Will be diving deeper into this topic over the next week or so, but read this over the weekend and wanted to share. While equities of major Canadian Banks are trading approximately 50-80% higher then April 2009, spreads between Canadian financials and non financials are at their widest since April 2009. Hmmmm.... One of these things is not like the other......
It seems to me that general sentiment is still that Canadian banks are best prepared to weather any global slowdown and that they are far safer than any US or European bank.
Given that Canadian banks were able to make new all time highs after 08, I understand why people believe that, but in my opinion it is a mirage. With today's uber integrated financial system in which assets are pledged ten times over, I don't believe any large, global financial institution is immune to the reverberations of the inevitable European debt implosion.
I'm certainly no options professional, but the fact that I can buy RY July 40 puts for only 1.30 seems a bit insane to me.
I could be right, I could be wrong, but this is the kind of assymetric risk-return that gets me excited!
More on this later.
http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2012/01/04/bloomberg_articlesLX9YML6VDKHZ.DTL
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