Big money captivated by banking drama as investors brace for more turmoil

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One hedge fund manager describes trades in the financial sector as being 'all over the map,' with nobody agreeing on anything.

eliminated one potential source of instability, but fundamental problems in the banking system remained, mainly tight monetary policy.One hedge fund manager described trades in the financial sector as being “all over the map,” with nobody agreeing on anything.

that initial news of the UBS offer for Credit Suisse would be “positive for financial system as it preserves the capital structure.”his shock that $17 billion of Credit Suisse bonds would be wiped out, asking, “What are the Swiss doing here…?!”There was also little agreement on how investors would be positioning themselves in smaller US banks, including First Republic.

“The situation is not resolving easily,” said one investor who allocates wealthy clients’ capital with hedge funds. by research firm S3 Partners, which said short sellers had made mark-to-market profits of $537 million on the trade this year and $62 million on Friday alone.for regional banks by tightening lending standards or forcing them to raise capital. With more regulatory pressure ahead, some said that buying stock in these banks after steep price declines might be a tougher call, because their lending activity could shrink.

 

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