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World of Cybercraft is officially live in Fortnite!

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The original was posted on /r/Superstonk by /u/Hatowner on 2023-06-26 18:29:03+00:00.

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Been back and forth with Mainstar for several months concerning DRS. Customer service confirms Mainstar has stopped DRS to Computershare.

"Yes, it is true that Mainstar isn’t DRS’ing GME shares any longer. I’m not really sure why not; I think it has something to do with GME not paying dividends at this time and Computershare is making us jump through too many hoops for processing and our administration has just decided all the time and trouble to do it just isn’t worth it for us to continue to do it. The shares that we have registered this way will continue to be held DRS with them, but new incoming shares won’t be. At least that’s my understanding for the time being…"

https://www.reddit.com/r/Superstonk/comments/114z235/mainstartrust_customer_service_is_top_notch/jplhfrm?utm_source=share&utm_medium=android_app&utm_name=androidcss&utm_term=1&utm_content=share_button

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I am feeling pretty negative today kids. I work as a nurse practitioner in a hospital, formerly oncology now advanced heart failure. I have had my own struggles as we all have: raised by an awesome mother who died at 49, stuck with a narcissistic father who wouldn’t hand me a tissue because I should suffer and earn it on my own. I haven’t asked him for a penny since I left high school. But now he is having health problems, which has become my job. I am beyond grateful for my two little kids: they’re my drive. I watch people suffer all day long. It can be rewarding, it usually always is. It’s also a reminder about what other people’s struggles can be. So much perspective. So many opportunities to be a part of a critical time in someone’s life, seeing the love surrounding them or the fog and regret.

I’m drowning in debt as a single parent, credit cards maxed to pay bills and let the kids experience what I couldn’t. I want them to see things, and have experiences. Even with a decent salary, I am always trying my best to save everyone else but never me. I have come so close to selling my shares so many times but for some reason my gut says no. Wait. So I keep waiting. I ran out of oil yesterday. It has gotten out of control the last two years but I somehow keep making it. I was the breadwinner in my marriage, and I still pay for everything. I can’t live with my head barely above water like this much longer. I just want to get back to a place where the debt is gone, or minimal. The divorce cleaned this chick out, I started from scratch. That’s what I hope my interest in the stock market or GME can help bring. Comfort. I’ve been parentified since I was a child, I just want better for my kids so they don’t have to deal with this. To shoulder the weight of everyone since childhood.

I wanted to share bc I am, in life, a vault. This thread is a place to spill it, for everyone in similar positions or not. I want everyone who is having or has had this day to come here and get some love and encouragement. Find refuge. You’re not alone ♥️

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Pictured: MorningStar Credit Ratings

TL;DR:

• A month after the sneeze in February 2021, MorningStar Credit Ratings was fined by the SEC for violating federal securities laws in how it rated CMBS (commercial mortgage backed securities), for at least 30 billion worth of CMBS ratings over 2 years. MorningStar lied over credit enhancement techniques and information about these CMBS loans, saying that they were less risky so that they didn't have to pay out to investors as much money.
• But before they could face even more music for more lies, MorningStar Credit Ratings SHUT DOWN, pulling all its CMBS ratings which would have included its "How Many More Lives?" report on GME and its effect on CMBS.
• MorningStar Credit Ratings may have been created by MorningStar in and around 2008/2009 to take advantage of Fed money. Fed wanted to jump start the CMBS market and needed then agencies to rate these CMBS Jenga towers, and Morningstar was willing and able to get that sweet Fed zipple despite being fined by the SEC and shut down years later.
• Despite this all, the MorningStar report on "The GameStop Loans" gives us an eye into 100+ loans and what CMBS packages they intersect with as far as GME stores going into pre-sneeze. It will be covered in even more detail in a later post.

For the (MorningStar meets The Big Short) culture: https://www.youtube.com/watch?v=9xZx1lf2tvs&t=28s

Sections

0. Preface

1. Back in the ~~90s~~ ..., erm 2019s

2. Meet Morningstar Credit Ratings

3. Go On...

4. Overlap

5. A Canary by Any Other Name: Post Conduit Loans

6. Credit Enhancement (or "Make CMBS Line Go Uppies!")

7. Don't Trust Me Bro

8. Lies, Damned Lies & Credit Agency Ratings

9. Comeuppance Plz?

10. NRSRO

11. Put Some Pantera On

12. Don’t Trust Me Bro =====================

Well no…all of this is just to say that Morningstar Credit Ratings is not our guiding angel during this time pre-sneeze.

