• 03/29/2015 - 10:03
    Do our childish minds really think those whom we blindly empower will scurry away like cockroaches exposed by the refrigerator light and leave us be after the fall? Really? Are we serious?

Deutsche Bank

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Best And Worst Performing Assets In September And Q3





The New Normal: a world in which the best performing "asset" in the month of September was the stock market of bankrupt Greece, while silver, that historic store of value, was on the other end, performing the worst.

 
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Frontrunning: October 2





  • U.S. Government Shut Down With No Quick Resolution Seen (BBG)
  • 12 House Republicans now say they’d back a ‘clean’ CR (WaPo)
  • Republicans’ 2014 Senate Edge Muddied by Shutdown Message (BBG)
  • Obama Shortens Asia Trip Due to Government Shutdown (WSJ)
  • Fed Said to Review Commodities at Goldman, Morgan Stanley (BBG)
  • Foreign Firms Tap U.S. Gas Bonanza (WSJ)
  • Behind Standoff, a Broken Process in Need of a Broker (WSJ)
  • Japan Awaits Abe’s Third Arrow as Companies Urged to Invest (BBG)
  • Microsoft investors push for chairman Gates to step down (Reuters)
 
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Futures Slide In Delayed Shutdown Response





If yesterday was the paradoxical government shutdown "relief rally" pushed higher by a last minute VIX smashing ramp, today reality is starting to set in and global stocks and US futures are set to open lower. The FTSE MIB remains the only European bourse to trade in positive territory in today’s session, having touched upon 2 year highs as it is expected the political tumult that threatened to cause a collapse of the Italian government will be resolved today even as the latest news indicate Berlusconi's PDL will support the Bunga godfather after all. Other European equities have failed to benefit from this as market participants remain cautious ahead of the ECB rate decision today when Draghi may or may not (most likely) announce a new LTRO.

 
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Frontrunning: October 1





  • Government Shuts Down as Congress Misses Deadline (WSJ); Shutdown starts, 1 million workers on unpaid leave (Reuters); Government Shutdown Begins as Deadlocked Congress Flails (BBG)
  • This is not The Onion: Stocks Rise on U.S. Government Shutdown (BBG)
  • Pentagon chief says shutdown hurts U.S. credibility with allies (Reuters)
  • In historic step, Japan PM hikes tax; will cushion blow to economy (Reuters)
  • Obama Says He Won’t Give Into ‘Ideological’ Budget Demand (BBG)
  • More part-time warehouse workers: Amazon to Hire 70,000 Workers for the Holidays (WSJ)
  • Less full-time legitimate workers: Merck to fire 8,500 workers  (BBG)
  • Education cuts hit America’s poor (FT)
  • Euro-Zone Factory Growth Slows (WSJ)
  • Watchdog Warns EU Not to Water Down Insurance Rules (Reuters)
 
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Meanwhile In Italy...





UPDATE: Reuters reports that 20 senators from Berlusconi's party are preparing to create new party if Berlusconi does not soften stance against PM Letta - EUR and Italian Bonds are ramping.

*AS MANY AS 20 BERLUSCONI SENATORS MAY LEAVE PDL: REUTERS

As Deutsche Bank notes below in the brief but complete summary of where we go next, the various scenarios that are possible, and market reactions, the actions represent the acceleration of an end to a very fragile environment. It seems, in Italy, Sentaors resign first - and ask questions later...

 
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How The Market Reacted To Prior Government Shut Downs





With even the most compromising politicians on both sides of the aisle admitting at least a brief government shutdown is inevitable (and according to Stone McCarthy the shutdown will hardly be brief and will affect the timely release of such major economic indicators as construction spending, factory orders and the employment number on Friday), the next question arises: how have markets responded to not only shutdowns, but also debt ceiling impasse (with the memory of August 2011 still very vivid) in the past. Here is the full answer from Deutsche's Dominic Constam: "In a shutdown scenario, government agency-compiled economic data releases could be delayed, while essential services, such as Treasury auctions, interest and principal payments on Treasury securities will not be affected. Some federal workers could be furloughed. The most recent government shutdown occurred in late 1995 to early 1996, and lasted about three weeks. Payroll and retail sales data were delayed during that period."

