Plenty of Pain for Credit Suisse and Holidays Ahead!

Plenty of Pain for Credit Suisse and Holidays Ahead!

European futures are trading higher as traders have returned from their long holiday weekend. This is the first time that investors will get a chance to react to a solid US jobs report, and we have already seen the flavour of this in the US markets. Having said that, some investors are likely to pay attention to the third coronavirus wave in Europe and rising covid cases in the biggest economy of the Eurozone, Germany. The country that had once strong control of the situation now faces several challenges with not enough vaccine shots as the cherry on top.

Credit Suisse’s Pain 

More pain ahead for Credit Suisse, and it seems like that the bank has many dark days in front of them. Several high-level staff departures are announced today, and on top of that, the bank also announced that it would be proposing a dividend cut. All of this is coming at a very bad time.

That is because now is when the banks should be attracting investors by hiking dividends as regulators have eased off some of the restrictions that they put in place since the financial crisis. But it is the Archegos fallout that has become a significant nightmare for Credit Suisse, and the bank has to take the right steps for its survival, as losses are just too big to digest. 

It will be difficult for investors to digest the departure news of two talented high-level staff members, such as the CEO Brian Chin and Chief Risk and Compliance Officer Lara Warner. But someone had to be held accountable, and the hammer has fallen on these two individuals. Investors certainly do not like to see talent depart, but blunders have been made under the current circumstances, and people need to be held accountable. 

Tech Rally 

As for the stock market, it is very clear that tech investors are back with a vengeance, and it seems that the Nasdaq index is set for a rally that we have not seen before. Tech stocks are cheap, and investors have raised plenty of cash by selling them earlier. In other words, not only do they have their initial capital back, but they have their profit which they made. So, it is likely that we may continue to see the Nasdaq index outperforming the other two indices just because tech stocks are too cheap an opportunity to be missed. 

Airline and Their Bubble Travel 

Another sector that is likely to see some serious tailwind supporting it is going to be the airline sector during this month. That is because there is decent progress being made on the vaccine front, and countries are very much going to take the example of the travel bubble between New Zealand and Australia. We saw their airline stocks soaring overnight, and soon we will see international travel resuming both in the US and in the UK as well, as both countries are progressing very well in terms of their vaccine. 

Boris Johnson, the British Prime Minister, said yesterday he is hoping to see international travel getting back on track from May. This has opened that door for the summer holidays. In addition to this, many cruise operators are also preparing to begin their sailing schedule again as well, and the cruise line industry hasn’t seen a serious recovery yet. The risk to reward ratio makes much more sense here.