Now why’s that? Coincidentally, a month AFTER the sneeze, back in February 2021, the SEC filed a civil action against Morningstar Credit Ratings LLC for violating “disclosure and internal controls provisions of the federal securities laws in rating [CMBS]”. 30 CMBS transactions worth $30 billion were incorrectly rated between 2015 and 2016.

https://preview.redd.it/phwtwnxv7e8b1.png?width=1994&format=png&auto=webp&v=enabled&s=f8eb6cde3f27643213859eb1aa603ae21f5012f7

So yeah, that company that we maybe banking on to give us an idea of what truly to expect about Gamestop’s loans, that was blasting all over the financial world the strong wording of “How Many More Lives?”--perhaps implying an imminent demise of Gamestop even as its own write-up said its CMBS impact was “minimal”–yeah, that Morningstar was incorrectly rating shit just like the credit ratings agencies were back in 08. Time is a flat circle:

“analysts to make undisclosed adjustments to key stresses in the model that it used in determining the rating for that transaction…According to the complaint, analysts frequently made these undisclosed adjustments to reduce the stress applied in the model and, by easing the stresses, Morningstar lowered the credit enhancement it required for many of the ratings it awarded classes of the CMBS transactions.”

So they made changes on the down low and the back-end, making the credit enhancements look BETTER than they actually were. So meaning, whatever they said was A-rated, was actually fucking worse. NOW WHY DOES THIS SOUND FAMILIAR? Sound 2008-y? Because it fucking was.

8. Lies, Damned Lies and Credit Agency Ratings ==============================================

So looking as an example of how they could fuck investors, this might perhaps be used as a way to fuck investors if they were building up their rainy day fund–or more likely, go fuck yourself fund–using that excess spread method of “credit reduction”.

**This means that if they got 10% in mortgage money every month and were meant to pay 5% to investors, they were like “hold on, more risky means we pay them more…so MorningStar plz bby can you say it’s less”...**And MorningStar kissed the big banks or issuers that were paying for these ratings on their forehead and/or taint. Morningstar said “ofc bby” and then rated these as worth paying less interest. So 10 - 5=5% might be now 10-3=7%, giving the issuers a heftier and heftier gap of money to Scrooge McDuck in.

morningstar credit ratings, after another legit ratings well done

If you need a TL;DR, it comes down to this: MorningStar Credit Agency LIED about their ratings, which meant potentially RISKIER commercial mortgages–if they were accurately rated–would pay investors more so to avoid that they said they were A-ok so investors didn’t get as much money! SOUNDS FUCKING LEGIT.

8. Comeuppance Plz? ===================

Ah these fuckers. So they rated a shit ton of issuers as LESS RISKY so that they would get paid more. And this was in February 2021? Let’s hope that these fuckers got some comeuppance and shit right after that SEC call outright?

MorningStar avoiding your poor credit enhancement techniques on your CMBS tower

I don’t think there are any sweet summer children left here, so you know the answer.

No. Fuck no.

Because as of a few months PRIOR to the SEC calling them out, MorningStar Credit Agency NO LONGER FUCKING EXISTED. Yeah, that’s right. Back in Nov. 2020, the entire thing fucking shut down:

“Morningstar Credit Ratings, LLC (“Morningstar”) no longer operates as a credit rating agency. Effective November 23, 2020, DBRS, Inc. no longer identifies Morningstar as a credit rating affiliate. Morningstar no longer updates or maintains the historical content or information regarding previously withdrawn Morningstar credit ratings that is available on this website.Morningstar Credit Ratings, LLC (“Morningstar”) has withdrawn all of its credit ratings. Morningstar does not issue or monitor credit ratings. Morningstar no longer updates or maintains the historical content or information regarding previously withdrawn Morningstar credit ratings that is available on this website.”

you gotta love the balls on them "hey fam we shut down because of...crime shit prob...but check out our other offerings!"