 
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When Bubbles Fail: Albert Edwards Explains What Happens When The Fed Can No Longer Contain The Fury Of The "99%"





"They’re at it again! US inequality is surging and the Fed has created another house price boom. Does this matter? Well I think so. But who cares what I think. Warren Buffet, Bill Gross and Stanley Druckenmiller think it matters. Clients marvel at how the US profits’ share of GDP remains so high and that labour remains so weak. Marc Faber said recently that in postponing the QE taper, we have merely climbed to a higher diving board. I go further. I see growing inequality draining the swimming pool dry. The crunch, when it comes, will be ugly"...  Investors should make no mistake. The anger of the 99% will ultimately not be bought off by yet another central bank inspired housing bubble, engineered to pacify them and divert their attention as their real incomes fall and inequality continues to grow." - Albert Edwards

 
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Goldman Slams Deutsche Bank Next, Expects "Severe Revenue/Profit Pressure"





Goldman is on a roll: after crucifying JCP only to underwrite their disastrous following on offering (which is already down 4% from the offering price and has to be a world record in the shortest time to rape muppets), it is now Deutsche Bank's turn. To wit: "We revise our forecasts, to reflect the communicated revenue outlook, litigation provisions and dividends. We now expect a marginal loss in 3Q." More: "DBK’s warning on 3Q FICC revenue and an expectation of clarity regarding the Fed proposal “very shortly” warrants an update; we continue to rate DBK shares Sell, and see better upside potential elsewhere in the sector" and the punchline: "Following the Fed proposal’s implementation, we expect severe revenue/profit pressure, driven by a constricted ability to “export” lower funding costs across the Atlantic and operational disruption." So how many hours until DB announces a Goldman-led equity offering?

 
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Frontrunning: September 27





  • House GOP banking on Plan C (Politico)
  • Pimco shook hands with the Fed - and made a killing (Reuters)
  • BlackBerry's Torsten Heins has a $55 Million golden parachute (Reuters)
  • JPMorgan Urged to Pay More in Mortgage Deal (NYT)
  • Soros Adviser Turned Lawmaker Sees Crisis by 2020 (BBG)
  • U.N. Members Agree on Syria Disarmament (WSJ)
  • U.N. Says Humans Are 'Extremely Likely' Behind Global Warming (WSJ)
  • The non-falsifiable threats emerge: Shutdown Would Shave Fourth-Quarter U.S. Growth as Much as 1.4% (BBG)
  • Swaps Rules Worry Industry: Coming Regulations Have Market Players Concerned About Possible Disruption (WSJ)
 
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Frontrunning: September 26





  • The new normal name of a broken market: glitches - NYSE, Nasdaq Consider Cooperating to Address Glitches (WSJ)
  • Early Thursday Humor: Abe Tells Wall Street Japan’s Economy Is Exceptionally Good (BBG)
  • Rising Rates Seen Squeezing Swaps Income at Biggest Banks (BBG)
  • JPMorgan Mortgage Talks Said to Discuss $11 Billion Deal (BBG)
  • Can't make this up: HFT firm "finds" Fed did not leak data early to benefit HFT firms (FT)
  • Hertz Cuts Full-Year Forecast on Weak U.S. Airport Rentals (BBG)
  • Greece does not need third bailout, seeks debt 'reprofiling' - deputy PM (Reuters) - right, it needs a fourth and fifth
  • Hezbollah gambles all in Syria (Reuters)
  • Twitter Adds J.P. Morgan and Morgan Stanley as Bankers on IPO (WSJ)
  • Messi in Court Shows Tax Collectors Set to Pursue Star Athletes (BBG)
 
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Deutsche Bank Plunges On Latest Debt Trading Revenue Warning





First it was Jefferies. Then Citi. Now it's Deutsche Bank's turn:

JAIN EXPECTS 3Q DEBT TRADING REV. TO DECLINE `SIGNIFICANTLY'
JAIN SAYS CB&S AFFECTED BY MARKET ENVIRONMENT
JAIN SAYS 3Q TRADING RESULTS DIDN'T BENEFIT FROM CATALYST
JAIN EXPECTS TO TAKE ADDITIONAL LITIGATION RESERVES

Stock promptly plunges because nobody could have possible foreseen this...

