Royals Rumblings - News for January 29, 2021

Well, no new Royals news yesterday.

MLB.com’s Anne Rogers put together a list of Royals superlatives since Statcast went live.

Fastest pitch: Josh Staumont, 102.2 mph Staumont didn’t touch 100 mph once in 2019, but in ‘20, the 27-year-old reliever hit triple digits 36 times. None were faster than his 102.2 mph pitch on Aug. 19, 2020 — the fastest pitch in Royals’ Statcast history and tied with Jacob deGrom as the fastest pitch in baseball that season. The pitch was a four-seam fastball that landed inside for a ball against the Reds’ Phillip Ervin, but keep reading to find out what Staumont’s next pitch to Ervin that day did.

Keith Law with his top 100 prospects (sub required):

Spoilers: the Royals check in at #17 (Daniel Lynch), #27 (Bobby Witt Jr.), and #30 (Asa Lacy).

While we’re doing rankings and listicles and look backs, MLB Stats “re-ranks” the 2011 prospects. That was the BFSITHOW with Moose and Hos checking in at #7 and #8, respectively (IIRC, BA had Hos 8, Moose 9, and Myers 10). However, none of them make the top 10 now as that class was /loaded/. The re-draft has Chris Sale at 7(!) and Bryce Harper at 8(!!).

It’s starting to look like Thursday is going to be Craig Brown’s “Splash Hits” day where he does some little tidbits from multiple stories over at Into The Fountains. One of the items he talks about is Marcell Ozuna to the Royals

Therein lies the lack of a “fit” for the Royals. They already have a right-handed power-hitting DH type in Jorge Soler. Although Soler can exit as a free agent after the 2021 season. Maybe signing Ozuna to a four year deal like Bowden speculates does make a little sense, in that a Soler/Ozuna overlap would be for just a single season…and talk about a beefy lineup. If the Royals decide to commit to a free agent contract the likes of which they haven’t done since after the 2015 season.

At Royals Reporter, Kevin O’Brien asks “Could Ronald Bolanos be a sleeper for the Royals in 2021?”

A couple of things stand out about Bolanos’ adjustment in 2020. First off, he is averaging nearly 97 MPH on the fastball here, and it looks like he is throwing it with more ease in comparison to his Padres days. Unlike his windup, where a lot seems to be moving around, his pitching motion out of the stretch is a lot more refined, which should bode well for more long-term success if he continues to keep this approach. Furthermore, the switch also had an effect on his velocity overall, as his FF averaged 95.2 MPH in 2020, a 0.9 MPH increase from 2019.

Lastly, Sean Thornton at Bleeding Royal Blue talks about the Hall of Fame and his ballot.

The last couple months I have struggled with how I would approach discussing my IBWAA Hall of Fame ballot. For years I have cherished being able to vote for our Hall of Fame and it was a part of the game that brought me joy, even in unsure times. But that isn’t the case this year.

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Around MLB, there’s some news today.

Sara Goodrum was named minor league hitting coordinator in the Brewers system:

...a promotion believed to make her the first woman ever to hold that job for a big league organization. She will oversee the Brewers’ hitting program throughout the organization, manage the hitting coaches at the team’s affiliates and, when the coronavirus pandemic fades, travel around the system to assist in player instruction.

Seven years ago, Masahiro Tanaka left the Rakuten Eagles in Japan to join the Yankees. Now, $155M richer, he’s returning to the Eagles.

Before Marcus Simien left town, Oakland’s offer to him was only 1/$12.5M but $10M of that to be paid $1M a year for 10 years. Sadly, we will not be celebrating Marcus Simien day (ala Bobby Bonilla Day) as he went to the Jays a couple of days ago for a 1/$18M contract.

Tampa’s mayor and the owner of the Rays are sparring in public about building a new stadium to replace Tropicana Field. In the article, they act like the “half season in Tampa, half season in Montreal” is still a thing. I thought that was clearly a stupid bluff.

“Right now, they’re entitled to 50 percent of the proceeds and that’s with a full-time team in the city,” Kriseman said. “And they’re proposing to take 100 percent of the proceeds for a large part of that land, and 50 percent for the rest of it. And that’s for a part-time team.

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Speaking of stupid and bluffs and stupid bluffs, I just can’t get past this whole Gamestop (GME) thing so that’s going to tie into our video game and song of the day.

CBS Sports talked about the baseball angle here with a Dayn Perry article entitled “How the New York Mets became tied to the GameStop-Wall Street saga”. Actually, the article is a pretty good primer of the whole story, including how new Mets owner Steve Cohen put $750M of his own hedge fund in the hedge fund that redditors are trying to bankrupt, Melvin Capital. Wait? Didn’t the last Mets owner get done in by a Ponzi scheme?

