Deutsche Bank

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Frontrunning: December 17





  • New Calls for Gun Limits (WSJ)
  • Funerals begin for Newtown victims as schools confront tragedy (Reuters)
  • Introducing The Stock Trader of the Future (WSJ)
  • Feds knocking on 72 Cummings Ave door any minute now? SAC E-Mails Show Steve Cohen Consulted on Key Dell Trade (BBG)
  • China Signals Tolerance of Slower Growth After Meeting (BBG)
  • Huge mandate for Japan's LDP may be less than meets the eye (Reuters)
  • UBS Said to Face $1.6 Billion Libor Penalty This Week (BBG) - shareholders pay, and nobody goest to jail
  • Treasury Plan Would Cut Rates on Some Mortgages in Bonds (BBG)
  • Egypt opposition calls for protests against basic law (Reuters)
  • Euro Crisis Will Linger, Merkel Tells Summit (WSJ)
  • Economic slowdown throughout euro zone a worry for ECB: Liikanen (Reuters)
 
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European Risk Catalysts For The Next Six Months





The following is a list of key events to watch over the next several weeks and months – events that could have bearing on how the euro sovereign debt crisis evolves.

 
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Frontrunning: December 14





  • Obama, Boehner hold "frank" meeting amid "fiscal cliff" frustration (Reuters)
  • Rice Ends Bid Amid Criticism (WSJ)
  • EU summit delays crucial decisions (FT)
  • EU moves to cap bank bonuses at 2 times annual salary (CBC)
  • Europe Wins a Battle, but Not Yet the War (WSJ)
  • Banks Spurn Europe Bond Rush Amid Central Bank Loan Largesse (BBG)
  • German-French Sparring Over Euro Caps 2012 Crisis Fight (BBG)
  • Fed begins stress tests on bank liquidity (FT)
  • Draghi’s rallying cry for new EU powers (FT)
  • EU Seeks Plan to Handle Failing Banks Amid Cost Concerns (BBG)
  • Berlusconi says Monti has strong EU backing (FT)
  • Abe Set for Japan Victory Faces 7-Month Window to Keep Hold (BBG)
  • Japan's Abe would try to keep China ties calm-lawmakers (Reuters)
 
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Frontrunning: December 13





  • Bernanke Wields New Tools to Reduce Unemployment Rate (BBG)
  • Home Seizures Rise as Banks Adjust to Foreclosure Flow (BBG)
  • EU Backs Release Of Greek Aid (WSJ)
  • Democrats Confident They Have 'Cliff' Leverage (WSJ)
  • Americans Back Obama Tax-Rate Increase Tied to Entitlement Cuts (BBG)
  • Goldman flexes tentacles: Treasury open to Carney radicalism (FT)
  • Launch Fuels Asia Security Concerns (WSJ)
  • BOJ’s Unlimited Loan Program Seen Open to Use by Hedge Funds (BBG) - there are Japanese hedge funds?
  • Abe Set to Face Manufacturing Gloom as Japan Contracts (BBG)
  • US and UN condemn N Korea rocket launch (Guardian)
  • Eurozone agrees common bank supervisor (FT)
  • Berlusconi Adds to Italy Turmoil by Signaling He’d Step Aside (BBG)
 
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Frontrunning: December 12





  • Here come the low margin products: Apple Tests Designs for TV (WSJ)
  • Obama and Republicans Trade Offers to Avert Fiscal Crisis (BBG)
  • Carney broaches dumping inflation target (FT)
  • Bernanke Critics Can’t Fight Bonds Showing No Inflation (BBG)
  • Corporate Taxes on Table in Cliff Talks (WSJ)
  • US business chiefs back tax rise (FT)
  • Greece Confident Bond Buyback Needed for Aid Succeeded (BBG)
  • New Faith in Europe's Banks (WSJ)
  • European Bank Sees Little Room for Rate Cuts (WSJ)
  • North Korea Claims Success in Rocket Launch (WSJ)
 
