Gundlach: "The Market Will Keep Pushing Deutsche Bank Lower Until It Is Bailed Out"

Tyler Durden's picture

With stunned investors reliving memories of the 2008 crisis as Deutsche Bank, a bank that is half the size of its host, Germany, seemingly on the precipice, and with Angela Merkel vowing as recently as this weekend not to bailout the bank, the market felt paralyzed: should it BTFD as it always has every time in the past 7 years, or should it wait for more clarity from the bailouters-in-chief before allocating capital to another riskless transaction, which may well be the next Lehman brothers.

 

Not helping matters was Jeffrey Gundlach, who as part of his weekly chat with Reuters' Jennifer Ablan said that should tread lightly carefully when trading Deutsche Bank shares because a government bailout is not out of the question. The problem is how does one get to it.

"I would just stay away. It's un-analyzable," Gundlach said about Deutsche Bank shares and debt. "It's too binary."

Gundlach said investors who are betting against shares in Deutsche Bank might find it futile. Maybe, but not if they cover their shorts before the max pain point, something which the market - where equity/CDS pair trades now allow a "go for default" strategy - will actively seek out.

"The market is going to push down Deutsche Bank until there is some recognition of support. They will get assistance, if need be."

What happens then? "One day, Deutsche Bank shares will go up 40 percent. And it will be the day the government bails them out. That jump will happen in a minute," Gundlach said. "It is about an event which is completely out of your control."

Unless, of course, the government does not bail DB out, as Merkel vowed she wouldn't, in the process painting herself into a corner with only adverse possible outcomes.

What if DB is just the bank that the system will use to teach a world addicted to bailouts a (bail-in) lesson? In that case, being long the CDS would be a far more lucrative option than shorting the stock, or using a straddle to bet on a surge in vol in the coming days.

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King Tut's picture
King Tut (not verified) Sep 29, 2016 4:58 PM

Who says they won't ban shorting DB like they did TBTF in 2008? 

 

kliguy38's picture

that there gundlach is one smart dude.......wowzy watta brain.....duh

on a more serious note how bout sum football this year to keep that mush slowly dissoving in your head

38BWD22's picture

 

 

DB and Wells Fargo both show, yet again, that these BANKSTERS just look after themselves (and their .gov protectors).

Little fish like us can buy gold...

 

nibiru's picture

wait so politician (Merkel) said it won't bail out banks.

 

Hmmm I heard that one before.

Jim Sampson's picture

This is getting exciting!  I can't wait!  

 

Just picked up a 100 oz Ag bar.

NidStyles's picture

Look another type of terrorist, a financial terrorist.

 

This Tribe creates the situation, then shorts the hell out of the banks when something doesn't go their way and use it as a form of Pavlovian style conditioning on the general public. The vote didn't go the way the Tribe wanted it to.

"Demoralize the enemy from within by surprise, terror, sabotage, assassination. This is the war of the future." ~ Adolf Hitler

jcaz's picture

....Can still do ok with options, Jeff-  sold my Dec16 $8 puts for 80 cents at the close today,  paid 30 cents for them yesterday;

Don't always have to be so gaul dang fancy an' all.......

macholatte's picture

 

Unless, of course, the government does not bail DB out, as Merkel vowed she wouldn't, ....

And what has Yellen said about this: Maybe buying stocks is a good thing.
Yea baby!
Something tells me the American Sheeple are going to get reamed by Europe again.

 

 

BetaGap's picture

Deutsche Bank - DB - Derivative Bomb

Countrybunkererd's picture

someone else said "you are either with us or against us" ... kill DB so all others fall in line with the plan?

Escrava Isaura's picture

Jim Sampson Just picked up a 100 oz Ag bar.

 

Say no more.

Do you really think gold will save your ass post collapse?

Gold and Prada bags will be excessive baggage to carry around.

 

 

Richard Head's picture

Gold may or may not save you, but Ag is silver.

Escrava Isaura's picture

Silver(ware).

Try hands. That's the future.

But thanks anyway.

 

Pipsqweek's picture

Better Hope it aint tungdten. How do you validate it's authenticity. With coins they have a specific size relative to their weight. If a krugerand or an Eagle they ring. If they fail these tests = fake. Good luck.

just the tip's picture

deja-poo

i've heard this shit before.

f_symbols's picture
f_symbols (not verified) 38BWD22 Sep 29, 2016 7:01 PM

My last pay check was $9500 working 12 hours a week online. My sisters friend has been averaging 15k for months now and she works about 20 hours a week. I can't believe how easy it was once I tried it out. This is what I do... http://tiny.cc/2jncfy

1980XLS's picture

Your sister making alot more than her friend, doing dirty things, on the streets of Chicago, with the BLM boyz.

Your mother gets 10% of the cut. They are not giving you your fair share.

King Tut's picture
King Tut (not verified) kliguy38 Sep 29, 2016 5:04 PM

"Bear Stearns is fine. It's fine!"- J. Cramer

major major major major's picture

They traded up and partnered with JPM... successful merger.

King Tut's picture

Shotgun wedding

FireBrander's picture

Hillary up by 26 POINTS in California!

