| Investors worry about further fallout from the block trade mess. The Suez Canal is back in business. Singapore has a stock-market mystery. Here's what people in markets are talking about today. What might be the largest margin call in history is ringing fresh alarm bells on Wall Street among those worried about hidden leverage and its potential to fry the financial system. The forced selling of the apparently swap-linked shares at Bill Hwang's Archegos Capital Management has set off a hunt for other areas of excess — from margin debt to options and bloated balance sheets — after stocks at the center of a $20 billion block-trade selling spree plunged and investment banks warned of losses. So far, Credit Suisse and Nomura have told shareholders their businesses face "significant" losses. It was only last April that Hwang quietly got the SEC to remove some of the shackles that had been placed on him years earlier as part of an insider-trading settlement. Regulators should have seen this fiasco coming, argues columnist Eliza Martinuzzi. Timothy L. O'Brien is reminded of Long-Term Capital Management's 1998 implosion. Asia stocks are set to open firmer after U.S. equities bounced off session lows as investors weighed rapid progress on the U.S. vaccine rollout against the risk of further block-trade fallout. Financials dragged the S&P 500 Index slightly lower on the Archegos revelations, but broader markets have seen only small ripples so far. Futures pointed higher in Japan, Australia and Hong Kong. The dollar and oil rose, along with Treasury yields. Horns sounded in celebration as the 220,000-ton Ever Given was finally freed and limped up the Suez Canal after almost a week. Salvage teams used the tides and a full moon to pull the ship from deep inside the sandy bank, and traffic has now resumed through the vital waterway. Clearing the queue of vessels may take as long as two and a half days, with canal operations returning to normal within four days, Suez Canal Authority Chairman Osama Rabie said. The long-term impact of the canal's $10-billion-per-day closure will likely be small given that global merchandise trade amounts to $18 trillion a year. Yet so many ships being thrown off schedule will ensure cargo delays for weeks, if not months. Why are so many Singapore-listed firms dropping from the exchange's main board to its junior venue? Usually, secondary boards act as stepping stones for growing companies en route to the big leagues. And yet at Singapore Exchange Ltd., 27 firms have dropped from the Mainboard to the Catalist since 2014, according to data from Mak Yuen Teen, an associate professor of accounting at the National University of Singapore. In the same period, only seven moved in the other direction. The clearest benefit for most of the companies that moved downward was to avoid an SGX watchlist that could have led to their delisting. Catalist is in danger of becoming a "graveyard for dying companies," Mak warns. Other observers note that Singapore continues to attract a lot of money, and that won't be altered by some tiny companies dropping to the junior board. The coronavirus probably spread from bats to humans via another animal, according to the long-awaited results of a joint World Health Organization-China study into Covid-19's starting point. Possible host species include mink, pangolins, rabbits and ferret badgers. The hypothesis of lab leaks was deemed extremely unlikely. The hunt for the origins of the virus — which has infected more than 127 million people, and caused over 2.7 million deaths worldwide — has been shrouded in controversy since the start of the pandemic, with Beijing and Washington pushing alternative theories about how Covid began. The WHO team will brief member states on Tuesday and will then publish the report to the public. What We've Been ReadingThis is what's caught our eye over the past 24 hours: And finally, here's what Tracy's interested in todayThere are shades of Long-Term Capital Management, Lehman Brothers and GameStop in the drama involving Bill Hwang and his family office, Archegos. Not only is the blow-up likely to be the biggest of its sort since LTCM, it also involved an apparent agreement between banks to try to contain their losses (an attempt that seems to have failed in this instance, as banks rushed to liquidate positions). Perhaps the most important similarity to LTCM, however, involves Archegos's use of leverage. My colleagues Sofia Horta e Costa, Bei Hu and I reported yesterday that a large chunk of Hwang's trading seems to have been done through total return swaps (TRS) and contracts for difference (CFDs). These opaque derivatives helped Archegos amass exposure to companies without actually holding the underlying stock and showing up as a major investor in filings. In that way, Archegos also resembles Lehman Brothers and its use of "Repo 105," a window-dressing accounting treatment that allowed it to remove inventory from its balance sheet and obscure its true financial health. Hwang's classification as a family office may also have helped, as Ben Emons at Medley Advisors notes: "Because Archegos is a family office and not an RIA, compliance rules by the SEC are fairly limited because a family office has only fiduciary responsibility" to the family itself.  Then there's the GameStop resemblance. Retail investors helped push the price of GameStop by buying options that snowballed into a massive spate of dealer hedging. The question is whether Archegos's use of derivatives had a similar effect, adding fuel to share prices' rise and then knocking them over as positions were unwound. It looks like Hwang's family office built up large exposures to single companies. Viacom, for instance, a stock rumored to be held by Hwang, had jumped about 170% so far this year before crashing down last week. There are still a ton of unanswered questions swirling as to exactly what happened at Archegos, but a few things seem clear. There are still unappreciated pockets of leverage in the financial system and these pockets can have a knock-on effect on banks and the market itself. You can follow Tracy Alloway on Twitter at @tracyalloway. | 
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