If there is one bank that is more concerned than any other about global central bank unorthodoxy, it is Deutsche Bank which as we reported yesterday, saw its stock price drop to a record low yesterday. As such it is not surprising that in his overnight note, DB’s Jim Reid focuses on the “broken financial system” and highlights the one indicator that confirms just how broken the system is: the Bund Yield.
This is what he said: Continue reading »
As reported yesterday, adding insult to injury to a bank that just hours earlier admitted that in addition to rigging everything else it has also been caught engaging in “stock fraud” at the same time as a new mortgage probe was launched against it, Deutsche Bank’s senior debt rating was downgraded by Moody’s to Baa2, just two notches above junk. For the bank with the tens of trillions in derivatives, being seen as an increasingly more distressed counterparty was not good news and explains why the CEO took the unexpected step of having to defend his firm following the downgrade.
As Bloomberg reports, DB’s CEO John Cryan said he was not happy with the Moody’s decision, his bank has never had more capital and could easily repay its debt many times over.:
“We are very disappointed,” Cryan said in an interview on the sidelines of the Institute of International Finance’s conference in Madrid. “We have enough capital to repay all of our debt four-times over.”
It is unclear if under debt he also included the bank’s gross notional derivative liabilities which are several tens of trillions worth. Continue reading »
Call it some no holds barred German bank on German bank action.
After a tumultous start to a year that Germany’s largest, and judging by the tens of billions in legal settlements and charges also its most criminal bank, Deutsche Bank, would love to forget, things got worse over the weekend when a note issued by another German bank said that either Deutsche will have to massively dilute its shareholders as a result of “insurmountable” debt, or a fate far worse could await the Frankfurt-based lender. Continue reading »
One of the reasons why central banks around the globe have flooded the financial system with trillions in excess reserves is to make sure that banks no longer have to rely on potentially fleeting short term deposits (and is also why negative interest rates have become the norm in so many part of the world, that $10 trillion in bills and bonds now trade with a negative yield). As a result of years of such central bank policy, banks – mostly in Europe – no longer need to compete with each other for deposits: after all why offer tempting deposit rates in an age of NIRP when banks can get all the liquidity they need straight from the ECB and in some cases even get paid on it.
Furthermore, the whole point of NIRP is to slowly unleash negative, not positive, interest rates in order to discourage savings.
Which is why we were surprised to find that in a promotional offer by Europe’s biggest, and by many accounts most insolvent, bank, Germany’s Deutsche Bank is not only not rushing to penalize depositors, on the contrary it is offering its Belgian clients a 5% gross return for new €10,000 – €50,000 deposits if this money is locked up for the next three months. The offer is only valid for the next 40 days, until June 24. Continue reading »
Two former Deutsche Bank corporate brokers have been sentenced to one of the longest prison terms possible for the crime of insider trading in the UK. As US financial market participants walk free in the streets managing their own “home office” money, Martyn Dodgson and Andrew Hind will be rotting in a Wandsworth prison cell (among the worst reputed of England’s prisons) for up to four and half years for what the judge called “persistent, prolonged and deliberately dishonest behavior.”As Bloomberg reports, the group, including three other defendants, formed part of the FCA’s biggest insider-trading investigation dubbed Operation Tabernula. Continue reading »
Helicopter money may be on the horizon, but if Deutsche Bank has its way, there is at least one intermediate step.
According to DB’s Dominic Konstam, now that the benefits QE “have run their course”, it is time for the next, and far more drastic step: “the ECB and BoJ should move more strongly toward penalizing savings via negative retail deposit rates or perhaps wealth taxes. With this stick would also come a carrot – for example, negative mortgage rates.” Continue reading »
Well, that didn’t take long.