Poll Breakdown:

 42% Democrats

24% Republicans

~~~

26% are union members...

14% "victims" of 'parental violence'...

68% "non-military" household.

61% voted Obama in 2012

Talk about a biased poll...geesh!


https://cbssanfran.files.wordpress.com/2016/09/survey_usa_president_sena...


SurveyUSA is owned by Hypotenuse, Inc., a privately held company in New Jersey.

Jay H Leve - President & Chief Executive Officer

Employment History

Newspaper Reporter and Editor The Miami Herald

Vice President, Director of Humanware, Citibank

Creative Director, VIEWTRON CO. LTD

philosophers bone's picture

It a Presidential Election year, so therefore time for the politicians to bail out financial institutions in the name of "preserving" Granny's savings account.

Bush Baby's picture

Obama will bail em out just to keep the market from crashing before the election.

Probably loading a 747 jumbo with cash as we speak

waterwitch's picture

Seems to me 2008 was a presidential election year as well.

The One...'s picture

Love the Hanoi Jane urinal target. We have them in all the urinals at our VFW... lol

thesonandheir's picture

Who has 60tn down the back of the sofa?

NoDebt's picture

Agree with Jeff except he missed an alternative outcome- bail-out but with existing equity holders zeroed out (diluted to near-zero).  Or same same with bail-in.  Or both a bail-out and bail-in, in combination.

This fucker is BIG.  They're going to need to use multiple tools simultaneously, I think.

Agreed, uninvestable.

back to basics's picture

He is not talking about "investable", he is talking about tradable.

And I agree with him, it's untradable because no one knows when it will be bailed out.

But one way or the other, bailed out it will be. There is no other choice. 

kenny500c's picture

Who will be bailed out? Stockholders, bondholders, large depositers, small depositers, counterparties?

TheReplacement's picture

Do you think the Euro will be stronger or weaker, regardless of bailout, bailin, bailup, baildown...bailallaround?  The biggest bank in the strongest economy in Europe is puking.  Does that instill confidence in the Euro or not?

Just ahead of the contagion wave (hours, maybe days, not weeks), do the dollar and yen strengthen in comparison? 

What is China's exposure and how long does that take to ripple through? 

Does it hurt Russia in any noticeable way since they have already been forced to adjust to sanctions for quite some time now?

I sure wouldn't be long anyone who is heavily invested in DB.

GreatUncle's picture

You know that little fucking island called Japan who bailed out its banks and went full retard on QE?

This is the same but much fucking bigger it is the only way for them to keep it all going for now and Rotschild central banks will all step in to support it and will have nothing to do with the ECB or Germany although Germany will be owned at that point.

One sure bet ... DB is TBTF period so then it must be a valid investment in a ZIRP world where 0% is a decent bet and where the Rothschild central bank system can handle it.

Might sound crazy, the system never goes down on finances alone the final plug comes when near 70%+ of the population are prepared to riot and reckon we are still only at the 30% mark so a way to go yet.

Winston Churchill's picture

Strong support at 0.0 per share.

GreatUncle's picture

ZIRP, or a NIRP world, not so sure on the 0.0 a share concept anymore.

You go into a NIRP world you can put money into DB just to avoid paying NIRP and that is better at 0.0.

USofAzzDownWeGo's picture

I don't trust this jew. In fact, I don't trust any jew. 

DCon's picture

You can always trust a Jew

To Do what is in the best interest of him or herself

Treason Season's picture

In theory I disagree. In practise... .

Osmium's picture

So they may get bailed out, they may not.  So you have to ask yourself one question.  Do I feel lucky?

cognitive dissident's picture

if Gundlach claims they will be "saved", then it's almost more likely that they will NOT BE. And if they are nationalized, then the EU dissolves like an alka seltzer within days, not weeks, Au/Ag both rocket to new highs against the Euro, and landmines will be everywhere.

a bailout of DBAG is not necessarily "good news", such an event would merely prolong the coming pain even longer.

GunnerySgtHartman's picture

a bailout of DBAG is not necessarily "good news", such an event would merely prolong the coming pain even longer.

1000% correct, sir!  I would give you multiple votes up if I could.

BandGap's picture

DB gets bailed out and you can bet Commerzbank and all those Italian and Austrian banks will be lining up for their handouts. This is a no-win situation.

The only reason for the stall is so the preferred customers can get their loot while they figure out how they can pee on the peons.

GreatUncle's picture

a bailout of DBAG is not necessarily "good news"

The thing we have not learned is to bailout a failed entity is to then pay the cost of that entity until it eventually fails.

It eventually fails because as Japan is finding out there is no global economy to build a recovery hence the Hanjin shipping collapse.

BURN THAT FUCKER NOW!

Rainman's picture

 ....40% upside on a penny stawk is sweeeet !  just need to guess which penny is the buy.

Bay of Pigs's picture

Buy at 6 cents and sell at a dime?

Okay, got it.

Sanity Bear's picture

Why would they pass up an opportunity to steal trillions from tax serfs?

trader1's picture

is DB having another "Lehman moment"?