The banking industry faces some major challenges this week, with Credit Suisse’s stock price plummeting and government intervention looking likely. UBS has offered to buy Credit Suisse for one fifth of its stock price amid falling credit default swaps, but the Swiss government plans to bypass laws requiring a shareholder vote on the deal. There are also reports that the government is considering full or partial nationalisation of Credit Suisse. In addition, two major European banks are preparing for potential contagion and are seeking support from the European Central Bank and the Federal Reserve. Meanwhile, US medium-sized banks are calling for deposit insurance for the next two years.
This is Going to be an Insane Week
The market is not prepared for what’s to come in the following days. In this video, we’ll discuss some of the biggest events happening this week and how they might affect the market. Make sure to hit the subscribe button and turn on the bell notification to never miss a video.
Be Careful Out There
Before diving into the events, the video creator warns viewers about a concerning trend where YouTubers are being impersonated on calls. It’s important to be careful and not fall for these scams that demand money or investment.
The Market’s Looking Good
Bitcoin is on an upward trend, reaching around $26,000-$27,600. Despite repeated rejections, the momentum in the market suggests that it might ascend above the $27,750 threshold.
Credit Suisse and UBS Debacle
Initially planning on borrowing $54 billion from the Swiss National Bank, Credit Suisse is now being offered to be purchased by UBS for $1 billion. This proposal was to bypass shareholders’ votes in a rush to restore trust in the banking system. However, the government stepping in and considering a full or partial nationalization suggests that Credit Suisse has been mismanaged poorly.
Rising Scenarios of Contagion
Two major European Banks are looking to the ECB and the FED for statements of support as they examine scenarios of contagion. They want to ensure that their capital and liquidity positions are highlighted so that people will stop withdrawing and panicking. This suggests that they are not in a strong position and that there might be more blood in the banking market.
Medium-sized Banks Want Deposits Insured
Medium-sized banks are calling for all deposits to be insured for the next two years amid concerns that depositors are transferring assets to larger banks. They’re hoping that the government will step in and allow them to be a little bit riskier with their bonds. This might lead to more red in the banking sector as people are worried about their deposits.
To summarize, there are many events happening this week that could affect the market drastically. From the Credit Suisse and UBS debacle to the rising scenarios of contagion, it’s important to keep a close eye on the market and be cautious.