DDL: Saudi posts widest deficit since 2018

Plus, the operational naked shorting driving gamma squeezes in today's markets.

May 06, 2026

The linkfest below has been compiled using links posted in the Blind Spot’s Discord community over the past 24 hours. The links and summaries have been loosely quality-controlled in the AI-assisted compilation process. However, caveat emptor, because not everything has been rigorously fact-checked, and not all sources are necessarily credible. The best way to view this post is on the main website, so please click the title to take you there.

Blind spot of the day

This is what a gamma squeeze looks like.

Two weeks on, it’s worth dissecting what happened with the Avis squeeze. The consensus is that Avis stock got pumped when two hedge funds took advantage of its limited free float. But there’s also a compelling narrative about how, once again, the market-making shenanigans (or more pointedly, operational naked shorting) behind ETFs may have contributed to the conditions that made that possible. As regular readers will know, this is a topic very close to The Blind Spot’s heart.

The theory started gaining traction after Reuters reported that Avis’ explosive move had become large enough to materially influence the Russell 2000 itself because of the company’s swelling index weight during the squeeze.

Essentially, as CAR’s stock price rose sharply, its weight inside passive index products also rose. ETFs and index-tracking funds that mechanically mirror those benchmarks would then need to buy additional CAR shares to maintain proper weighting. That incremental demand, in turn, could push the stock even higher, creating a feedback loop in which rising prices generated new passive demand, which then generated further price appreciation.

ETF market makers and authorized participants were then forced to source scarce CAR shares during ETF creation and redemption activity. And since they often run operational naked short positions, this will have made them vulnerable to a short squeeze by savvy hedge funds that know what’s what.

For more on how ETF plumbing and “operational shorting” mechanisms allow for synthetic short exposure to persist even as the stock’s real float becomes increasingly constrained see here and here. Plus, all our legacy work on ETF plumbing on FT Alphaville. I’d wager that while it’s not necessarily the case that these mechanisms caused the squeeze, they certainly amplified both the buildup of short interest beforehand and the instability of the eventual unwind.

The standout sign that something of this nature was involved is that short interest climbed to levels approaching or exceeding the available free float. This makes little sense to those who expect short exposures to fall as stocks become increasingly difficult.

However, if you factor in “create-to-lend” and “operational shorting” mechanisms, you begin to appreciate how ETF and market-making infrastructure can temporarily create synthetic supply that behaves economically like additional shares, even when the underlying stock itself is scarce.

The original “victim” of this strategy was high-street retailer Gamestop. In reality, Redditors simply figured out how these mechanisms work and used that knowledge to engineer a squeeze in their favorite video game outlet to shield it from bankruptcy. The fact GameStop is now pursuing the acquisition of eBay kinda says it all.

On that front, the GameStop move is bewildering Wall Street analysts who believe there is a clear-cut shortfall in the financing. The clue as to what they’re plotting comes, however, in the “half stock” dimension of the deal offer and the fact CEO Ryan Cohen insisted in the most awkward way imaginable that “we have the ability to issue stock in order to get the deal done.” Popcorn time at a minimum.

Josh Young@JoshYoung

Instant classic

2:09 PM · May 4, 2026 · 2.03M Views

415 Replies · 446 Reposts · 6.81K Likes

Summary

Dated Brent hovered near $115 while physical differentials narrowed—an apparent calm that contrasts sharply with the broader picture of global oil reserves plunging at a record pace, stockpiles collapsing by nearly 200 million barrels in a matter of months, and Middle East war strains coinciding with Iranian declarations of a Persian Gulf Strait Authority requiring tolls and documentation from passing vessels. US naval escorts through the Strait of Hormuz, the mysterious disappearance of a tanker, and the announcement that Project Freedom would be paused at the request of Pakistan and others illustrate the delicate choreography now required to keep energy flowing.

Second-order effects are already visible. Diesel prices have surged ahead of gasoline, feeding directly into agricultural costs and prompting warnings of a next wave of food inflation. Jet-fuel availability concerns intensified after the collapse of a UK airline serving TUI. Meanwhile, Glencore’s Kazzinc facility in Kazakhstan suffered a deadly explosion, removing capacity across multiple metals. Norway’s decision to reopen three gas fields closed last century reads as a quiet hedging action. Global LNG exports fell 7% month-on-month in April to the lowest level since May 2024, the third consecutive decline. Central banks, sensing the shift, accelerated gold purchases to 244 tonnes in Q1, the highest since late 2024.

These commodity stresses intersect with an AI-driven reordering of both labour and capital. Coinbase’s CEO cited the changed pace of what is possible with a small, focused team while cutting 14% of staff. Hyperscaler debt issuance—notably Alphabet’s record Canadian deal—is swallowing bond-market capacity. Young data-centre electricians in Texas are reportedly earning $240–280k with no college debt, while AI is pushing up consumer energy costs via higher RGGI carbon prices and increased power demand. The Army is asking missile makers to hack their own weapons, signalling how deeply the technology has penetrated even kinetic systems. Deepfakes of Italian Prime Minister Giorgia Meloni circulate as political weapons; separate complaints allege discrimination against white male employees at the New York Times.

Financial markets themselves appear to float above the fray. The S&P 500 has surged to a new record high, up 15% since its March low, even as Australian voters call for spending cuts amid an energy-driven cost-of-living crisis, Canadian deficits balloon under new leadership, and HSBC reports a $400m fraud-related loss tied to risks in the $3.5tn private-credit sector. Bullish’s $4.2bn acquisition of Equiniti to create a global transfer agent for tokenized securities suggests the infrastructure for a parallel financial plumbing is being laid. Saudi Arabia’s 126bn-riyal quarterly deficit—48% of revenue—adds another layer of sovereign stress that could yet influence stablecoin and CBDC strategies.

European peculiarities surface in the form of German laws rendering three-star restaurant reviews illegal and Google Map reviewers being banned for low ratings. Public broadcasters face calls for overhaul and budget cuts; independent journalists receive White House recognition.

Layered atop everything are lingering COVID-era accountability questions. An NIH virologist who downplayed lab-leak hypotheses was caught smuggling dangerous viruses from Africa without proper paperwork; the FDA stands accused of blocking publication of research linking Covid vaccines to shingles. European intelligence reports of a possible Russian coup involving Sergei Shoigu, alongside historical documentaries on the Arab-Israeli conflict, complete a mosaic in which old grievances, new technologies and tightening resource constraints interact in non-linear fashion. The pattern that emerges is not collapse but fragmentation: parallel infrastructures, competing truth regimes, and price signals that are increasingly difficult to interpret through any single analytical lens.

DDL: Saudi posts widest deficit since 2018

Plus, the operational naked shorting driving gamma squeezes in today's markets.

Blind spot of the day

Summary

Commodities

Crypto

WW3-geopolitics

Stocks

Finance

WW3-military

Restaurants

Covid

Technology

Media-matters

Economics

ESG

Disunited-kingdom

Banking

Artificial intelligence

Corruption

Religion-and-cults

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