This Is The Rumor Causing The Spike In Deutsche Bank Shares

Tyler Durden's picture

In the past few hours, DB stock has staged a dramatic rebound, surging from its overnight -9% lows, to green on the day. What is causing it: after all, aside from a trivial "Dick Fuld-esque" letter by John Cryan to his employees blaming speculators for the plunge, there has been no actual news.

The catalyst for the spike is again a rumor.  As Bloomberg writes, "there has been trader unsubstantiated speculation - launched on Twitter - that the bank may reach a lower RMBS settlement with the U.S. DoJ than feared."

"unverified handles on Twitter speculate the DoJ fine may be $5.4b, vs reports earlier this month the DoJ had sought $14b. Unverified handles including @fiatcurrency, @Fxmacro Tweet or retweet the speculation."

The rumor got extra significance after some traders repeated and "justified it" in the process, to wit: "Deutsche Bank stock is being helped by speculation the DoJ settlement could be lower than feared," Sylvain Loganadin, market analyst at FXCM, told Bloomberg by phone. “People don’t want to stay short on Deutsche Bank going into the weekend in case there’s a statement”: Loganadin

Putting the rumored $5.4 billion number in context, earlier today JPM said that there is a possibility that "DB settles US RMBS at an amount inline with our expected level of $3-4bn leading to no capital raise" however it admitted that another alternative is that "the DOJ demands significantly more than c$4bn which DB would be reluctant to accept in ourview as it would otherwise trigger a capital raise."

* * *

The catalyst for the rumor is a phone conversation held earlier today between the US president and German chancellor although as Bloomberg reported just before 6am, President Barack Obama and German Chancellor Angela Merkel didn’t discuss U.S. Justice Department’s case against Deutsche Bank AG during phone call, according to German government spokeswoman Ulrike Demmer.

Adding some color to potential regulatory intervention, Bloomberg also noted that when asked about concerns over Deutsche Bank, chairman of the White House Council of Economic Advisers Jason Furman says Obama administration is monitoring banking system daily. 

Furman, speaking at a Bloomberg breakfast in Washington, says Europe made less progress than U.S. in protecting banks. “They’ve made less progress in terms of increasing capital for their financial institutions, less progress in putting in place some of the mechanisms we have for resolving them,” Furman says about Europe.

However, he adds that “there are a lot of mechanisms both within Europe and within the U.S.” to protect the financial system, Furman says.

It was not clear if that included bailouts.

* * *

Naturally, Deutsche Bank has refused to comment on speculation around the level of the DoJ fine.

Which means that should the DOJ make no announcement on Sunday, any buying spree today in DB may promptly turn into another selloff. Making matters worse, with German trading closed for holiday on Monday, only the far more illiquid US tracking stock will be open, which may accentuate any potential selling.

*  *  *

As a reminder, there were "fixes" galore in 2008
and rumors sent Lehman stock soaring over 10% in at least 6 weeks
during the last few months...

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Txpl9421's picture

Sell Mortimer! Sell!

Bumpo's picture

Que next wave of selling on news there's still something left to liquidate!

ParkAveFlasher's picture

I don't see the word "Gartman" on this chart, thus I'm ignoring it.

nibiru's picture

I'm waiting for Janet to bail out DB. 

SomethingSomethingDarkSide's picture

Too big to fine?  How far we have fallen..

Mr. Kwikky's picture

Bloody hell...they found a parachute

khnum's picture

A poster here nailed it the other day the supercomputers that frontrun major markets can predict the future far enough ahead that they can avoid any major doom and always guarantee a buyer and a seller its a new paridigm there NEVER will be another crash unless deep state wants it

Cognitive Dissonance's picture

Buy on the rumor, sell on the news. As old as the hills.

SomethingSomethingDarkSide's picture

It's all fun and games until a counterparty goes belly up and the ledger gets exposed in the sun light

NotApplicable's picture

Well, luckily the world has a counterparty of last resort.

Mr. Kwikky's picture

Andy Hoffman knows al about these computer alghoritms..it's time someone reads him and acknowledge his forsight along with Martin Armstrong and a few other experts..

BTW: About the Deep State, the elections are also rigged according to this computer programmer, Clint Curtis:
https://www.youtube.com/watch?v=K7tjnuG-l6g

Mustafa Kemal's picture

"supercomputers that frontrun major markets can predict the future far enough ahead"

The "can" part of this is unsubstantiaed claim.

Morevoer, if you believe it then you will believe the predictions of the climate scientists models.

Bush Baby's picture

Did DB short it's own stock and then start the rumor ?

Antifaschistische's picture

So...I'm guessing Goldman was going to lose a truckload of money in the DB blow-up.  So, they yanked the chain at the DOJ.  then they take a heavy position knowing which way the wind will blow over the weekend as a bonus.