So literally, the entire thing not only fucking shut down but it WITHDREW ALL ITS FUCKING RATINGS BEFORE IT GOT CALLED OUT BY THE SEC.

10. NRSRO =========

I know some of you can see this section header and already see some letters you don’t like: SRO. But in this case, it’s (somewhat) different. And you can see that NRSRO header in the screenshot just a bit above when Morningstar Credit Ratings reported it was shutting down...

https://preview.redd.it/8ld8g27y9e8b1.png?width=1280&format=png&auto=webp&v=enabled&s=1fb097bf6947470b4c96fe668a8b0ffab6c44d4e

In June 2008, coincidentally near the height of the financial crisis when other rating agencies were in the shit for fucking the global economy with lies, Morningstar Credit Ratings was let in to the big boys as a Nationally Recognized Statistical Rating Organization, or NRSRO. Although it had only applied to rate asset-backed securities (such as CMBS), it later got the chance to rate financial institutions and corporate issues in eight years time.

But wait, why was it the the next year in December 2009 that Morningstar entered the credit ratings market. I wonder why Morningstar entered the credit ratings market?

“In its latest move to jump-start the illiquid market for commercial mortgage-backed securities (“CMBS”) and spur commercial real estate lending, the Federal Reserve Board of Governors (“Federal Reserve”) announced on Tuesday the anticipated expansion of the Term Asset-Backed Securities Loan Facility (“TALF”) to include certain highly rated “legacy CMBS” issued before January 1, 2009 as eligible collateral. This most recent expansion of TALF marks the first addition of a “legacy” asset class to the list of TALF-eligible collateral and follows the Federal Reserve’s announcement earlier this month that newly issued, highly rated CMBS would become TALF-eligible collateral beginning in June. The initial TALF subscription for legacy CMBS is expected to occur in late July.

https://preview.redd.it/oyt1biy18e8b1.png?width=1314&format=png&auto=webp&v=enabled&s=873d1e20199844f9653587ea0138585f0edba23b

On Tuesday, the Federal Reserve also expanded the number of credit-rating firms qualified to rate TALF-eligible collateral and released details regarding the pre-certification process for eligible borrowers who seek pre-clearance to qualify for a TALF loan.”

as always, fuck these Fed assholes

So the Federal Reserve Board of Gove...

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Pictured: Morningstar credit ratings on their GME report

TL;DR:

• In 2019, Morningstar Credit Ratings put out a report on Gamestop called "How Many More Lives?" signalling worry over its closing stores post then-GME CFO Jim Bell's announcement that GME was closing stores.
• This report featured some overlap in CMBS properties that were featured in 2019's "Big Mall Short", where ppl like M1 Partners, Apollo Global, Carl Icahn, and others began shorting malls/retail stores.
• MorningStar ratings are based on techniques called "credit enhancement" that help increase the ratings on CMBS loans. These include subsubordination (allocating losses to lower rated junior bonds to protect better rated senior bonds), overcollateralization (having the value of your bond that might be worth $1000 in properties actually be backed up by more properties–maybe worth $1100–to help cushion blows), and excess spread (making a rainy day fund almost from the mortgage you get from a property if it pays 10% a month, while you need to pay out 5% in interest). However, we may later learn that MorningStar Credit Ratings as a whole may not be worth trusting...as well as their ratings...

For the culture: https://www.youtube.com/watch?v=RbeF6BoKrI0

Sections

0. Preface

1. Back in the ~~90s~~ ..., erm 2019s

2. Meet Morningstar Credit Ratings

3. Go On...

4. Overlap

5. A Canary by Any Other Name: Post Conduit Loans

6. Credit Enhancement (or "Make CMBS Line Go Uppies!")

7. Don't Trust Me Bro

8. Lies, Damned Lies & Credit Agency Ratings

9. Comeuppance Plz?

10. NRSRO

11. Put Some Pantera On

12. Preface ==========

Previously, on “The Big Mall Short”: The Big Mall Short #10: On Ventriloquism and the Unbearable Lightness of Brian Sozzi & Jim Cramer's "Where, Memesters, is Everyone?" Epistemological Bullshit

This is the Big Mall Short.

https://preview.redd.it/dbfrqfe74e8b1.png?width=1350&format=png&auto=webp&v=enabled&s=4f3315025646da57e9741e5ff0d2557351382a3a

