Here's a rad markets-are-wacky thing:
That's TSMC's stock—the one traded in Taiwan vs New York.
They're exactly (-ish) the same instrument, but at times there's a spread opening up... recently it's been upwards of $150 billion of difference in market cap.
My econ brain goes: ARBITRAGE, LAW OF ONE PRICE... Small differences or discrepancies can happen here and there, sure whatevs, but $150bn in the 10th largest stock on the planet?!
My god, what is going ON?!
Nobody has a very good answer, but Wigglesworth traces an interesting candidate:
DE Shaw’s view is that it boils down to an acute bank balance sheet shortage. In other words, the supply of financing available to arbitrageurs from banks is simply too limited at the moment. It’s like you can see the juicy unspoilt apples at the top of a tree, but the hardware shop has run out of the ladders needed to pick them.
"what looks like a gross violation of LOOP is actually the rising cost of renting bank balance sheets getting baked into market prices."
If there's an acute bank balance sheet/capacity shortage... is there gonna be a HUGE BIG PRINT coming?! (#914600).
Mr. Wiggly ends on the same note:
Alphaville does wonder what the apparently extreme tightness of bank balance sheets might mean at a sensitive time for financial markets as a whole.
non-paywalled: https://archive.md/PndgO