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Frontrunning: December 11





  • Fed Seen Pumping Up Assets to $4 Trillion in New Buying (BBG)
  • China New Loans Trail Forecasts in Sign of Slower Growth (BBG)
  • U.S. "fiscal cliff" talks picking up pace (Reuters)
  • Insider-Trading Probe Widens (WSJ)
  • U.K.'s Top Banker Sees Currency Risk (Hilsenrath)
  • Three Arrested in Libor Probe (WSJ)
  • Nine hurt as gunmen fire at Cairo protesters (Reuters)
  • Egyptian President Gives Army Police Powers Ahead of Vote (BBG)
  • Pax Americana ‘winding down’, says US report (FT)
  • Japan Polls Show LDP, Ally Set for Big Majority (DJ)
  • HSBC to pay record $1.9 billion U.S. fine in money laundering case (Reuters)
 
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Are Equity Yields A Screaming Buy - Or Reversion To Reality?





In many countries around the world the main equity market has a dividend yield above its 10 year bond yield and in many cases its average IG credit yield. Although this isn't the first time that such an outcome has been seen through history, at a minimum it's reversing what has been a 50-year-plus trend where equity dividends were below bond yields. Currently, the US, UK, Germany, and France all have equity dividend yields above their 10 year govvie. However, before the world and their pet snake Sebastian decide this is the buying opportunity of a lifetime, a little more context shows that this was the normal from the start of the 20th century to around the end of World War II. In fact - if we replace government bond yields with corporate bond yields the picture appears to be a huge mean-reversion back to pre-World-War II relative valuations (where dividend yields were consistently higher than corporate bond yields). As Deutsche's Jim Reid notes though - it is more likely that it might be that fixed income and equities are both expensive as central banks have artificially elevated prices in everything in an attempt to keep the financial system solvent - and furthermore this is not the time for epic asset allocation switches.

 
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Central Bankers - Unorthodox Policy Options Left In The Armory





A week ago, Mark Carney was announced as the BoE’s next Governor amid much fanfare. This week, Japan’s election could herald a new more aggressive approach from the BoJ. 2013 will then see speculation mount about Bernanke’s successor and also likely see the operation of the ECB landmark OMT program. It will also mark the 100 years of the Fed and probably much reflection on their impact on the US/Global financial system. So, as Deutsche's Jim Reid notes, central banks will remain in the spotlight for 2013. However whilst their actions to date have certainly minimized the tail-risk post-GFC, they have yet to lift real GDP above their 2007/2008 peak in most countries and virtually every developed economy is operating well below what is perceived to be trend growth. QE would have been seen as highly unorthodox four years ago - and unique for most central banks stretching back through their history. However fast forward to today, that old unorthodoxy has become the new orthodoxy. But what have the world’s central banks got left to offer a world that at some point might be hungry for more?  as the world economy peers into the future and sees a growing threat of a recurring recessions and below target inflation, radical monetary policy may become increasingly appealing as elected politicians stuck in gridlock turn to (relatively) politically unconstrained central bankers to save them from their failings and get their economies racing again. For better or for worse.

 
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Crisis Year 7 - The Japanization Of Credit





Since the crisis first began in 2006, developed world equities are still lower, real GDP has struggled to grow above its pre-crisis peak in most countries, core bond yields are sharply lower with peripheral yields higher and with credit yields generally performing well albeit it with fairly extreme volatility. Credit has been helped by the fact that the authorities way of dealing with this crisis to date has been through money printing and liquidity facilities to help prevent mass defaults which, as is is clear in the chart below, has led to a weakening in the normal relationship between GDP and defaults. Just as one of the features of the last 20 years in Japan’s post-bubble adjustment and lost growth period is that defaults have remained very low; it appears as long as money printing props up the debt market, defaults are likely to be much lower than the underlying economic environment suggests they should be. However, as we noted previously, the mark-to-market volatility on the way may just become too much to bear for all but the most long-term bond rotators.

 
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It's All About Politicians, Central Bankers And Growth For 2013





"It’s all about Politicians, Central Bankers and Growth for 2013" is how Deutsche Bank's Jim Reid perfectly sums up the year ahead. While he notes that Central bankers have increasingly eliminated the immediate tail-risk across the globe, he adds that they have not yet found the solution to weak/negative growth and how to successfully de-lever over indebted economies. This argues for a risk-off (periodic growth disappointments), risk-on world (liquidity injections) to continue as far as the eye can see. We tend to agree that the biggest risk to this comes from politicians. The fiscal cliff is the near-term risk but the Italian elections also loom and execution risk in Spain must be closely watched. It could be a decent year for markets but with huge risk off moments. If politicians drop the ball and renege on promises or get forced by the electorate to embark on a different path against the wishes of the EU/ECB then huge risk aversion could still easily occur.