Earlier today when we reported the stunning news that DB has decided to “turn” against the precious metals manipulation cartel by first settling a long-running silver price fixing lawsuit which in addition to “valuable monetary consideration” said it would expose the other banks’ rigging having also “agreed to provide cooperation to plaintiffs, including the production of instant messages, and other electronic communications, as part of the settlement” we said “since this is just one of many lawsuits filed over the past two years in Manhattan federal court in which investors accused banks of conspiring to rig rates or prices in financial and commodities markets, we expect that now that DB has “turned” that much more curious information about precious metals rigging will emerge, and will confirm what the “bugs” had said all along: that the precious metals market has been rigged all along.” Continue reading »
Back in July of 2014, we reported that in an attempt to obtain if not compensation, then at least confirmation of bank manipulation in the precious metals industry, a group of silver bullion banks including Deutsche Bank, Bank of Nova Scotia and HSBC (later UBS was also added to the defendants) were accused of manipulating prices in the multi-billion dollar market. Continue reading »
From the article:
“And, in Germany, I have high level information that I can’t even release publicly (but I will tell TDV subscribers in our next issue coming out this week – subscribe here). The reason I can’t (or won’t) release this information publicly is that it could cause mass pandemonium in Germany, and throughout the EU, if this information were known. Yes, it’s that bad.”
In Germany the government is discussing right now to allow the military to be deployed within Germany’s borders (against terrorists, i.e. its citizens).
Deutsche Bank …
… is too big to save.
Bail-ins coming to a country near you.
Prepare for collapse.
The Credit Suisse Fear Barometer just hit an all-time high as reports circulated through the alternative media that Barack Obama discussed the imposition of martial law when he and Vice President Joe Biden met with Yellen on Monday in an “emergency meeting.”
The reports may be exaggerated but not the crisis-like feel of the meetings. This was reportedly a first: having the president and VP meeting directly with the Fed head. Does it have something to do with the “survival of the government” at a time when the US banking system may be facing a general default? According to some reports: “Members of the House and Senate are said to have been ‘up all night’ in discussions and meetings; with floods of phone calls back and forth. ”
Pick of Problems
What could be the problem? Take your pick of dozens, literally! Continue reading »
JPMorgan, Goldman Said to Discuss Buying Deutsche Bank Swaps
~Lender looking to complete sale of $1.1 trillion swaps book
~Deutsche Bank has sold about two-thirds of book since 2015
Deutsche Bank AG, the lender exiting some trading operations, is in talks with JPMorgan Chase & Co., Goldman Sachs Group Inc. and Citigroup Inc. to sell the last batches of about 1 trillion euros ($1.1 trillion) in complex financial instruments, people with knowledge of the matter said. Continue reading »
Two weeks ago, shortly before noting that Venezuela’s CDS is now at the same level where Greece was 3 months before its default, we wrote that as a result of a recently implemented gold swap with Deutsche Bank, Venezuela was preparing to liquidate its remaining gold holdings (ostensibly temporarily, if only on paper) in order to pay down its upcoming debt maturities.
As it turns out Venezuela has already started moving much of its gold reserve to Europe where it will be located closer to swap-provider and ultimate custodian, and liquidator, Deutsche Bank, by way of Switzerland. According to BullionStar, Switzerland has imported a net of 35.8 tonnes of gold from Venezuela in January 2016.
And so, the gold which deceased Venezuela leade Hugo Chavez so painstakingly tried to collect from Europe, is just a few short years later, about to make its way back to where it came from. Continue reading »
It’s definitely different this time…
The 2008 analog lines the current trajectory up with August 2008 right after Treasury Secretary Paulson told the world reassuringly that:
“Our economy has got very strong long-term fundamentals. And you know, your policy-makers and regulators here – we’re very vigilant.”
And we all know what happened next…
Could never happen again?
Rumors of ECB monetization (which would be highly problematic in the new “bail-in” world) and old news of the emergency debt-buyback plan have sparked an epic ramp in Deutsche Bank’s stock this morning (+11% – the most since Oct 2011). This extreme volatility is, however, eerily reminiscent of 2007/8 when headline hockey sparked pumps and dumps on a daily basis in Lehman stock… until it was all over.
“Deutsche Bank is fixed”?
Or is it?
Things are already fading…
We suspect every bounce will be met by opportunistic selling as an inverted CDS curve has seldom if ever reverted back to life.
So a rumor made Deutsche Bank rise as much as 15% in the early hours, closing at +10,20%.
While algos patiently await the only thing that matters for US stocks today which is Janet Yellen’s testimony before Congress. expected to be released at 8:30 am (and previewed here), the rest of the world this morning is a hot mess of schizophrenic highs and lows.