Ok, let’s hit some smaller points since I’m not Shaun and I’m just learning about a lot of this stuff in real-time. Obviously, I’m not a financial professional. I have no inside information on the market - I’m just reading the internet like everyone else. Please don’t use any of this to make any market decisions or whatever disclaimer I need to make here. I’m just looking at this from afar and trying to digest it as a curious reader and nothing more. Plus, I’m sure some of this information will probably be old news by the time it’s posted tomorrow morning at 7 a.m. So, buckle up: we’re going to jump around a bit.

I know some folks here have talked about The Big Short this week. I think the “better” book about 2008 is from Matt Taibbi: Griftopia. If you don’t remember the name, perhaps you remember him from his colorful description of Goldman Sachs as “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money”. He seems like an arse of the highest order but also somehow became one of the best financial reporters of the Great Recession (of course, one could argue that’s because the financial “media” was using jangly keys to distract everyone from the real causes for their own self interest so you instead had to rely on Rolling Stone or Jon Stewart eviscerating financial analysts on a comedy show* just to get any actual answers). Whereas the story from Michael Lewis seems to have been “we all made some mistakes and there was a perfect storm and everyone learned a valuable lesson, sort of”, Taibbi names names and tells you exactly how your 401(k) got emptied by a rogue’s gallery of crooks who made billions doing it. It’s also a really depressing book as there are a lot of bad guys, few answers, and even fewer good guys to put them in place.

As an aside: I’ve done a lot of thinking this week about the Jon Stewart-Jim Cramer interview. For those who don’t remember, this was back in 2009 when there was real populist anger at hardships being endured during the height of the Great Recession. Jon Stewart took some shots at CNBC for bad financial reporting and they retaliate, mistakenly thinking they can wage a war of words with a professional comedian who has a popular nightly show. After about a week, Jim Cramer makes an ill advised decision to come on the show, probably thinking he’ll be able to jargon his way around the interview. Stewart talks about Cramer’s hedge fund past and shows an old clip where Cramer talks about market manipulation. But Cramer then lies to Stewart’s face about a “hyperbolic” (I think he meant to say “hypothetical” situation) where he talks about how to manipulate the market to cover shorts. He claims he was “inarticulate”, looks like he was about to lie “he didn’t trade in futures” but mentally amended it in time to say “barely traded in futures” and how he’s fighting against shorts. But then Jon delivers a line that Cramer probably hears in his sleep to this day: “roll 210”. In an old grainy clip from 2006, Cramer talks about how he has done it and encourages people to do just what he was saying and “no one else would ever admit that on camera”. And Cramer looks like a 5 year old with his hand caught in the cookie jar. Cramer then tries to play the good guy for about 5 minutes before Jon pantses him again with two more clips, catching him in more lies. Then he delivers these lines like a parent scolding a child:

I understand you want to make finance entertaining, but it’s not a f——— game. And when I watch that, I get, I can’t tell you how angry that makes me. Because what it says to me is: you all know. You all know what’s going on. You know, you can draw a straight line from those shenanigans to the stuff that was being pulled at Bear, and AIG, and all this derivative market stuff that is this weird Wall Street side bet... listen you knew what the banks were doing. And yet we’re touting it for months and months. The entire network was. And so now to pretend that this was some sort of crazy, once in a lifetime tsunami that nobody could have seen coming is disingenuous at best and criminal at worst.

Of course, Cramer suffered no repercussions and is still on CNBC to this day.

I’ve been thinking a lot about that clip because I’ve been reading way too much r/wallstreetbets this week. For those unfamiliar with Reddit, there’s a front page where popular stories end up and r/wsb would be there from time to time so I’d poke my head in and look. Until about a year ago, it was a very different place.

If you’ve ever been around gamblers (or stock market junkies), you know what they sound like: they love to talk about how they won big last week and have a great system that can’t fail so they’re on their way to being rich. But then you won’t hear for three weeks about it and they’re still at work next to you, instead of retired to some tropical island, so you just know they’re taking a bath on bad bets and too proud to admit it. Well, r/wsb used to be the fractured mirror these gamblers: the most popular posts would be screenshots from users bragging about the huge fortunes they /lost/ on stocks. But this is something new and probably(?) a once-in-a-lifetime event that we’re getting to watch unfold in real-time. Boy, I wish we’d stop doing that.

Like any subculture, the subreddit has its own lingo, some of which I wouldn’t repeat here. But one of the stories I kept seeing over and over was this same populist rage of “me and/or my family suffered greatly through 2008 and none of these people went to jail or lost one red cent so I just want them to feel pain”. So it’s hard to say where this ends or what pain tolerance these investors have. And I’m sure we’re going to see story after story about how awful these people are for doing this trying to talk the market. They even had to go private for a while on Wednesday because of explosive growth, bots, and suspected bad actors trying to stop what they were doing.

