Credit default swaps surge
Things appear to be moving a little too quickly for comfort...actually that's possibly an understatement according to the social media switchboards.
Hopefully this does not prove to be the case, but the signs are not looking amazing for Credit Suisse with credit default swaps now approaching (and I quote) "Lehman-like" levels, and trading at their highest level since their rather worrying spike 14 years ago in 2008.
CS came out and made the obligatory statement that there is no problem with no liquidity, for now.
Naturally enough 'those people' on social media are pointing out that the Lehman Brothers CFO said the same thing only days before the group filed for bankruptcy.
And in fact social media has basically caught alight, following on from an initial inflammatory Tweet from a business reporter at ABC News right here in Australia.
A problem for major investment banks and financial institutions, of course, is that once it's being so openly discussed whether or not there are serious liquidity issues in play, there can become a genuine risk that this becomes something of a self-fulfilling prophecy.
We'll have wait and watch how this all unravels over the week ahead, as this speaks to how nervous market participants are right now, and there's never only one cockroach in the kitchen, as they old saying goes (and as any Queenslander resident will testify).
In fact, there are plenty of other potential issues afoot, including with other US$50 billion plus market players.
Today's financial system is highly leveraged and interconnected with hidden market risks from derivative exposures, and the failure of any major player would have serious consequences across the financial sector.
Since the release of The Big Short book and movie almost everyone online seems to fancy themselves as a markets insider, calming awaiting to profit handsomely from the fallout from the next banking crisis.
Markets don't always unfold the way people think they will, though...and in any case bailouts would be far more forthcoming this time around.
No pivot yet
I have a suspicion that many nervous investors are also looking at this through the lens of "well, central banks will surely have to pivot to a more dovish stance now, won't they?".
Me included, actually.
Time for central banks to take a bit of a breather before the financial system gets nuked again.
