Reddit traders are taking on Wall Street pros at their own game with this basic mantra: Stocks will always go up.

• A stunning stat sums up Monday’s trading session: There were 32 million call options, or bets that particular stocks would rise, in one day — the second highest ever.

Why it matters: Their trades — egged on in Reddit threads — have played a role in historic market activity in recent days.

• Their influence has caused sharp swings that have so far been contained to a handful of stocks that had largely been left for dead.

How it happened: The rise of Robinhood and other fee-free trading apps was paired with a pandemic that left millions stuck at home with spare time, a risk appetite, and extra cash.

• A sign of the mania: GameStop, which has emerged as the poster child for the Reddit options trading frenzy. Its stock was halted nine separate times by the New York Stock Exchange because of outsized volatility.

How it works: When a heavily shorted stock, or bets that a stock price will fall, keeps going up, the short sellers have to buy back more stock to cover their trade — pushing the price up even higher.

• Hedge fund Melvin Capital Management got slammed for being on the short-selling side of the bet for stocks like GameStop.
• It received a much-needed cash infusion from fellow hedge funds Point72 and Citadel, the Wall Street Journal reported.

Sell-side analysts are pushing back: Telsey Advisory Group slashed its rating on GameStop, while another defended the decision to cease covering the company altogether.

The overwhelming consensus: Retail traders are beating out the old guard for now (see: GameStop short sellers have mark-to-market losses of a whopping $6 billion so far this year), but it ends badly for the the Redditors.

• GameStop “represents nothing more than the gamification of Wall St by tech firms that make 'trading' so available., its shameful....but they all need to get burnt so that they learn what they don't know,” long-time equity broker Kenny Polcari tweeted.

What they’re saying: “We see the increased interest by retail investors (particularly younger investors) as encouraging, as surveys show that this group has been reluctant to invest,” Mark Hackett, Nationwide’s chief of investment research, tells Axios.

• “But the risk-seeking behavior seen in certain pockets recently is not healthy.”

The bottom line: The pandemic era’s Reddit traders are squeezing Wall Street’s most sophisticated investors.

Some of the best-performing stocks of 2021 are brands familiar to anyone who used to hang out in malls as a kid in the mid-2000s, Axios' Felix Salmon writes.

Why it matters: The iPhone killed Blackberry and the pandemic hit suburban retail chains. But memories linger, and this is a market where day traders love nothing more than to pile into beaten-down stocks with a lot of short interest — especially if they carry instantly recognizable brand names.

Janet Yellen will be the first female Treasury secretary in the department's 232-year history. The Senate voted 84-15 to confirm her to the post. (Axios)

Fourth-quarter profit at UBS rose 137% from the prior year, fueled by its wealth management and asset management divisions. (CNBC)

10% of unemployment claims paid out in California were fraudulent — while another 17% could have been doled out to fraudsters, the state's labor secretary said. (The Mercury News)

Findings from law firm Dechert’s independent investigation into private equity titan Leon Black’s relationship with Jeffrey Epstein were released yesterday.

What’s new: Black paid Epstein $148 mil­lion in fees for estate and trust planning advice — plus an additional $10 mil­lion do­na­tion to Epstein’s charities, the report said.

• The payments were legitimate, per the probe — though it’s much higher than reports that indicated payments were closer to $50 million.

• It found no evidence that Black was ever involved in any criminal activity. Or that Apollo Global, Black’s firm, ever retained Epstein for services.
• The probe said Epstein’s companies bought more than 200,000 shares in Apollo’s IPO and held that stake until at least September 2019, as the New York Times points out.

The bottom line: Come July, Black will no longer be CEO of the private equity giant he co-founded 30 years ago — though he’ll stay on as chairman.

Read Black’s statement.

ServiceNow will create a $100 million racial equity fund that aims to promote more lending within Black communities.

Why it matters: It’s the latest move by corporate America to dedicate resources to fighting systemic racism and inequality.

How it works: The fund will buy loans (home, small business and other types made in some Black communities) off banks’ balance sheets — freeing up them up to lend more within the community.

• ServiceNow is partnering with RBC‘s asset management arm, which will manage the fund.
• RBC will identify home, small business and community project loans made in Black communities across 10 regions, including Chicago and Washington, D.C.
• If the loans meet the criteria, they will be purchased as securities for ServiceNow’s portfolio.

The fund will be available for investment next month, and fully invested this year, the company says.

• Any returns generated by the fund will be reinvested.

Between the lines: The company says it wants to help fight inequitable access to capital that systemic racism breeds — a goal not possible with a one-time donation to an organization or nonprofit, ServiceNow CFO Gina Mastantuono says in an emailed statement to Axios.

The big picture: Last year’s uprising over racism in America — sparked by the police killings of George Floyd, Breonna Taylor and others — pushed corporate America to come to terms with its role in perpetuating systemic racism and how their cash loads could help fight it.

• The country's biggest companies have pledged billions of dollars to racism and inequality efforts.

Bankruptcy filings hit a decade-high last year — though, by one measure, they eclipsed the financial crisis high.

• 7% of companies that filed for bankruptcy had over $1 billion in liabilities, the highest share in at least 10 years, according to S&P Global Market Intelligence.

What they’re saying: The energy and consumer sectors saw the bulk of filings, with the pandemic slamming “companies that relied on consumer spending and those in the energy industry that suffered a historic downturn in oil prices,” researchers wrote.