In this clip from The Call @ Hedgeye, Financials analyst Josh Steiner and Hedgeye Risk-Manger-In-Chief Keith McCullough discuss globally systemic banks (G-SIBs) that recently received government assistance. While the aid may satisfy its intention to keep the doors open for institutions considered “too big to fail,” it does nothing to benefit the average investor.
“I don’t think this is the time to try to rush in and be a hero,” Steiner explains. “I think there’s a tremendous amount of risk in the system right now and I think we need to give it time to play out to see what the next steps are here.”
McCullough cautions not to interpret news of bailouts for First Republic and Credit Suisse as a sign that the sinking bank industry is saved.
“What ends #Quad4? That’s the only question that really matters,” McCullough explains. “Not, who’s going to tell us what about First Republic. It doesn’t matter. Whatever dress you were wearing on the Titanic didn’t matter. This is very straightforward. It’s a very risky play.”