If you recall from Pt. 2, CMBS--or commercial mortgage backed securities--are a grab bag of loans to different offices, retail stores, and commercial real estate that you can buy or sell, or bet whether the price of all those leases will be paid off as those spaces do business. They’re often tied in with signed leases to these spots. If many of those offices, retail stores, and commercial real estate spots fail, welp then they can’t pay their lease and the entire grab bag (CMBS) might go down. These leases can be made to offices or factories, but they can also be made to retail stores like Tuesday Morning, Bath Towel, or GameStop.

https://preview.redd.it/v2untxk94e8b1.png?width=800&format=png&auto=webp&v=enabled&s=04afc4f20b3242a427f4047341eed7c5f86bb1b3

In our previous episode, we talked about Advan Research, SafeGraph (that works heavily with Goldman Sachs) and other firms like it, that sell our cell phone & geolocation data to hedge funds that they then use to short firms. About 95% of Advan's clients are hedge funds, Some firms like Advan even have T+1 data (can give today's foot traffic as soon as TOMORROW) and are approaching near T+0 (can tell hours later how busy foot traffic is, truck traffic for company shipments, etc.). And because these firms exist, then it is utter bullshit uttered by people like Jim Cramer and Brian Sozzi, because (1) they are well aware these geolocation tools exist, (2) they don't tell retail investors their own phone data may be used in shorting stocks they own, (3) they blatantly lie using pics of empty stores as a mislead given that such tools exist and are so often used by hedge funds.

In this post, we revert to something a bit more different and more technical again. We are introduced to Morningstar Credit Ratings, a rater of CMBS loans, that rated GameStop back in 2019 pre-sneeze and determine whether it told people anything useful back then, or whether it was a more unreliable narrator than otherwise.

1. Back in the 90s...erm, 2019s ===============================

Back in 2019, the world was an odd mix of things: fans were ecstatic that “Stranger Things 3”--or “The Witcher” for others--was dropping on Nutflicks, Notre Dame (the Cathedral, not the college football team) was on fire, and protests in Hong Kong were flaring. And in the same month that everyone was gearing up for the infamous running raid on Area 51, ex-P.K. Chang saboteur and then-GameStop CFO Jim Bell had something to announce: GameStop was closing stores.

https://preview.redd.it/x74qd8vl3e8b1.png?width=640&format=png&auto=webp&v=enabled&s=0baabfb44132fa7019cd1fffffa9bc415c99ab7d

A month after this announcement, someone went “HOLY SHIT!” and got hype as fuck. In fact, they got hype enough to publish a report about it. That someone? ~~Albert Einstein~~ Morningstar Credit Ratings.

MorningStar Credit Ratings pored through the limited details of the Jim Bell-driven announcement and threw up its hands in shock–whether real or fake–over the issue.

a different kind of agency? That certainly ends up being true...

MorningStar was perhaps worried. And not just worried for any reason: it was worried over CMBS.

2. Meet Morningstar Credit Ratings ==================================

In 2019, one member of the financial world caught wind of this announcement and relayed it itself as it penned a letter to aNaLySts and the financial public alike: Morningstar Credit Ratings–affiliated with Morningstar, the credit ratings agency for CMBS–put out an all-hands-on-deck report called–literally–“How Many More Lives? GameStop Closures Put $41.8 Million in CMBS at Risk; $383.4 Million in Total Exposure”.

https://preview.redd.it/lgyzz65o3e8b1.png?width=1292&format=png&auto=webp&v=enabled&s=ec5bd0149cba266b8b5fd16f34a1236155ec69ec

In part, a response to then-GME CFO’s announcement to announce store closures–up to 200 by the end of 2019–addressed the company’s move to even FURTHER minimize its brick-and-mortar presence over the next 12-to-24 months (for those of you counting, that’s the year 2020 and 2021…):

Morningstar Credit Ratings, LLC (DBRS Morningstar) believes that GameStop Corp.’s impending store closures could adversely affect already underperforming retail properties even though the risk to commercial mortgage-backed securities with exposure to the retailer is minimal. While GameStop has not identified which stores it will be closing, DBRS Morningstar identified 20 loans, with a combined allocated property balance of $41.8 million, that are most at risk because they already have low debt service coverage ratios, are backed by properties with low occupancy, or have GameStop as a major tenant that is within five miles of another GameStop store.