 
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China Beige Book Exposes Government Lies: "Conventional Wisdom Of Economic Expansion In China Seriously Flawed"





There are facts; then there are completely fabricated, made up numbers. And then there is Chinese "data." After having been exposed in the past several years countless times on these pages alone as being absolute manipulated propaganda hogwash, it is amazing that anyone, anywhere still believes anything to come out of the official Beijing mouthpiece, which merely adjusts a few variable cells in the big central planning goalseeking excel spreadsheet and reports the answer. Yet the recent myth of a China "rebound" is one of the factors why stocks recently hit fresh all time highs: forget all that stuff about a CNY1 trillion deleveraging (yes, China's credit bubble is still the biggest in the world) - all that matters is made up garbage. Well, it may be more difficult this time. As Bloomberg reports, a "Beige Book" survey of the Chinese economy conducted in late August showed that "China’s economy slowed this quarter as growth in manufacturing and transportation weakened in contrast with official signs of an expansion pickup, a private survey showed." Surprise: China was lying again.

 
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Frontrunning: September 25





  • JPMorgan eyes $4bn ‘pay for peace’ deal (FT)
  • Prosecutors Pursue Big SAC Settlement (WSJ) - in the US if you are rich enough, no crime is bad enough
  • Cruz's Defiant Stand Is Also a Lonely One (WSJ); Texas senator speaks for more than 14 hours (FT)
  • Iran Applies Brakes to U.S. Mideast Plans (WSJ)
  • Americans in Poll Doubt Economy Rebound in Defiance of Forecasts (BBG)
  • Big Banks Cut Basel III Shortfall by $112 Billion at End of 2012 (BBG) - the equivalent of 10 bridges to the Kalahari desert
  • Obama’s Jabs at Russia on Syria Shows Diplomacy Tensions (BBG)
  • ICAP Staff Face Criminal Charges Tied to Libor  (WSJ)
  • Alibaba Is Said to Shift Target for I.P.O. to U.S. From Hong Kong (NYT)
  • Home gold rush is over (Reuters)
  • Conoco in landmark Alaska drone flight (FT)
 
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Volumeless Drift Lower Continues For Fourth Day





Early weakness in Asia driven by US-follow thru selling and ongoing concerns about the us fiscal showdowns as well as the debt ceiling, if not by actual news, resulted in a red close in both the Nikkei and SHCOMP, as well as other regional indices such as the Sensex. This then shifted to Europe, where however stocks reversed the initial move lower and are seen broadly flat, with Bunds remaining bid on the back of month-end, as well as coupon and redemption related flows. However the move higher in stocks was led by telecommunications and health care sectors, which indicates that further upside will require another positive catalyst. There was little in terms of fresh EU related macroeconomic commentary, but according to a report published by the European Banking Authority, the EU’s biggest 42 banks cut their aggregate capital shortfall with respect to the “fully loaded” 2019 Basel III requirements to €70.4bln as of December 2012. This is amusing since not one European bank has actually raised capital, but merely redefined what constitutes capital courtesy of a liberal expansion of RWA, Tier 1 and various other meaningless definition which works until such time as the perilous European balance kept together by the non-existent OMT, is tipped over.

 
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On This Day 15 Years Ago The LTCM Bailout Ushered In "Too Big To Fail"





While the commemoration of the 5 year anniversary of the start of the Great Financial Crisis is slowing but surely fading, another just as important anniversary is revealed when one goes back not 5 but 15 years into the past, specifically to September 23, 1998. On that day, the policy that came to define the New Normal more than any other, namely the bailout of those deemed Too Big To Fail, a/k/a throwing good (private or taxpayer) money after bad was enshrined by Wall Street as the official canon when faced with a situation where capitalism, namely failure, is seen as Too Dangerous To Succeed. This was first known as the Greenspan Put, subsequently the Bernanke Put, and its current iteration is best known as the Global Central Banker All-In Systemic Put. We sow the seeds of bailing out insolvent financial corporations to this day, when instead of making them smaller and breaking them up, they are rewarded by becoming even bigger, even more systemics, and even Too Bigger To Fail, and their employees are paid ever greater record bonuses.

 
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