News over the weekend indicates the markets may be in for a wild ride today.
We reported over the weekend that two large US financial institutions reported sales of nearly $20 billion in Chinese Tech and US media companies on Friday:
Now this morning, two massive overseas banks announced their pending record losses:
While neither Credit Suisse nor Nomura named the fund, it’s been widely reported that Archegos Capital Management is the firm connected to the fire sale.
In a trading update before the market open, Credit Suisse said a number of other banks were also affected and had begun exiting their positions with the unnamed firm. The Zurich-based lender’s shares were down over 13% by lunchtime following the announcement.
The Japanese firm Nomura is facing a mess today:
Nomura also issued a trading update on Monday warning of a “significant loss” at one of its U.S. subsidiaries resulting from transactions with a client stateside. Japan’s largest investment bank said it was evaluating the potential extent of the loss, estimated at $2 billion. Its shares fell more than 16% on Monday.
“This estimate is subject to change depending on unwinding of the transactions and fluctuations in market prices,” the bank said.
Zero Hedge reports it this way:
Just around the time Nomura closed down 16.3%, its biggest drop on record after warning it faces around $2 billion in prime brokerage losses (see below) tied to a single US client – the now infamous Archegos tiger cub hedge fund – Swiss banking giant, Credit Suisse, was also swept up in the Archegos vortex after the Swiss bank said it faces a potentially “highly significant” loss from a U.S. hedge fund client defaulting on margin calls, sending the Swiss bank’s share plunging as much as 16%, the most since March last year and wiping out all 2021 gains.