Credit Suisse stock tanks as default swaps hit a record high

Yahoo Finance Live anchors discuss stock performance for Credit Suisse.

Video transcript

[AUDIO LOGO]

BRAD SMITH: Also here, let's track shares of Credit Suisse here, as we're giving you kind of a world view of some of the different movements that we're seeing today. Credit Suisse, that's trading higher today by about 3 and 1/2% this morning, after shares briefly sank to an all-time low on Monday.

While credit default swaps hit a record high, Credit Suisse executives have been calling clients and investors to reassure them that it is in sound shape. And said, it is moving to sell assets as part of its new business plan here. A new business plan that, of course, needs to just reassure many of its potential clients that it would have worked with that it is still in a good cash position, or a liquid position, or has enough in its own reserves, because of the fact that there is typically a hit on sentiment when you do hear of a bank making a move like this.

BRIAN SOZZI: Yeah, I like this new research out by JPMorgan's credit team this morning. They're saying that they would like to see Credit Suisse pull forward their earnings release. It's-- they're supposed to report on October 27, they would like to see-- and this is coming from their credit team that are really plugged in to probably what you're seeing in the credit default swaps markets.

But nonetheless, they want to see that pull forward and get a clear action plan on that investment banking division, what happens to it, how is it restructured, do they need to create-- and this a term, I'm sure, you remember too, Julie, from the financial crisis, do they create a bad bank--

JULIE HYMAN: Oh.

BRIAN SOZZI: --where they take all the bad assets--

JULIE HYMAN: They put all that stuff in there.

BRIAN SOZZI: --kind like what Citigroup did and hope-- and just siphon it off, and stick it out there in the Ether sphere somewhere. And then just focus on some of their strong assets. But again, that's the first time I've heard that brought up, really probably since the financial crisis, a bad bank.

JULIE HYMAN: Right. So you see that-- a little bit of a comeback in the shares today. But considering they closed at a record low yesterday, it's not that much of a comeback. So unclear whether it reflects real optimism that they'll come up with some kind of plan like that or just--

BRIAN SOZZI: Or like a zombie bank? I remember-- I think that's they were calling it back--

JULIE HYMAN: Oh, gosh, yes. You're giving me bad flashbacks--

BRIAN SOZZI: Yeah.

JULIE HYMAN: --to that point in time, Sozz. But yeah, so we'll continue to follow this Credit Suisse story and see if they make any sort of real progress towards a plan that helps the bank.