3. Go On... ===========

So to recap, MorningStar Credit Ratings said that it was worried about these impending closures for GameStop. It argued that the impending GameStop shop closures could hurt other underperforming retail properties. MorningStar made this argument, even though–in the same breath–it would say that GameStop’s personal risk to CMBS loans was low.

Of note, MorningStar said 112 US properties with commercial mortgages worth a total of $384 million had GameStop as among the 5 largest tenants in each of those 112 properties. In particular, MorningStar identified 20 loans as the worst loans of concern, with issues such as one East Harlem NYC store with 4 other GME stores within 5 miles of that store.

https://preview.redd.it/1yygl5op3e8b1.png?width=1192&format=png&auto=webp&v=enabled&s=6bac97667a18a6177edc391602f97e58b06984c5

MorningStar discussed lots of churn in that area, including an OfficeMax’s exit meaning the nearby GME store had to pick up more slack at one specific property. This goes back to a central idea in CMBS loans: as more stores in a CMBS bundled property fail, there is a chance that the whole loan goes tits up.

One other such example: the MorningStar report also talked about a GameStop being the only remaining retail tenant on-site for a mixed-use property after another tenant–one we are all familiar with–had left: Radioshack.

Some of these concerns overlap heavily with items that I’ve talked about in previous posts in “The Big Mall Short”, such as when anchor stores exit (Walmart leaving “dark stores” in its wake in Pt. 7) or small end-caps on strip malls having tenant exits. Effects roll downstream, hurting other stores and the Jenga Towers that house them.

4. Overlaps ===========

Of the 130+ properties that MorningStar reported on in their published pieces, pretty much none of the SPECIFIC stores were featured in that report had overlapped with loans included in the “Big Mall Short” that I featured in the chart I researched and pulled together for Pt. 5. In that part 5, I looked at the most heavily shorted retail tower of CMBX loans, and found a large majority of the stores featured GME stores:

https://preview.redd.it/ponqg0oq3e8b1.png?width=1025&format=png&auto=webp&v=enabled&s=3ce4ba367847bac8a017345ea65cd598407972d6

This tower (known as CMBX.6), featured the most heavily shorted tower of CMBS loans by individ...

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Source: https://tellerwindow.newyorkfed.org/2023/06/26/fednow-is-coming-in-july-what-is-it-and-what-does-it-do/

On March 15, the Federal Reserve announced that the FedNow Service will launch in July 2023. FedNow will “facilitate nationwide reach of instant payment services by financial institutions—regardless of size or geographic location—around the clock, every day of the year.” But what exactly is the FedNow Service, and what does it do? In this article, we describe FedNow at a high level, offer answers to common and anticipated questions about the service, and explain how it will support the provision of instant payment services in the United States.

A New and Different Payment “Rail”

At its core, FedNow is an interbank instant payment infrastructure. Banks, credit unions, and other eligible institutions have accounts at the Federal Reserve. These Fed accounts allow institutions to hold reserves. Banks pay each other by transferring reserves from the paying bank’s Fed account to the receiving bank’s Fed account using several interbank payment options. FedNow is a new addition to the suite of options to make such transfers.

What differentiates FedNow from other payment rails is that it is specifically designed to support instant retail payments. With such payments in mind, FedNow’s most important feature is that it will operate 24 hours a day, seven days a week, year-round. With FedNow, financial institutions will be able to clear and settle retail payments instantly at any time, including nights and weekends.

Still, FedNow shares some characteristics with existing payment systems. It is an interbank system, like ACH and Fedwire. In addition, FedNow, like Fedwire but in contrast to ACH, will be a real-time gross settlement (RTGS) system. This means that every transaction of FedNow will be processed in real time, whenever the paying bank chooses to send the payment, and settled on a gross basis, payment by payment, rather than periodically settling several payments in batch.

Will retail customers get to use FedNow directly? The short answer is no, at least not directly. Instead, FedNow will support instant payment services, to which individuals will have access through their financial institutions, if these institutions adopt FedNow. Banks and credit unions that offer retail payment services will be able to use FedNow to clear and settle retail transactions and instantly make funds available to both merchant and customer.

