Chief Investment Officer
Summary: The biggest long position in the market is long European Bank Stocks based on rising interest margin and the perception of improving conditions. Their sharp sell-off is a major LIQUIDITY RISK to this market
The biggest long position in the market is long European Bank Stocks based on rising interest margin and the perception of improving conditions. Their sharp sell-off is a major LIQUIDITY RISK to this market…..
I have commented extensively on this banking issue, and the lack of real solutions from Fed. To me the Silicon Valley Bank (SVB) meltdown and bankruptcy was the Bear Stearns of 2007 when they told market they had ample liquidity and then saw two funds blow up, followed by the end of the bank as it was sold for pennies on the dollar to JP Morgan Chase. Market rallied 4.8% back then (we did 2.5% yesterday) and think it feels like 15%.
The key development here is that interbank market sees liquidity drying up (much higher volatility) after the Credit Suisse story – long developing, but now accelerating as of this morning and discussed below.
The first rule of investing is that the return OF money is more important than the return ON money. Market figuring this out the hard way today.
Fundamentally the ignition of this morning sell-off was the Credit Suisse headline:
The CDS of Credit Suisse is now same level as when Deutsche Bank faced the same existential issues.
On the “too big to fail” concept – remember Credit Suisse is really two companies – CS AG, which is too big to fail, but 100% Swiss entity and CS International, which has no such guarantees.
Here are quick overview charts to show the market “pain” (note that Credit Suisse CDS prices are on the left axis).
A new fragmented world order can render some of today's infrastructure obselete, but it also calls for massive new investments across the globe, which requires a new set of strategic and tactical investment strategies.
Steen Jakobsen,
Chief Investment Officer
As globalisation turns to fragmentation, China seems set on playing a role in the global economy, while simultaneously working towards proofing its own economic situation from external shocks and crises.
Redmond Wong,
Market Strategist
The recent bank runs and ensuing challenges are reminicent of something we've seen before. Will it end like the S&L crises of 1986 and 1995?
Chris Dembik,
Head of Macroeconomic Research
Equity markets need to recalibrate to another - fragmented - global world. What's your view on equities in this market - are they going up or down?
Peter Garnry,
Head of Equity Strategy
With every development comes new opportunites, some of which could be in India. Have you considered the country as a part of your diversification strategy?
Charu Chanana,
Market Strategist
A collar is an option strategy that allows some protection while maintaining some upside potential. What investment would you like to use a collar strategy for?
Hans Oudshoorn,
Trainer Academy
There are arguments to be made for many commodities to have upside. Which are you paying the most attention to this quarter?
Ole S. Hansen,
Head of Commodity Strategy
In a very challenging macro environment, which currencies do you think will come out on top?
John J. Hardy,
Head of FX Strategy
