Deutsche Bank

Futures Levitate Following Worst Chinese Mfg PMI In One Year, Brent At 2015 Highs; Bund Slide Continues

The best news for stocks is twofold: volumes continue to be lethargic with both the UK (May Day bank holiday) and Japan closed until Thursday (Golden Week), while the bulk of the S&P500 has now exited the stock buyback quiet period. As such, ignore record equity outflows - all the matters is that corporate CFOs, flush with brand news bond issuance cash, will tell their favorite Wall Street trading desk to buy stocks at just the right inflection point sending the market surging just as shorts once again test the downtrend and the 50 DMA.

CFTC Helps Deutsche Bank Avoid "Bad Actor" Tag

Deutsche Bank's LIBOR settlement likely should have landed the bank on the SEC's "bad actor" list, but thankfully, the CFTC was willing to write language into its settlement with the bank which effectively allows the German lender to skirt Dodd-Frank, proving yet again that it's good to be TBTF.

Greek Deposits Now Lowest Since 2005; One Third Of Bank Assets Now ECB-Funded

Greek deposits fall €2.5 billion in March to the lowest level since 2005 as the cash crunch intensifies ahead of looming payments to government employees and the IMF. Meanwhile, Deutsche Bank sees a referendum on a "reluctant" reform agreement as the most likely "solution" (although most Greeks reportedly oppose such a step) but says the chances of a less favorable outcome are still at least 30%.

Futures Flat On FOMC, GDP Day; Bunds Battered After Euro Loans Post First Increase In Three Years

Today we get a two-for-one algo kneejerk special, first with the Q1 GDP release due out at 8:30 am which will confirm that for the second year in a row the US economy barely grew (or maybe contracted depending on the Obamacare contribution) in the first quarter, followed by the last pre-June FOMC statement, in which we will find out whether Janet Yellen and her entourage of central planning academics will blame the recent weakness on the weather and West Coast port strikes and proceed with their plan of hiking rates in June (or September, though unclear which year), just so they can push the economy into a full blown recession and launch QE4.

How To Play The "Common Knowledge Game" Effectively

In the Common Knowledge Game, fundamentals – whether they are of the stock-picking sort or the macroeconomic sort – don’t matter a whit, and your personal view of those fundamentals matters even less. The only thing that matters is whether or not the QE-works lesson has been absorbed by the learning process of investment professionals, and that’s driven by the lesson’s transformation into common knowledge by Missionaries (like Deutsche Bank's Torsten Slok).

Debt Pile-Up To Fuel Further Oil Price Pressure

"An 'oil-debt nexus' could create a vicious circle whereby overindebted companies pump more oil to ensure they can pay interest on their loans, adding to the current global oil glut, and further depressing energy prices," WSJ notes, citing a BIS report. The interplay between the industry's growing debt pile and falling prices is a microcosm of the deflationary dynamic that’s taking hold in the macroeconomy and that serves, in Citi's words, to destroy creative destruction, creating "zombies" along the way.

Failed Chinese Local Bond Offering Leads To PBOC Easing Confusion

An inauspicious start to China's local government debt swap initiative has the PBoC scrambling to determine the best way to facilitate the successful issuance of new municipal securities as several provinces have reportedly canceled or delayed offerings. Now, the question is whether Chinese LTROs will be enough, or whether outright QE will ultimately be the only option.

Frontrunning: April 27

  • Nepal earthquake toll crosses 3700 (Reuters)
  • Greeks Add Pressure on Tsipras to Compromise as Talks Resume (BBG)
  • With No Deal on Greek Bailout Aid in Sight, Some in Europe Suggest ‘Plan B’ (WSJ)
  • BOJ Shouldn’t Ease Further; Yen Fell Enough: Business Lobby Head (BBG)
  • Clinton Foundation admits making mistakes on taxes (Reuters)
  • Here’s the Old Nemesis Starting to Spook Bond Traders Again (BBG)
  • Deutsche Bank to Trim Investment Banking (WSJ)
  • China’s Stocks Rise to Seven-Year High on SOE Merger Speculation (BBG)

Equity Futures At Session Highs Following Chinese QE Hints; Europe Lags On Greek Jitters

It has been a story of two markets so far, with China's Shanghai Composite up another 3% in today's continuation of the most ridiculous, banana-stand driven move of the New Normal (and there have been many ridiculous moves in the past 6 years) on the previously reported hints that the PBOC is gearing up to start its own QE, while Europe and the Eurostoxx are lagging, if only for the time being until Citadel and Virtu engage in today's preapproved risk-on momentum ignition, on Greek jitters, the same jitters that last week were "fixed"and sent Greek stocks and bonds soaring. Needless to say, neither Greek bonds nor stocks aren't soaring following what has been the worst week for Greece in months.

For Nazi Industrialists And Hitler's Banker "All Was Forgiven"

Germany had lost the war, the Nazi industrialists agreed, but the struggle would continue along new lines. The Fourth Reich would be a financial, rather than a military imperium. The industrialists were to plan for a “postwar commercial campaign.” They should make “contacts and alliances” with foreign firms but ensure this was done without “attracting any suspicion.”... The State Department’s efforts on Schacht’s behalf worked. He was initially found guilty but was then acquitted, to the fury of the Soviet judge.

"Let's Take Them On!": Libor E-mails Of Christian Bittar Revealed

Regular readers will be familiar with Christian Bittar, the former Deutsche Bank rates trader whose various exploits and adventures we began to chronicle more than two years ago. Now, thanks to the bank's settlement with the Justice Department, we know exactly what Bittar said on his way to manipulating the world's benchmark rates.

Frontrunning: April 24

  • Obama’s Drone-Strike Rules to Be Reviewed (WSJ)
  • Hostage locations difficult to track - and may be getting harder (Reuters)
  • Varoufakis Said to Take Hammering From Riled EU Ministers (BBG)
  • EU Frustration Mounts as Greeks Try to Bypass Aid Process (BBG)
  • Kleiner Perkins seeks almost $1 million in costs in Pao case (Reuters)
  • Google Misses, Caps Costs as Growth Slows (WSJ)... stock surges 
  • Oil prices trade near 2015 highs on Yemen worries (Reuters)
  • Pentagon Announces New Strategy for Cyberwarfare (NYT)
  • Bloomberg Oil at $65 Seen Freeing 500,000 Barrels From Shale Fracklog (BBG)
  • ‘Flash Crash’ Trader Navinder Sarao: It Was Wits, Not Bits (WSJ)

Why Sarao Is The Flash Crash Patsy: He Threatened To Expose The "Mass Manipulation Of High Frequency Nerds"

The CME contacted Sarao about his trades after concluding he appeared to be significantly swaying opening prices.  Sarao explained some of his conduct to the CME in a March 2010 e-mail as “just showing a friend of mine what occurs on the bid side of the market almost 24 hours a day, by the high-frequency geeks.” And the reason why nobody touched Sarao until just days before the 5 years statute of limitations following the Flash Crash had run out, is the following: "He then questioned whether CME’s actions regarding his activity meant the mass manipulation of high frequency nerds is going to end."

The answer was no.