A Wounded Deutsche Bank Lashes Out At Central Bankers: Stop Easing, You Are Crushing Us

Tyler Durden's picture

Ten days ago, when Deutsche Bank stock was about 10% higher, the biggest German commercial bank declared war on Mario Draghi, as we put it, warning him that any further easing by the ECB would only push stocks (with an emphasis on DB stock which has gotten pummeled over the past few months) lower. What it got, instead, was a slap in the face in the form of a major new easing program when the Bank of Japan announced it is unveiling negative rates just three days later.

Which is why overnight a badly wounded Deutsche Bank has expanded its war against the ECB to include the BOJ as well, and in a note titled "The Risks From Further ECB and BOJ Easing" it warns that with the Zero Lower Bound already breached in nearly a third of global markets, the benefits to risk assets from further easing no longer exist, and in fact it says that while central banks have hoped that such measures would "push investors out the risk spectrum" the "impact has been exactly the opposite."

In other words, we have reached that fork in the road within the monetary twilight zone, where Europe's largest bank is openly defying central bank policy and demanding an end to easy money. Alas, since tighter monetary policy assures just as much if not more pain, one can't help but wonder just how the central banks get themselves out of this particular trap they set up for themselves.

Here is DB's Parag Thatte explaining the "The risks from further ECB and BOJ easing"

The BOJ surprised with a move to negative rates last week, while ECB rhetoric suggests additional easing measures forthcoming in March. While a fundamental tenet of these measures, in particular negative rates, has been to push investors out the risk spectrum, we remind that arguably the impact has been exactly the opposite:

  • Declining bond yields have been robustly associated with larger inflows into bonds at the expense of equities. Though a large over allocation to fixed income at the expense of equities already exists as a result of past Fed QEs and a lack of normalization of rates, further easing by the ECB and BOJ that lower bond yields globally will only exacerbate the over allocation to bonds;
  • Asynchronous easing by the ECB and BOJ while the Fed is on hold risks speeding up the dollar’s up cycle, pushing oil prices lower and exacerbating credit concerns in the Energy, Metals and Mining sectors. It is notable that the ECB’s adoption of negative rates in mid-2014 which prompted the large move in the dollar and collapse in oil prices, marked the beginning of the now huge outflows from High Yield. These flows out of High Yield rotated into High Grade, ironically moving up not down the risk spectrum. The downside risk to oil prices is tempered somewhat by the fact that they look cheap and look to be already pricing in the next leg of dollar strength;
  • Asynchronous easing by the ECB and BOJ that is reflected in the US dollar commensurately raises the trade-weighted RMB and increase the risk of a disorderly devaluation by China. The risk of further declines in the JPY is tempered by the fact that it is already very (-29%) cheap, but there is plenty of valuation room for the euro to fall.

Broad-based move across asset classes towards neutral amidst uncertainties

  • US equity fund positioning inched closer to neutral; as anticipated the returning buyback bid is being offset by large persistent outflows (-$42bn ytd);
  • European equity positioning is also close to neutral amidst slowing inflows; Japanese funds trimmed exposure from very overweight levels while flows turned negative for the first time in 2 months;
  • The large short in US bond futures has started to be cut; 2y bond shorts were cut by half this week while short-dated rates futures are already long. Robust inflows into government bond funds which began this year have continued while the pace of outflows from HY and EM funds has slowed;
  • A move toward neutral was also evident in FX positions. The surprise BoJ cut to negative rates caught yen longs by surprise, with the large initial subsequent depreciation in the yen partly reflecting a paring of positions. Meanwhile, the euro rose to a 3 month high as crowded leveraged fund shorts were being covered despite the ECB’s dovish rhetoric;
  • As the dollar fell, net speculative long positions in oil rose, reflecting mainly an increase in gross longs while shorts remain at record highs; copper shorts continue to edge back from extremes; gold longs are rising.