 
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Frontrunning: December 10





  • Central Banks Ponder Going Beyond Inflation Mandates (BBG)
  • Bloomberg Weighs Making Bid for The Financial Times (NYT)
  • Hedge Funds Fall Out of Love with Equities (FT)
  • Obama and Boehner resume US fiscal cliff talks (FT)
  • Italy Front-Runner Vows Steady Hand (WSJ)
  • Spanish Bailout Caution Grows as Business Lobbies Back Rajoy (BBG)
  • Japan sinks into fresh recession (Reuters)
  • China economic recovery intact, but weak exports drag (Reuters)
  • Greece extends buyback offer to reach target (Reuters)  ... but on Friday they promised it was done
  • Basel Liquidity Rule May Be Watered Down Amid Crisis (BBG) ... just before they are scrapped
  • Irish, Greek Workers Seen Suffering Most in 2013 Amid EU Slump (BBG)
 
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Bumble Bees 'Technically' Can't Fly; Just Don't Tell Them!





The news Deutsche Bank apparently sat on potential super-senior losses of $12 bln through the banking crisis is bound to anger the many bankers who saw their careers crumble or subsumed into bureaucracy. Other banks up the ying-yang with unhedgable risk went bust or were forced into the ignominy of public bailouts. From a proper accounting or risk-management perspective DB should have been bust - but to the unknowing world it wasn't. And that sums up the complexity of the bank world - if management can hide or not recognise risks (and even sack whistleblowers who disagree with them), what's the answer? It's the No-See-Ums that kill institutions. On the basis if you can't see it, then it can't see you... should DB have survived? If Lehman had kept schtumm about its leverage and unquantifiable risk, would it still be with us? Not getting caught is an objective all management have quietly inscribed into their heads. And as far as the UK's fiscal projections... on the basis QE has historically proved to be little less effective than pushing uphill on a length of wet wool, then we might just be staring down the Japanese abyss - no growth as CAPEX will stay subdued on the weak outlook. Lastly, we've been told (forceably) our concerns the Greek buyback could be difficult are completely overstated. We are idiots for even thinking it... apparently.

 
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Frontrunning: December 6





  • MSM discovers window dressing: Fund Managers Lift Results With Timely Trading Sprees (WSJ)
  • White House Unyielding on Debt Limit (WSJ)
  • Obama, Boehner talk; Geithner prepared to go off "cliff" (Reuters)
  • Republicans urged to resist tax rises (FT)
  • China looms large over Japanese poll (FT)
  • As predicted here two months ago, Greek Bond Buyback Leads S&P to Cut to Selective Default (BBG)
  • Japan opposition LDP set to win solid election majority – polls (BBG), but...
  • Japan Opposition LDP’s Main Ally Cautions Abe on BOJ Pressure (BBG)
  • U.S. and Europe Tackle Russia Trade (WSJ)
  • King Seen Maintaining QE as Osborne Extends Fiscal Squeeze (BBG)
  • Syria pound fall suggests currency crisis (FT)
  • Irish budget seeks extra €3.5bn (FT)
  • U.K. Extends Cuts Due to Poor Outlook (WSJ)
  • ECB Seen Refraining From Rate Cuts as Yields Sink on Bond Plan (BBG)
 
williambanzai7's picture

SHeRiFF KHuZaMi...





Insider traders and penny stock hucksters beware...

 
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Bombshell: Deutsche Bank Hid $12 Billion In Losses To Avoid A Government Bail-Out





Forget the perfectly anticipated Greek (selective) default. This is the real deal. The FT just released a blockbuster that Europe's most important and significant bank, Deutsche Bank, hid $12 billion in losses during the financial crisis, helping the bank avoid a government bail-out, according to three former bank employees who filed complaints to US regulators. US regulators, whose chief of enforcement currently was none other than the General Counsel of Deutsche Bank at the time!

 
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