Sell European Banks (UBS, BCS, CS, DB, STD)

Earlier today, Bloomberg reported that Deutsche Bank DB is considering a 9 billion Euro equity offering, which has sent the entire stock market to its lowest levels of the session. The article says that the proceeds of the offering could be used to acquire all of Deutsche Postbank AG, which DB already owns a substantial part of, as well as raising capital levels at the firm. The market, however, appears to be reacting to the news as a potential red flag with regard to the health of the European banking sector. As we have witnessed over the last couple of years, when it comes to these banking institutions, a "where there is smoke there is fire" attitude has been prudent, and in the case of short-sellers, very profitable. Consider shorting European banks on the premise that things in Europe are about to unravel once again. This may not be the most likely scenario, but the risk/reward looks attractive. Today's news may be a warning sign about an approaching storm. If it does indeed signal an inflection point in the market, the profits could be tremendous. If, on the other hand, this story turns out to be without broader implications, you will be able to exit your position at a small loss. Banks to look at include Deutsche Bank (DB), Credit Suisse CS, Barclays BCS, UBS AG UBS, and Banco Santander STD. Do not discount the significance of this news, although it may very well turn out to be insignificant. No one can predict the future, but we can look for attractive risk/reward situations. A small bet that the Deutsche Bank news may be foretelling deeper problems could pay handsomely.