Supporting Instant Retail Payments

If banks can already use an effective RTGS system like Fedwire to settle their payments, why is it necessary to build a new system? The answer is that existing interbank payment systems in the United States are not well suited to support instant retail payments. The goal of an instant retail payment system is to allow consumers and businesses to transfer funds at any time, from anywhere, and for these funds to be available to the recipient immediately. Imagine that Alice has lost her wallet and needs cash to take a taxi back home, late on a Saturday night. With a phone and an instant payment service app available, Bob would be able to send Alice or the taxi driver funds immediately, from across the country, and these funds would be available to pay for the taxi ride right away.

The connection between an interbank payment system and an instant retail payment system (the FedNow Service) may not be immediately obvious. So, let’s break down what happens in the example above. For Bob to send Alice cash with an interbank payment system, Bob needs to instruct his bank to debit his account, Bob’s bank needs to send cash to Alice’s bank, and Alice’s bank must credit her account. If Alice and Bob don’t have the same bank, any fund transfer between them requires an interbank transfer.

In principle, Alice’s bank could agree to extend an advance to Bob’s bank. This would allow the transfer between Bob and Alice to occur even if the transfer between their banks is delayed. However, doing so creates an interbank exposure that would need to be settled later. If instant payment usage grows enough, such interbank exposures could become large, and managing the risk they create could be complex and costly. This risk is eliminated if Bob’s bank can settle its obligation to Alice’s bank in real time, when Alice’s bank credits her account. Since individuals may have the need to send each other funds at any time, including late on weekend nights, as in our example, eliminating the risk that could arise from the resulting interbank exposures requires banks to have the ability to clear and settle transactions, and also make funds available—all within seconds, at any time. FedNow will do that.

Where Does Fedwire Stand?

Couldn’t Fedwire Funds Service’s hours of operations have been extended to allow it to support instant retail payments? There are several reasons why this would not have been practical; let us focus on one. Systems that operate 24 hours a day, seven days a week, 365 days a year need to be updated from time to time, without service interruption. The technology that supports Fedwire is not designed to do that effectively. Fedwire’s technology updates typically happen on weekends, when the service is not operating. FedNow, by contrast, is built to make the service upgradable without needing to shut it down.

FedNow will not replace Fedwire. FedNow is meant to support instant retail payments with a maximum value of $500,000; in most cases, financial institutions needing to make large, dollar-denominated RTGS transfers will continue to use the Fedwire Funds Service.

To Sum Up

FedNow is a new interbank RTGS payment system that will support instant clearing and settling of retail transactions. Individuals will not have access to FedNow directly, but instead will have access to the instant payment services offered by their financial institutions. FedNow will allow participating institutions to transfer funds between their customers and provide immediate availability without incurring credit exposures. Because of their speed and convenience, instant payments, whether between individuals or between a business and a customer, are expected to grow in the United States, as they have grown abroad. With FedNow, the Federal Reserve is supporting the growth of this segment of the payment industry.

TLDRS:

The Federal Reserve's new FedNow Service launching in July 2023.

• FedNow is essentially a new, fast, interbank payment system, like a new "payment rail" that connects all banks, credit unions, and similar institutions that hold accounts with the Federal Reserve.
• Unlike existing systems, FedNow is designed specifically for instant retail payments.
  • That means it will be operational 24/7/365, enabling banks to clear and settle retail payments in real-time, regardless of when they're made.
• It shares some qualities with current payment systems like ACH and Fedwire but will be a real-time gross settlement (RTGS) system, meaning transactions get processed instantly whenever they're sent and are settled one-by-one rather than in batches.
• As an individual, 'we' won't use FedNow directly.
  • Instead, our banks or credit unions can adopt the system and use it to instantly clear and settle retail transactions.
  • This allows folks or a business instantly access funds from completed transactions.
• Existing systems like Fedwire aren't ideal for instant retail payments, as their operating hours and technological capabilities don't allow for the speed, immediacy, and continuous operation needed for this kind of service.
• FedNow won't replace Fedwire. While it's designed for instant retail payments, it's capped at transactions up to $500,000.
  • For larger transfers, institutions will still use the Fedwire Funds Service.

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