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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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!

Bernoulli's picture

These guys have no experience and zero imagination.

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

gmak's picture

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

Captain Debtcrash's picture
Captain Debtcrash (not verified) gmak Feb 11, 2016 8:19 AM

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. 

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...


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.

halfasleep's picture

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

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.

_ConanTheLibertarian_'s picture

These 'experts' will then probably commit suicde.

overmedicatedundersexed's picture

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

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


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.

Fidel Sarcastro's picture

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

TradingIsLifeBrah's picture
TradingIsLifeBrah (not verified) gmak Feb 11, 2016 8:18 AM

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

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)...

Oldwood's picture


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?

Oldwood's picture

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

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?

Bernoulli's picture

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

MSimon's picture

And she is thinking "We're shafted".

hotrod's picture

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

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.


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.


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.


new game's picture

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

_ConanTheLibertarian_'s picture

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


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.

overmedicatedundersexed's picture

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

ghostzapper's picture

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

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?

Sandmann's picture

US Taxpayer backed by 401Ks and Social Security Fund

Lucky Leprachaun's picture

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

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.

UNGUiDED TOURS's picture

Get gold for your girlfriends this valentine's day.

Spungo's picture

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

Mitch Comestein's picture


Don Diego's picture

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

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.

Wahooo's picture

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

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]

MSimon's picture

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

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.

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."