. Apple is holding an event on September 15 to release new products: The event is expected to see possible new launches in iPhone 12 models along with new iPad and iWatch. There are reports that the products may hit the shelves later than expected due to the Pandemic.

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