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European investment banks at the mercy of wannabe Big Shorters?!

Augustin Eden, 8 Feb

European investment banks at the mercy of wannabe Big Shorters

European investment banks are the talk of the town on Monday following a week in which some major names (Credit Suisse, Deutsche Bank to name 2) came out with some minor numbers. Monetary policy that’s easy for the consumer has been tough for banks – some might say quite rightly – but what’s interesting is that the Credit Default Swap (CDS) is once again gracing the newswires. Of course last time CDS were this prevalent, what followed is well documented in the film The Big Short, where a few baffled players made their fortunes in the ensuing crash. The downturn being currently experienced by the European investment banks was arguably set in play last autumn, so why have their CDS rocketed upwards only now?

It looks like a case of the old ‘I’ll believe it when I see it’ attitude, with the now heightened possibility that hitherto invincible investment banks are to be allowed to fail. But one can’t help entertaining the thought that many may have taken the film, whose release on 22 Jan coincides conveniently with many financials’ CDS taking off, as unofficial investment advice!

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