Declining bond yields mean larger inflows into bonds at the expense of equities

  • A fundamental tenet of central bank easing has been to push investors out the risk spectrum. The impact has arguably been exactly the opposite
  • Beyond any negative signal further monetary easing sends on underlying growth prospects, historically falling bond yields with the attendant capital gains on bonds have seen inflows rotate into bonds at the expense of equities. The correlation between equities and bond yields remains strongly positive. Notably, the best period of inflows for equities was after the taper announcement in 2013 when bond yields rose sharply

Large over-allocation to fixed income already

  • Past Fed QEs, a lack of normalization of Fed rates and easing by other central banks means that a large over-allocation already exists in fixed income while the underallocation in equities remains massive
  • Additional easing by the ECB and BoJ by encouraging inflows into bonds will only exacerbate the over allocation to fixed income

Asynchronous easing behind decline in oil and flight from HY

  • Asynchronous monetary easing by the ECB or BoJ while the Fed is on hold puts upward pressure on the dollar, downward pressure on oil prices and heightens credit concerns in the Energy, Metals and Mining sectors
  • It is notable that the huge outflows from HY began to the day with the ECB’s adoption of negative rates in Jun 2014. Those outflows from HY moved into HG, ironically moving up not down the risk spectrum
  • The risk to oil prices is somewhat tempered by the fact that oil prices are cheap to fair value and look to be pricing in the next leg of dollar strength

Asynchronous easing that is reflected in a higher dollar is reflected commensurately in the trade-weighted RMB

  • By virtue of the near-peg to the US dollar, by early 2015 the trade-weighted RMB had risen along with the US dollar by 32% in trade-weighted terms and has been in a relatively narrow range since
  • A variety of Chinese economic indicators have been strongly negatively correlated with the US dollar: Chinese data surprises (-42%); IP (-65%); and retail sales (-59%)

Further dollar strength raises the risk of a disorderly Chinese devaluation

  • Asynchronous easing by the ECB and BOJ reflected in the US dollar and in turn the trade-weighted RMB increases the risk of a disorderly devaluation by China
  • The risk of further declines in the JPY is tempered by the fact that it is already very cheap (-29%), but there is plenty of valuation room for the euro to fall
  • The surprise BoJ easing in January prompted a paring of longs, while investors are unwinding short positions in the euro despite dovish rhetoric by the ECB

* * *

A few last words. Since DB, whose CDS has soared to very dangerous levels in recent days suggesting the market is suddenly concerned about its counterparty status, is effectively the Bundesbank, one can make the argument that any incremental easing by the jawboning Mario Draghi during the ECB's next meeting suddenly looks very precarious.

On the other hand if Draghi once again isolates Weidmann and does cut rates to -0.40% as the market has largely priced in, because the ECB head fulfills the desires of his former employer Goldman Sachs first and foremost, one would wonder if as we speculated last summer Deutsche Bank is not indeed the next Lehman, if for no other reason than Goldman has decided the German financial behemoth should be the next bank to fail, and unleash the next global taxpayer-funded bailout episode.

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Jim in MN's picture

Whaaaaaat?  You mean playing Big Brother idiot games on six billion people's core behavioral incentives might not have been such a great idea after all??????


NidStyles's picture

These silly Goys don't get it. They can't figure out what is going on, look at the actions of the EU and Mamma Merkel. Between the rapes and projected replacement of the indigenous peoples of Europe.



The bankers (The Tribe Inc.) want them to suffer.

Nutsack's picture
Nutsack (not verified) NidStyles Feb 6, 2016 10:15 AM

All white countries must perish so the Jew World Order may flourish.

liverdiefree's picture

Damned right. It's not their fault they're so much smarter than you. Of course the same could be said of a salted slug.

KesselRunin12Parsecs's picture
KesselRunin12Parsecs (not verified) liverdiefree Feb 6, 2016 10:49 AM

"smarter than you"


That 'ol schtick makes me laugh... Being a Zionist bankster is kind of like working for the MOB... Never confuse coercion with 'smarts'...


Renfield's picture

<<That 'ol schtick make me laugh... Being a Zionist bankster is kind of like working for the MOB... Never confuse coercion with 'smarts'...>>

Apparently, 'smarter than you' means 'more above the law than you'. All part of our Orwellian 'new normal' (a contradiction in terms BTW.)

