Three words to describe today’s action. Volare for Italy (to fly), mierda in Spain (shit) and the US has it’s own plain crap, Bofa. Needles to say, the French banks also contributed to the melt down in European equities. With Italian banks struggling big time, Soc Gen joined the party (for real) today. With all major banks holding mega short gammas in their exotic books, look for further volatility and further panic, as the market offers absolutely no liquidity to hedge positions, unless you are going to buy VIX at these somewhat elevated levels….As The Trader has been arguing over the last four months, risk has been mispriced for very long time.
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