A beleaguered Deutsche Bank is set to slash the investment bank bonus pool by some $566 million as John Cyran's effort to right a sinking ship continues. As Bloomberg reports, "no decision has been taken and the biggest reductions are likely to impact employees in the fixed-income business. Some managing directors may have their entire bonus scrapped, according to the person."
- Great News: China’s GDP Growth Beats Forecasts as Stimulus Supports Spending (BBG)
- Oh wait, maybe not: China GDP: Deflategate Comes to Beijing (WSJ)
- Actually, definitely not: Shanghai rebar falls to record low after weak China GDP (Reuters)
- But who cares: European Shares Gain on Earnings as Bonds Drop, Metals Decline (BBG)
Moments ago, Europe's largest bank by assets and by gross notional derivatives, announced a raft of high-level management changes as part of an anticipated and sweeping restructuring of key divisions and senior-level committees. As WSJ reports, Colin Fan, the investment-banking co-head responsible for securities trading, will resign effective Monday. But the most profound change is that Deutsche Bank will split its investment bank into two pieces: one, focused on mergers and other deals, corporate finance and transaction banking services such as cash management, and the other on trading and global markets.
Over the past few years three things have 'worked' - Buybacks, Biotechs, and Buying IPOs. Those days are now over...
The global Bubble is bursting – hence financial conditions are tightening. Bubbles never provide a convenient time to tighten monetary policy. Best practices would require central bankers to tighten early before Bubble Dynamics take firm hold. Central bankers instead nurture and accommodate Bubble excess. It ensures a policy dead end - the faltering global Bubble has progressed beyond the point where Fed rate policy has much impact.
CEOs are not the most trustworthy figures in society. They will lay off thousands of employees to beat analysts' estimates, and yet they have no trouble looting the stock to pay themselves millions while the company loses money. However, one theme that keeps coming up is that unethical behavior has a price tag. With this in mind, consider the implications when the New York Fed tells us that economic activity declined because of the weather. Now that it's summer, it's not clear how cold weather is interfering. Perhaps the Fed has a South Pole subsidiary? When will the market crash and the Fed be replaced for lying about poor performance?
Corporate executives offer three main reasons for share repurchases: 1. Buybacks are investments in our undervalued shares signaling our confidence in the company’s future; 2. Buybacks allow the company to offset the dilution of EPS when employee stock options are exercised or stock is granted to employees; or 3. The company is mature and has limited investment opportunities, therefore we are obligated to return unneeded cash to shareholders. The logic behind each of these explanations is in the vast majority of cases is flawed, to be kind, and deceptive to be blunt.
Moments ago, the biggest single employer in the US after the Federal government, with 2.2 million workers, surprised its shareholders when it announced that Rob Walton, who had served as Chairman of the Board since 1992, was stepping down (he will stay on as a director) and would be replaced with vice-Chairman Greg Penner, grandson of founder Sam and son in law of Rob, who started his career at Goldman Sachs before joining WMT as a management trainee.
GE’s announcement that its getting out of the finance business should be a reminder of how crony capitalism is corrupting and debilitating the American economy. The ostensible reason the company is unceremoniously dumping its 25-year long build-up of the GE Capital mega-bank is that it doesn’t want to be regulated by Washington as a systematically important financial institution under Dodd-Frank. Oh, and that its core industrial businesses have better prospects. We will see soon enough about its oilfield equipment and wind turbine business, or indeed all of its capital goods oriented businesses in a radically deflationary world drowning in excess capacity. But at least you can say good riddance to GE Capital because it was based on a phony business model that was actually a menace to free market capitalism. Its deplorable raid on the public purse during the Lehman crisis had already demonstrated that in spades.
The End Of Guitar Center (And An Irrational Addiction To Growth & The Scourge Of Unregulated Structured Finance)Submitted by Tyler Durden on 02/05/2015 20:15 -0500
The fact is, the die is cast. In a couple of weeks, Guitar Center will need to report its Christmas performance to its bondholders. If things do not look good, its bonds will be ripped apart like RadioShack’s. Here’s what this really means: it’s the end of big box retail, an irrational addiction to growth, and the scourge of unregulated structured finance. For a few years, unwise urban planning and unregulated banks created a new bubble in the American suburbs. The objective truth is that the growth of the last decade was financed by banking fraud, and that financial trickery of this sort only fools people in the short-term. Eventually, you must have a product people demand, sold by competent people who care about the business, financed in a way that makes sense.
Following the deaths of 36 bankers last year, 2015 has got off to an inauspicious start with the reported suicide of Chris Van Eeghen - the 4th ABN Amro banker suicide in the last few years. As Quotenet reports, the death of Van Eghen - the head of ABN's corporate finance and capital markets -"startled" friends and colleagues as the 42-year-old "had a great reputation" at work, came from an "illustrious family," and enjoyed national fame briefly as the boyfriend of a famous actress/model. As one colleague noted, "he was always cheerful, good mood, and apparently he had everything your heart desired. He never sat in the pit, never was down, so I was extremely surprised. I can not understand." Most believe that the suicide is not related to his work at the bank, but a former colleague had noticed that on his Facebook recently changed its job title to "former." Chris leaves behind a son - who had recently been cleared of cancer.
The summer, thankfully, has been largely bereft of the dismal trend of bankers committing suicide, but as Bloomberg reports, Thierry Leyne, a French-Israeli banker and partner of Dominique Strauss-Kahn, the disgraced former chief of the IMF, was found dead Thursday after apparently taking his own life by jumping off the 23rd floor of one of the Yoo towers, a prestigious residential complex in Tel Aviv. This is the 16th financial services executive death this year.
Mega-startups go parabolic. Flame-out already happening.
- Turkey says Syria town about to fall as Islamic State advances (Reuters)
- Only now? Growth worries grip stocks, oil (Reuters)
- Hong Kong Protest Leaders ‘Furious’ at Agenda for Talks (BBG)
- Earthquake Damages Thousands of Homes in Southern China (BBG)
- Keystone Be Darned: Canada Finds Oil Route Around Obama (BBG)
- Where Is North Korea's 31-Year-Old Leader? (BusinessWeek)
- Australia to Revise Employment Data (WSJ)
- Americans Living Longer as Fewer Die From Heart Disease, Cancer (BBG)
- A 401(k) Conundrum: Can You Make Cash Pile Last for Life? (BBG)
- China Services Sector Slows in September (WSJ)
- Liberian Rubber Farm Becomes Sanctuary Against Ebola (WSJ)
- The World’s Most Powerful Central Banker: Janet Who? (BBG)
- Islamic State moves into south west of Syrian Kurdish town (Reuters)
- Waldorf to Be Biggest Chinese Property Purchase in U.S. (BBG)
- Spain Seeks People in Contact With Ebola-Infected Nurse (BBG)
- Hong Kong protests at crossroads as traffic, frustration pile up (Reuters)
- Immigration: Grim Caseload at the Border (WSJ)
- China Cuts Thousands of ‘Phantom’ Workers From State Payroll (BBG)
- U.S., U.K. Regulators Push to Settle Deutsche Bank Libor Case This Year (WSJ)
- Wall Street Moles Go to NY’s Top Cop, Spurning SEC Cash (BBG)
- Pimco's outflow headaches only just beginning (Reuters)
- Japan Lawmakers Flag Need for Exit Strategy as Yen Falls (BBG)