Douchebank seems to have figured out it has a big ol' Lehman-shaped target on its back.

O/T digression, but speaking of above-the-law, check out the Articles of Agreement for the IMF (download link here):


Here are a couple of morsels to make you laugh even harder, KR12P:

<<Of particular importance is Article IX Status, Immunities, and Privileges on page 26 [or 37] and onward which, among others, states:

Section 3. Immunity from judicial process

The Fund, its property and its assets, wherever located and by whomsoever held, shall enjoy immunity from every form of judicial process except to the extent that it expressly waives its immunity for the purpose of any proceedings or by the terms of any contract.

Section 4. Immunity from other action

Property and assets of the Fund, wherever located and by whomsoever held, shall be immune from search, requisition, confiscation, expropriation, or any other form of seizure by executive or legislative action.

Section 5. Immunity of archives

The archives of the Fund shall be inviolable.>>

And this:

<<But the Ponzi scheme is not too obvious when one considers the fact that whenever the Fund lends money, the borrower only receives a paper authorizing the latter to print money to pay for its developmental projects back home, e.g. a 1-kilometer bridge.

An IMF debt is a mere paper of authority to print paper currency that has its indicated loaned amount recorded in IMF’s computers and ledgers. Up until this point there’s no actual wealth being lent, nor borrowed, or created.

When the 1 km bridge is completed and the borrower begins paying for the IMF debt with usurious interests, of course, that’s when real wealth is transferred from the sweat of the brows of the people to the Fund, again, in exchange for the IMF’s authority to print currency, a fancy paper with some logo and watermark on it, usually made holy with handshakes and selfies.>>

Someone's laughing all right... This is how one shows 'smarts' in a criminal world.

NidStyles's picture

They're "smarter", because they are willing to forgo any illusions that the laws mean anything to them, because they are foreign invaders looking to conquer everyone.



That they have to rely on nepotism, and the agreements of bankers as you posted there shows the truth of the matter. They are incapable of competing in a true economy, and thus have to control every aspect of it to compete at all. That shows that they are not in actuality smarter, but far dumber than the average citizen.


So Tribe members, how's it feel knowing that the people you hate so much are so far more intelligent than you?




Sanity Bear's picture

a psychiatrist could make a career off of you guys

Kefeer's picture

That is almost funny, for Psychiatrists make a living off their need to understand why they are so screwed up.

NidStyles's picture

The "left" (the cult of the Tribe) always likes to call those that disagree with it's "conclusions" crazy.


Never once do they ever take a step back and question their own mind and "conclusions". Introspection is not a part of their vocabulary it seems.

Son of Loki's picture

DB is such a poor loser. Those German bankers simply need to ... "keep the QE at arms length."


Hat tip to Renfield above for tha tinfo. It's very enlightneing and confirms my thoughts about the IMF after reading that book, "Confessions of an Economic Hit Man."

NoDebt's picture

Just give me my $40MM severance package and I don't care what you do after that.

OpenThePodBayDoorHAL's picture

Your typo made me think of a useful new term: tinfo

"Tinfo" is defined as new information that supports a tinfoil hat conspiracy theory

Sudden Debt's picture

Actually a very good one Hal ;)

Let's start to use it from now on!

bamawatson's picture

i thought tinfo was how black cops signed off

Scooby Dooby Doo's picture

Scooby got his diploma from the Department of Education and even Scooby knows that it's important to ease.

Keep easing!

sun tzu's picture

It's the revenge of the tribe. They flood Germany with Muslims and Africans and destroy the banking system. While Germany is under attack and the women are raped, the tribe will sit back and eat popcorn.

NidStyles's picture

The funny thing is that they started the war.


"The Jew cries out in pain as he strikes you."


When I was young I didn't understand that saying. Now I get it fully. In general they truly are a piece of shit people. Not worth saving IMO. They can't seem to break their pattern of behavior.


So I say let the hardcore Fascists eat them.

MSimon's picture

So I say let the hardcore Fascists eat them.


