Deutsche Bank AG ’s talks with the U.S. Justice Department to settle a high-profile set of mortgage-securities cases are continuing, with no deal yet presented to senior decision makers for approval on either side, the WSJ reports as Germany's econ Minister Gabriel accused DB of blaming speculators for last week's plunge in its share price.
"So for what it’s worth however the ECB decides to navigate their latest challenge we are less inclined to embrace the classic financial sector meltdown led risk off trade that forces core rates significantly lower. Or at least it would need a spectacular display of policy incompetence first. (On second thoughts..?!)"
Deutsche Bank executives are heading to the United States in the coming days to negotiate a settlement over a fine of up to $14 billion for misselling mortgage-backed securities, the Frankfurter Allegemeine Zeitung reported. This means that Friday's rumor presenting the settlement renegotiation between DB and the DOJ as a done deal, was the latest unsubstantiated media hoax meant to push risk assets higher.
One day after Deutsche Bank stock soared from all time lows, on the back of what so far appears to have been a fabricated report sourced by AFP which relied on Twitter to "inform it" that the DOJ would reduce its RMBS settlement with the German Lender, today Bloomberg reported that Deutsche Bank and six of its managers were charged in Milan for colluding to falsify the accounts of Italy’s third-biggest bank and manipulate the market.
For the first half of the year, we were warned early and often by authorities that the Brexit vote could be a calamity for the ages. For example, the IMF claimed that a “Leave” result would threaten to “cause severe damage”, while Standard and Poor’s said that it would “paralyze” investment in the UK. But, as Visual Capitalist's Jeff Desjardins notes, it turns out that the real Brexit casualty isn’t the UK economy – instead it is the reputation of the many professional economists who wrongly predicted doom and gloom as the likely aftermath.
"In our opinion it is not so much funding issues but rather derivatives exposures that more likely to trouble markets going forward if Deutsche Bank concerns continue. This is especially true if these concerns propagate into a confidence crisis inducing more rapid unwinding of derivative contracts."
Angela Merkel cannot afford to bail out Deutsche Bank given the hard line Berlin has taken against state aid in other European nations and the risk of a political backlash at home, a German media chorus blasted on Saturday.
"Central banks buying in the [stock] market... you really think that's a good idea?" Raging about central banks' picking winners, buying Deutsche Bank, and keeping stocks "steady" around elections, Santelli exploded, "is that the world we really want to live in?" The Fed's buying stocks "will completely and utterly and in every possible way destroy and value in the marketplace..."
Seemingly confirming the rumor,Agence France Press reports that Deutsche Bank is nearing a $5.4 billion settlement with the US Justice Department. This has catalyzed another leg higher in Deutsche Bank stock and lifted the whole market.
"We do not particularly like the profile of a credit where performance is skewed to an outcome that is so inherently unpredictable – in this case, guessing what a regulatory fine will be.... DB is likely to be a weak bank for several years from now, though, even with a capital increase."