1/ current risk-on trade may be reaching a point of exhaustion.

2/ trigger events can come from out of the blue, and at first may appear immaterial or insignificant to the bigger picture. One of these events is the escalating monetary/fiscal/geopolitical crisis in #Turkey

3/Turkish Lira $TRY is on verge of a significant devaluation, which in turn will be very negative for Turkish equities including banks.

4/ This is the point where MOST believe contagion is not possible. Yet, we know contagion is started by the smallest, unexpected event. The probability of TRY being this event is a higher than expected probability event.

5/ Spanish banks have exposure to Turkish banks and the Turkish economy. Spanish banks are zombie banks and are only alive due to ECB actions. BBVA has significant exposure to Turkey and even before a TRY crisis escalates, its stock price is already back to 1995 levels.

6/ If BBVA enters crisis, so too will other Spanish banks which will then likely spread to other $EUR banks whose stock prices are also testing record lows. Here's French bank BNP which is back to 1998 levels.

7/ and if EUR banks experience increased stress, it's highly likely it will spread to $EUR and developed equity markets, resulting in a sudden shift from risk-on to risk-off. And that is how an insignificant event can turn into a trigger point.