And after the Fascist run out of THEM to eat? Evidently you haven't seen the part of the menu that includes you. After they run out of your favorite meal of course. 

sun tzu's picture

Anyone who doesn't believe Goldman Sachs is doing "God's work" must be completely insane

jm's picture

This whole rant smacks of jealousy or being left out of something undefinable more than anything else.

Most Jews aren't bankers. They do not break laws at their whim and avoid punishment for all of it.


NidStyles's picture

Yeah, because I'm jealous of people that advocate and promote the destruction of entire cultures based on their non-compliance to what I think they should be. That and I must be jealous of their sucking the foreskins off of little boys....


They don't have to be bankers, Rabbi's make the rules for them. Goy laws are for Goys. They don't care about whose laws they violate. If it becomes an issue they get on a plane and fly to Israel to avoid presecution.


  Yep, you called it, I am definitely jealous of a people that can't do anything other than behave like criminals and degenerates. I'm really jealous of them destroying my country and telling me I'm a dirty disgusting Goy as well.

jm's picture

I think you are scared of honestly looking at yourself, because the problem is there.  The hate for Jews is a cover.  Most Jews aren't bankers and have nothing to do with banking.  Jews operate under the law just like everybody else, just look at Skreli.


new game's picture

renfield, thanks and that is why you are smarter and moar diligent than me. thank god i don't have a banker in my life, ha lol, as i live in the shadow of a bank...

spanish inquisition's picture

Finally, someone speaking some sense.

iggenFlot's picture
iggenFlot (not verified) NidStyles Feb 6, 2016 11:54 AM

You're about as racist as they come. Are you sure you're not wanted somewhere for Nazi war crimes?

roadhazard's picture

He's a one trick pony, all I have to do is see his icon and I know what the BS is going to be about.

NidStyles's picture

Funny, I have only recently started talking about the Tribe. Since last August to be exact.

DeadFred's picture

This is part of the CB plan

The CBs are wandering blind

iinthesky's picture

Let them alone: they be blind leaders of the blind. And if the blind lead the blind, both shall fall into the ditch.

Matthew 15:14


How can you not love this man?

Hongcha's picture

Scribes and pharisees, hypocrites; who swallow a camel and choke on a gnat.

KnuckleDragger-X's picture

This is really funny since DB helped the ECB design the suicide vests being given to all the players. of course the Fed is planning on something to make things much worse.......

TRM's picture

Yes. Another rate hike in defiance of all indicators to the contrary. Implode the world Bwa Ha Ha Ha

KnuckleDragger-X's picture

Cut or raise doesn't matter, it will be the wrong thing to do. At this point doing anything, including nothing, will make things worse......

Son of Loki's picture

Cut or raise  ... seems to me the safest asset is gold since RE, and some other so-called, "infation protection assets are hugely overpriced right now.

KnuckleDragger-X's picture

That's barbaric don'cha know. Anything that has trade value will come in handy.......

runningman18's picture

The thing is, the banksters did not "set a trap for themselves", they are destabilizing the system deliberately.  It's called order out of chaos, or, problem - reaction - solution.

SWRichmond's picture

They are laying the groundwork for SDR.

Antal Fekete pointed out a long time ago that the regime of falling interest rates destroys capital.  Imagine what the regime of negative rates will do, eh?

Bemused Observer's picture

Well it's a pretty idiotic plan. One does not control chaos, thus the idea of somehow achieving a planned goal by using chaos is laughable.

Who comes up with these theories?

DanDaley's picture

It's not so much chaos that they want to create, as a setting up of conditions that require an inexorable need, a dramatic solution...as in chess, these are called forcing moves, where the opponent has no recourse other than to comply...the solutions become a kind of inevitability.

BandGap's picture

They are beginning to eat their own. It doesn't matter who wins at this point.

Seagate's picture

Except when to queue the laugh track and clap.

MSimon's picture



A queue is a line of people. Waiting in line.

eyesofpelosi's picture



J Jason Djfmam's picture

Douche Bank: From Summer's Eve.

css1971's picture

No... It definitely isn't German.

ZHrnh's picture

 ??? ???? (oy vey)

fixed it for you.