Following this morning’s proclamation by Deutsche Bank co-CEO John Cryan that Germany’s largest bank is “rock solid,” David Stockman exposed the ugly truth that everyone appears to have forgotten from just 7 years ago…
“in my experience is that when the crunch comes, bank CEOs lie”
Stockman details the Morgan Stanley, BofA, Lehman, and Bear Stearns bullshit that occurred before exclaiming…
“I don’t trust Deutsche Bank. I don’t trust what they’re saying. And there’s reason why the banks are being sold all across the world… because people are realizing once again that we don’t know what’s there [on bank balance sheets].”
With Deutsche Bank credit risk exploding and stock price collapsing to record lows, despite the CEO’s “rock solid” affirmations, there is only one way to know just how real a crisis this is… when government officials issue ‘denials’.
German Finance Minister Wolfgang Schaeuble says he isn’t worried about Deutsche Bank.
“No, I have no concerns about Deutsche Bank,” Schaeuble says Continue reading »
Moments ago, in response to DB’s open querry on Twitter whether the Dax is “overreacting”, we highlighted DB’s soaring CDS and asked if perhaps the market was not underreacting.
Minutes later the market opined, by sending DB stock to new all time lows.
“Worse than Lehman…”
One could make a case that everything is just a “liquidity problem”.
“So back to the original question WHAT NEEDS TO BE DONE. Simple? Recognize the problem. It is not oil, it is not in the banks..it is a run on central bank liquidity, especially dollar based and there needs to be much more ($) liquidity…. Cash shd be charged interest — put the micro chip in large denom notes/tax cash withdrawals.. encourage spending not saving.” Continue reading »
“Absolutely rock solid?” …
… like the molten granite found below the foundations of the Twin Towers?
Yesterday’s desperate scramble by Deutsche Bank to comfort markets about its liquidity position worked, for about three hours. And then, the bank which really should just keep its mouth shut, did the opposite and reminded an already panicked market just how “serious” things are, in the parlance of Jean-Claude Junkcer, when in an internal memo, the CEO assured his workers that:
- DEUTSCHE BANK CEO: CAP STRENGTH, RISK POSITIONS ’ROCK SOLID’
That was the good news. The bad news:
- DEUTSCHE BANK TO INFORM STAFF IN COMING WEEKS ABOUT COST CUTS
Here is the full note released from DB CEO Cryan: Continue reading »
Just when we said DB should probably keep its mouth shut, the bank that everyone is suddenly very focused on decided to take to Twitter with the following rhetorical question:
— Deutsche Bank (@DeutscheBank) February 9, 2016
Well, judging by this…
… the markets are probably underreacting.
Wait until this blows up …
The echoes of both Bear and Lehman are growing louder with every passing day.
Just hours after Deutsche Bank stock crashed by 10% to levels not seen since the financial crisis, the German behemoth with over $50 trillion in gross notional derivative found itself in the very deja vuish, not to mention unpleasant, situation of having to defend its liquidity and specifically assuring investors that it has enough cash (about €1 billion in 2016 payment capacity), to pay the €350 million in maturing Tier 1 coupons due in April, which among many other reasons have seen billions in value wiped out from both DB’s stock price and its contingent convertible bonds which are looking increasingly more like equity with every passing day.
DB did not stop there, but also laid out that for 2017 it was about €4.3BN in payment capacity, however before the impact of 2016 results, which if recent record loss history is any indication, will severely reduce the full cash capacity of the German bank.
Last Thursday when we recounted the story of how Venezuela is now literally flying in paper money (using three dozen cargo Boeing 747s), we wrote that “Venezuela’s hyperinflation, already tentatively estimated at 720%, will likely add on a few (hundred) zeroes by this time next year. It is also quite likely that Venezuela the country, as we know it now, will no longer exist because once any nation is swept up in hyperinflationary rapids two things occur like clockwork: social uprisings and political coups.
But before it gets there, Venezuela’s president Maduro will be busy liquidating the nation’s roughly $12 billion in gold reserves, which his late predecessor fought hard in 2011 to repatriate back to Caracas. Sadly that gold was never meant to stay in Venezuela after all.“
And sure enough, just a day later, Reuters writes that Venezuela’s central bank has begun negotiations with the suddenly troubled Deutsche Bank to carry out gold swaps “to improve the liquidity of its foreign reserves as it faces heavy debt payments this year”, payments which it won’t be able to fund unless it manages to “liquify” its gold. Continue reading »