And that brings us to yesterday. Most of these people signed up for buying stocks through online platform Robinhood, which basically was created to gamify investing and boasts “free trades”. Of course, there’s the old saying of “if the product is free, then you’re the product”. Remember when I brought up Matt Taibbi earlier? They were part of his “Pandemic Villains” series.

A cynical person might take all this in and hypothesize that engineers trained in building high-frequency trading software could reverse-engineer a retail stock-trading app that would serve two purposes. On the one hand, it would provide sophisticated traders with the most valuable kind of order flow in the form of inexperienced “dumb money” investors, while designing a compensation model best equipped to take advantage of how HFT traders operate.

Say what? Basically, Robinhood doesn’t have a seat to buy and sell stocks so it “sends all of its orders to market maker firms like Citadel” and “those firms in turn have what amounts to a free option on the Robinhood trader’s order”. So, if I’m reading this right, they get to either take the free money if someone on Robinhood buys higher than the market price or they get a cut from the market when they deliver the order to the exchange - it’s a win/win. Of course, both Robinhood and Citadel have gotten a slap on the wrist fine for doing some really shady stuff with these data feeds as recently as September 2020.

Wait, Citadel? Why does that name sound familiar? Oh, right, earlier this week they injected $2.75B into Melvin, the aforementioned hedge fund that r/wsb is at war with. So it looks really sketchy when Robinhood halted trading of these “meme” stocks (there are a handful of others like Kansas City’s own AMC, but GME is the most high profile) earlier on Thursday, stocks that could really do serious damage to Citadel by way of their investment in Melvin. This has led a lot of people to view this whole situation very skeptically, echoing the “disingenuous at best and criminal at worst” sentiment from 2009.

And now there’s just a bunch of bullet points here because I don’t know what to make of this story because I’m too financially illiterate and new to this to put all of this picture together:

• It wasn’t just robinhood that was in on the shenanigans yesterday. Many brokerage firms blocked the trading of “meme” stocks so people couldn’t buy anymore.
• But Robinhood took it a step further, selling off shares from users at the absolute bottom of the market yesterday “due to unreasonable risk in brokering your position”, which seems odd for a stock that traded between $120 and $460
• Some are speculating that robinhood did this to fill some of those short orders at a loss but a more manageable one than if it kept going up. And that they’re going to be the sacrificial lamb in all this. There was already a class action lawsuit filed yesterday.
• Ted Cruz and Alexandria Ocasio-Cortez agreed on something (@wsb tweet: “LOOK WE FIXED POLITICS”).
• There’s this guy: u/dfv (no, I can’t post his screen name here without violating our rules). He bought something like $100K of stock a couple of years ago and was part of that “I post screenshots of how much I lost” culture when he took a bath on his stock. He’s been posting quarterly up until a couple months ago when he posted weekly and now daily. He was worth almost $50 million at close on Wednesday! He “held the line” and lost $14 million Thursday but who knows what the future will bring. This is the type of crazy devotion these Wall Street folks are up against and why they’re scared.
• The thing is, this probably isn’t over yet..? The stock is still seriously over-shorted at 120% (look at the “Short Float” column). It was at 140% yesterday. So with all the market manipulation and everything that has made this a huge story, it only moved the needle 20%. There are still more short bets out there than actual shares of stock.
• Currently short-sellers are sitting on $70B in losses so far this year and it’s, checks notes, only January. There’s a lot of vitriol around shorts as they are used to run stock prices into the ground for corporate takeovers or just bankrupt a company. That’s part of what Cramer was talking about in the clip that Stewart took him to task over. Here’s another decent Twitter thread about what’s going on.
• FYI: If you were wondering if there were any other stocks out there like this, well, not exactly. There’s nothing like this where there are more shorts than shares - that’s what makes GME unique. However, here’s a list of the 10 most heavily shorted stocks and you can see that they are all up this year as investors are trying to get some juice out of this squeeze.
• Put those two together and there’s the thought that all we’ve seen so far is the “gamma squeeze” and not the actual “short squeeze” that could send this ridiculous price even higher. Again - I have no idea.
• Last July, the stock was under $4. December 31st, the stock closed the year at $19, where it muddled around until January 13th. Then it closed in the $40 range for about a week, ending last Friday. Monday $96, Tuesday $88, Wednesday $347. Yesterday, it hit $468, dipped to $126 and closed at $197, losing $153 on the day. But in after hours trading, it’s back over $300. And some option calls on shorts can come due on Fridays, especially the last Friday of a month. I think today’s going to be a wild ride and we’re going to see some more “unprecedented” actions like we saw yesterday.

Appropos of nothing, today’s song is from Rock Band 4. It’s Aerosmith with “Eat the Rich”: