Deutsche Bank Is Back: 5 Year Sub CDS Soar To Record High

Tyler Durden's picture


"Worse than Lehman" is how one European bond market trader described the carnage this week as the brief respite that ECB monetization and debt-buyback rumors provided yesterday have morphed into utter destruction this morning. European (and US) banks are a sea of contagious red with Deutsche Bank the tip of the collapse spear. Credit risk on Deutsche has exploded this morning with Sub CDS trading up 85bps to a record high 540bps... eerily reminiscent of the pre-Lehman bankruptcy week in 2008.

Time to panic now?


We've seen this kind of stress before for a financial institution...


and it did not end well...

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Thu, 02/11/2016 - 09:07 | 7170232 stocktivity
stocktivity's picture

From an earlier article this morning from JPMorgan -

"It's hard to imagine an uglier morning"

How many of these "financial experts" have never seen more than a 10% correction in their working lives? I'd guess about half have never seen what they are about to see. All they know and have needed to know  was BTFD!

Thu, 02/11/2016 - 09:10 | 7170239 Bernoulli
Bernoulli's picture

These guys have no experience and zero imagination.

I can easily imagine 100 different much uglier morning-scenarios for financial "markets".

Thu, 02/11/2016 - 09:12 | 7170252 gmak
gmak's picture

101 if you include Cramer's mug in the mix.

Thu, 02/11/2016 - 09:19 | 7170278 Captain Debtcrash
Captain Debtcrash's picture

Looking more and more like a critical mass default possibility, though the ECB will stand in front of it more than the fed did for Lehman. 

Thu, 02/11/2016 - 09:21 | 7170288 DaddyO
DaddyO's picture

Tyler's headline for this article may be a bit premature.

Let's wait until the end of the trading day and see what transpires.

My guess is that all the stops have been pulled in the behind the scenes channels to prop up banks and markets around the world.

Magic HFT's will fix things, just watch...


Thu, 02/11/2016 - 09:26 | 7170306 SWRichmond
SWRichmond's picture


Thu, 02/11/2016 - 09:47 | 7170379 BTFDemocracy
BTFDemocracy's picture

I am so tired of years of waiting for this global casino supported by a house of cards to unravel that I can no longer sit here and wait, crash and fail already.

Thu, 02/11/2016 - 11:37 | 7170623 halfasleep
halfasleep's picture

I love the smell of bailout/in in the morning!

Thu, 02/11/2016 - 09:28 | 7170293 El Oregonian
El Oregonian's picture

It's like how Jacob felt waking up to (sore to the eyes) Lea, when he thought he was supposed to be waking up to beautiful Rebecca...

Talk about ugly mornings...

It sucked to be Jacob then; it sucks to be us now.

Thu, 02/11/2016 - 09:21 | 7170287 _ConanTheLibert...
_ConanTheLibertarian_'s picture

These 'experts' will then probably commit suicde.

Thu, 02/11/2016 - 09:24 | 7170298 overmedicatedun...
overmedicatedundersexed's picture

Janet speeks again today, no matter what she says>>

expect rave responce by MSM and whip lash to close green..


Thu, 02/11/2016 - 09:08 | 7170235 gmak
gmak's picture

But.... but... but.... They are buying back their debt.  But... but.. but... We're told the German .gov will bail them out.


(We've had three official denials of any problem).  Oh. OK. Nevermind. Carry on. The roof is on fire.

Thu, 02/11/2016 - 09:14 | 7170262 Fidel Sarcastro
Fidel Sarcastro's picture

Trading will be awesome today across all markets. Get ready boys!

Thu, 02/11/2016 - 09:18 | 7170274 TradingIsLifeBrah
TradingIsLifeBrah's picture

Using the last of their cash to buy up debt in a bankrupt company (themselves) sounds like something that should calm investors down...

Thu, 02/11/2016 - 09:10 | 7170240 Quebecguy
Quebecguy's picture

Can't understand whyu banks stocks are crashing. TTYL, my branch called me and they have a great new deal (just for me)...

Thu, 02/11/2016 - 09:10 | 7170243 Oldwood
Oldwood's picture


Thu, 02/11/2016 - 09:11 | 7170247 firstdivision
firstdivision's picture

Who could've known that having only a handful of banks with debt so large it outweighs the GDP of nations was a bad thing?

Thu, 02/11/2016 - 09:13 | 7170258 Oldwood
Oldwood's picture

Those believing themselves immortal face a horrific fate. They will NEVER see it coming.

Thu, 02/11/2016 - 09:24 | 7170286 new game
new game's picture

the mirror has cracked, tyme to pick up the pieces, just a matter of tyme. the confindence will have to enforced, as in bail ins. no tyme to wait. this weekend may be too late. will they let is fail?can they? we know the answer-they can't let it fail because 50 plus trillion of derivatives start to cascade, is it to late?

Thu, 02/11/2016 - 09:12 | 7170256 Bernoulli
Bernoulli's picture

Maybe it would help if Angela Merkel comes out and says "Wir schaffen das!" (= we can handle it)

Thu, 02/11/2016 - 12:10 | 7170855 MSimon
MSimon's picture

And she is thinking "We're shafted".

Thu, 02/11/2016 - 09:13 | 7170257 hotrod
hotrod's picture

Time to see how Bail Ins work in the 1st world

Thu, 02/11/2016 - 09:15 | 7170266 NoDebt
NoDebt's picture

"Hey, I don't want to alarm anybody but, uh... there may be a problem with the banks."

- No Debt


That may be the new follow up to my ever-popular "Stay the hell outta the markets until the Fed announces QE4.  And it better be twice the size of the last one" I've been spouting snce last July.


Thu, 02/11/2016 - 09:20 | 7170280 Bernoulli
Bernoulli's picture

It's too late for Janet. She fucked up by raising rates in December. Now she can't go back to Zero and then announce QE4.

That would be just plain ridiculous.

Peter Schiff had it all figured out.

And even if they would do QE4: In my opinion, it won't work. Even if it is twice the size of the last one. It cries "desperation" so clearly and loudly that it will send the markets tanking even more.


Thu, 02/11/2016 - 09:23 | 7170292 NoDebt
NoDebt's picture

You're right.  If Janet backed up the train now, mere weeks after starting a tightening cycle based on the awesome "recovery", every gear in the transmission would instantly strip out.  It can't be her in the seat when they reverse course and it can't be this soon or they would likely get the opposite effect desired- abject panic.


Thu, 02/11/2016 - 09:26 | 7170308 new game
new game's picture

anybody smelling margin calls? or is it just my acute sense of ...

Thu, 02/11/2016 - 09:24 | 7170296 _ConanTheLibert...
_ConanTheLibertarian_'s picture

Hey, my money is safe in a bank so I'm fine


Thu, 02/11/2016 - 09:16 | 7170269 firstdivision
firstdivision's picture

Should've seen this one coming, as whom was the biggest benifactor of US and EU QE (hint: sound like douche)?  Look at the CDS start its run in a sprint right at the end of the US QE program.

Thu, 02/11/2016 - 09:21 | 7170285 overmedicatedun...
overmedicatedundersexed's picture

stock, when does a correction turn into something more? -10% , -20% how about -80%..just wondering.

Thu, 02/11/2016 - 09:22 | 7170290 ghostzapper
ghostzapper's picture

Which bankster whore do they trot out today to tell the sheep "DB is as solid as they come"?

Thu, 02/11/2016 - 09:23 | 7170294 Diplodicus Rex
Diplodicus Rex's picture

My understanding is that CDS is a form of "insurance". If that is correct then who on earth are the counter-parties for those deals? AIG?

Thu, 02/11/2016 - 09:30 | 7170324 Sandmann
Sandmann's picture

US Taxpayer backed by 401Ks and Social Security Fund

Thu, 02/11/2016 - 11:32 | 7170582 Lucky Leprachaun
Lucky Leprachaun's picture

Ultimately the European and American taxpayers. Bankers must have their bonuses no matter what happens.

Thu, 02/11/2016 - 12:00 | 7170784 dot_bust
dot_bust's picture

Excellent question!

Therein lay the contagion that can topple banks across the world.

When some of the counterparties who bought CDS as insurance don't get paid out on said insurance, that's when the true shit storm starts. Then we'll truly see the fire sales of any and all liquid assets to meet margin calls.

Thu, 02/11/2016 - 09:24 | 7170300 UNGUiDED TOURS
UNGUiDED TOURS's picture

Get gold for your girlfriends this valentine's day.

Thu, 02/11/2016 - 09:25 | 7170307 Spungo
Spungo's picture

I think it would be hilarious if DB actually was solvent, but the panic caused by ZH drove it into insolvency.

Thu, 02/11/2016 - 09:29 | 7170322 Mitch Comestein
Mitch Comestein's picture


Thu, 02/11/2016 - 09:33 | 7170328 Don Diego
Don Diego's picture

Don't worry, DB passed the ECB stress tests with flying colors.

Thu, 02/11/2016 - 09:44 | 7170343 Deflationist
Deflationist's picture

As my name suggests I have sold all stocks except gold miners since June 15 and enjoying every moment.

Thanks ZH for being my guiding star.

Thu, 02/11/2016 - 11:10 | 7170416 Wahooo
Wahooo's picture

Don't worry, DB. Taxpayers got your back.

Thu, 02/11/2016 - 11:20 | 7170503 zipit
zipit's picture

Bailout announcment coming over the weekend. Stocks to soar on Monday. And then... [somone post that pic of Road Runner going over the cliff]

Thu, 02/11/2016 - 12:17 | 7170917 MSimon
MSimon's picture

The road runner can fly. The coyote? Not so much.

Thu, 02/11/2016 - 11:29 | 7170567 ElixirMixer
ElixirMixer's picture

Just wait until one of these banks backing those highly "liquid" ETNs starts to sink. I guarantee that most of the "investors" in the ETNs haven't read the prospectus that closely.

Thu, 02/11/2016 - 12:03 | 7170802 conraddobler
conraddobler's picture

"Mom!"  "It's uncle Euro again and he's drunk again!"

"Mom why do uncle Yen and Euro, and my dad Buck, why do they all drink all the time and why do you keep buying them liquor?"

"Well Timmy if I don't do what they ask they get mean and they'll leave us!"

"Mom all they ever do is beat the shit out of me and you and they mess with little Sally at night would it really be so bad if they never came back."

"Never talk like that Timmy it makes me upset."


Thu, 02/11/2016 - 12:14 | 7170887 medium giraffe
medium giraffe's picture

Take it away, Ashford and Simpson:

Do NOT follow this link or you will be banned from the site!