Deutsche Bank

The Risk To The "Bull" Thesis

"Economic realities and wishful fantasies eventually reconnect and generally in the worst possible way...."

China's "Bubble Prophet" Sees Unprecedented Surge In Home Prices

"We’re living through a bubble. We’re kicking the can down the road by buying time not to keep things in check, but to blow the bubble into an even bigger one. What’s happened over the past two years has made any new reforms even more difficult to roll out."

BofA: "If Bonds Are Right, Stocks Will Drop Up To 20%"

"If the bond markets are right and growth slows, then we think earnings growth would likely return to the path seen in recent years. If we fade earnings growth back to zero in 2018/19 and keep markets on current 2018 multiples, we find 13% downside potential for equity markets."

Spanish Banking Crisis Spreads As Banco Popular Credit Curve Inverts

Having told its employees "don't panic" over the weekend (at the crashing stock and bond prices of Spain's 6th largest bank), it appears investors are ignoring that message as Banco Popular's credit curve has inverted for the first time since 2012 in the biggest red flag yet that Spain's banking crisis is systemic and about to test the EU's bail-in laws.

The Answer To El-Erian's Quandary: It's "A Perfect Storm" Melt Up

"There seems to be a perfect storm of so so growth and falling inflation, enough for the Fed to tighten modestly but being at risk of over doing it.... the easing in our financial conditions index is one of the most extremes on record, thanks to Fed tightening!" 

Frontrunning: June 5

  • Saudis, U.A.E., Bahrain and Egypt Cut Ties With Qatar (WSJ)
  • Saudi-Led Alliance Cuts Ties With Qatar (BBG)
  • Saudi, Egypt lead Arab states cutting Qatar ties, Iran blames Trump (Reuters); Qatar asks citizens to leave UAE within 14 days: embassy (Reuters)
  • London Fortifies Bridges to Protect Pedestrians From Attack (BBG)
  • Bank at Center of U.S. Inquiry Projects Russian ‘Soft Power’ (NYT)