NotApplicable's picture

Thing is, I can't imagine the DOJ levying the fine in the first place (or fedgov doing anything in general) without GS input.

pods's picture

Buy cheap calls, Tweet some bullshit, cash out.

This market is like Hammer.  Too Legit To Quit.

pods

Bush Baby's picture

So what is the fine 14 Billion ?

That's shoe shine money , Bill Gates could write that check and still be the richest man on earth.

If that's all it took , why is DB even crashing?

Cognitive Dissonance's picture

Fractional Reserve banking is a confidence game. And 'confidence' is gained from the illusion of ironclad rules and regulations not just for the bank, but for the system. When a bank appears to be violating the rules and regulations, the con begins to collapse.

An outside infusion of money from, say Bill Gates, where he just writes a check violates the rules. The infusion must come from within the system that also abides by the rules.

However, if Bill Gates were to purchase a new issue of stock with $14 billion, well....that would be a 'recapitalization' which is well within the rules.

If you live by the rules, you die by the rules. If you are dying because of the rules, you can also be brought back to life by the rules.

Antifaschistische's picture

which is probably why Yellen said it may be a good idea for the FED to consider buying stocks.  Problem solved.

spastic_colon's picture

this would be really suspicious if it happened on a friday at the EOM and/or EOQ  /s

Ghost of PartysOver's picture

Month End and Quarter End.  Hedgies need a better statement to send  to clients.  They need to create as many BS Rumors as possible.

spastic_colon's picture

sorry ghost i should have kept reading the comments...........

MFL5591's picture

The courrption taking place should be enough for ALL Americans to realize this group of trash needs to be thrown out of DC.

JackT's picture

Load up the cattle cars.

What's it called when the body goes through fits and spasms just before giving up the ghost?

pods's picture

Not sure what it is called, but Hillary started doing it.  So close!

pods

medium giraffe's picture

beat me to it pods. touche :)

JackT's picture

That last Lehman and DB comparison chart...I just don't see the timeline spanning 3-4 more months.

el.kabong's picture

Death rattle.... You're welcome ;-)

PS - Great name for a band....

BandGap's picture

DB is like an elephant with incurable cancer.

Got to keep that door open so "friends" of the bank can get out. Then, let it go.

My only question is how many of the people that have cashed out are returning today? None? OK, then. My bet is that some idiots are buying the rumor and the dip. Nothing has changed. Greed rules but the theatre is still on fire.

waterwitch's picture

I can't stand the suspense!

ShrNfr's picture

Then sit down, grab some popcorn and enjoy.

Rubicon's picture

Thank God for the DOJ!

The Merovingian's picture

Fear and Loathing on Wall Street.

ss123's picture

AAPL showing some weakness now

ss123's picture

I know this is OT, but something is going on here.

cognitive dissident's picture

complete and utter garbage, again, every time... anything to kill the VIX, obviously.

here's hoping their toxic trash explodes and takes everything down with it.

getting old...

SeattleBruce's picture

I'm sure Obama and Merkel were talking about recipes...

Vinividivinci's picture

Banner headlines, like this one from Marketwatch.com, feed into the bull(shit)ishness we're seeing this morning...
"http://www.marketwatch.com/story/why-a-deutsche-bank-bust-wouldnt-be-as-..."
"Wouldn't be as bad as Lehmans"...??? wtf ??
Is it gauche to eat popcorn with my morning coffee? 'cause this shitshow is entertaining as fuck!

Huh Reeeally's picture

the bull(shit)ishness we're seeing... "Wouldn't be as bad as Lehmans"...??? wtf ??

Classic! Logged in just to upvote you Vinividivinci

Paul Morphy's picture

Shows how synthetic times are when a yarn on Twitter is given credence.

 

Bob Hope and no hope.

Clock Crasher's picture

Bullish reversal

Dead cat bounce +100% to the 20's

 

Shitmehita?  FAIL

Armed Resistance's picture

This is beyond comical. This intervention will continue to work until it won't. And then, look out below!

Sofa King's picture

This provides a good opportunity for anybody with half-a-brain to get the fuck out and not look back.

 

 

FreeShitter's picture

No shit, what rumor? Its the moneychangers up to their usual buying tactics......its friday and we cant have a negative day especially from doosh bank

Clock Crasher's picture

Excuse me Super Shitmehita

 

Short squeez will now commence and not stop for several years. 

 

Get with the program

HenryKissingerChurchill's picture

Super Shitmehita:  Short squeez will now commence and not stop for several years. 

 Get with the program

Jew heeeew!

azusgm's picture

The jubilee years are timed by the shemitahs. Jubilee runs from the Yom Kippur after the end of the 7th shemitah to the next Yom Kippur. Don't breath a sigh of relief the day after Rosh Hashana. You're not done.

Bank_sters's picture

How many of you have had a government tax, levy, fine etc cut because you fell on hard times?   Anyone.  Anyone?