Is the Derivatives Market About to Implode the Big Banks Again?

The 2008 Crash was caused by the unregulated derivatives markets. And if you think that problem has been fixed, you’re mistaken.

 

Consider Deutsche Bank (DB).

 

DB sits atop the largest derivatives book in the world.

 

This one bank has over  $75 trillion in derivatives on its balance sheet. This is over 20 times German GDP and roughly the same size as global GDP.

 

At this size, if even 0.01% of these derivatives are “at risk,” you’ve wiped ALL of the banks’ capital.

 

The bank’s CEO was “very disappointed” when Moody’s recently downgraded its credit rating.

 

Personally, we’d be a lot more disappointed by the share price.

 

DB shares have gone effectively NOWHERE for nearly 20 years. Moreover, this might be the single largest Head and Shoulders topping pattern ever. As we write this, we’re right on the neckline.

 

 

DB is perhaps the best example of the derivatives problem, but it is by no means the only one. US banks alone have over $200 trillion in derivatives sitting on their balance sheets.

 

And over 77% of these derivatives are based on interest rates.

 

This comes to roughly $156 trillion in interest rate-based derivatives… sitting on the TBTF balance sheets.

 

If even 0.1% of this money is “at risk” it would wipe out 10% of the big banks equity. If 1% were “at risk” it would wipe out ALL of the big banks’ equity.

 

Suffice to say, the Fed cannot afford a spike in interest rates without imploding the big banks: the very banks it has funneled TRILLIONS of dollars to in an effort to prop up.

 

At some point this whole mess will come crashing down just as it did in 2008. The derivatives market remains a $600 TRILLION Ticking Time Bomb.

 

On that note, we are already preparing our clients for this with a 21-page investment report titled Stock Market Crash Survival Guide.

 

In it, we outline precisely how the crash will unfold as well as which investments will perform best during a stock market crash.

 

We are giving away just 1,000 copies for FREE to the public.

 

To pick up yours, swing by:

https://www.phoenixcapitalmarketing.com/stockmarketcrash.html

 

Best Regards

 

Graham Summers

Chief Market Strategist

Phoenix Capital Research

 

 

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