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Credit Suisse Spirals As Bank Crisis Threatens To Claim A SIFI
I'm the last person to yell "Fire!" in a crowded theater.
I'm also instinctually averse to hyperbole for the sake of it. Longtime readers might fairly note that I regularly trafficked in various sorts of bombast during my earliest days writing for public consumption, but anyone who took the time to actually read the articles quickly discovered that most of my embellishment was tongue-in-cheek.
With those caveats, let me say unequivocally that if Credit Suisse were to run into any real trouble,
Looks like the Swiss are going to have to take measures…
Oh waiting for the talking heads to admit they were a little bit aggressive about their Fed forecasts and just a wee bit arrogant and full of themselves…. thinking about 2 Bloomberg contributors in particular.
They can’t let it go under ans everybody knows the GreatFinancialCrisis playbook (heck the Fed made up some new rules “only for a year”).
Investment wise, game theory says right now to be in cash and very soon decide which pieces you want to pick up (Warren Buffet’s $100B+ war chest might finally see some action in the next month ir two).
Sadly I fear that enough fear will make the long planned recession finally show up (companies slowing hiring, consumers slowing spending) to the party and hit Main Street the hardest.
CS has shrunk a lot in recent years. Deposits are $252BN (down -42% in a year!) which is only half again as much as SIVB’s deposits were at the start of 2023. Assets are $574BN, of which $74 cash, $137 securities (likely carried at fair value), and $286BN loans. I’m not clear why depositors would be at major risk. Shareholders are scarcely relevant at market cap <$10BN. Bondholders are owed $140BN, but high yield investors know the score. Counterparties, though, are probably a different story and maybe The Story. Off to pore over CS’s disclosures.
Since the SNB has backstopped CS’ liquidity, and CS’ balance sheet looks fine (maybe I’m naive, but it does), where’s the beef?
The shorts will now go elsewhere. The herd has easier pickings than a Swiss sifi.
I don’t remember anything that you wrote that I would have classified as “bombastic”- have you honestly ever written without meaning? I admit that I am unsure of when and where your earliest days of writing for public consumption actually occurred. I started tagging along during your SA days 🙂
Well, if we have learned this week that governments will absolutely backstop banks, why not Microsoft, Google, Apple, etc.? I do love Japan and most things Japanese!