Deutsche Bank Warns 'Contagion Risk' Highest Since 2012

With positioning at extremes, and leverage at extremes, and valuations at extremes, Deutsche Bank's Binky Chadha raises the red flag as the correlation across asset-classes soars to record highs signaling extreme contagion risk.

Very strong momentum across asset classes has seen oil up, the dollar down, equities and bond yields up, with the average correlation between them rising to 90%.

As Chadah conclude, whatever the fundamental case for each of the asset-class trades, extended positioning argues at a minimum for a breather and more likely a pullback soon.

Moreover, the tight correlation in the moves across the major asset classes (oil up, dollar down, equities and bond yields up) suggests a pullback in one for idiosyncratic reasons would likely spill over to the others.

So extended is the positioning that an unwind could occur even without a fundamental catalyst triggering a domino effect, says Chadha. To him, the dollar has “potentially the widest fundamental impact” across assets as its depreciation over the past year has helped support oil and equity prices while contributing to weak inflation that kept yields low.

But fixed income may represent the biggest risk as valuations are “completely out of line with growth” and reflect weak inflation, he said.


All Risk No Reward yogibear Fri, 02/02/2018 - 16:55 Permalink

Well, of course... they've blown up the exponential debt-money bubble to the moon - and it has to collapse at some point because it is based upon prima facie fraud...


"The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks."
~Lord Acton

“When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes. Money has no motherland; financiers are without patriotism and without decency; their sole object is gain.”
~Napoleon Bonaparte

"Let the American people go into their debt-funding schemes and banking systems, and from that hour their boasted independence will be a mere phantom."
~William Pitt, (referring to the inauguration of the first National Bank in the United States under Alexander Hamilton).

How To Be a Crook

Poverty - Debt Is Not a Choice

Renaissance 2.0 The Rise of [Debt-Money Monopolist] Financial Empire

Debunking Money

Krugman (and each MIT economist professor - THEY KNOW AND THEY OCCULT!) is a Goebbelsian propagandist as he covers the crimes of wolves with his fake sheep suit and lisp.

Krugman to Lietaer: "Never touch the money system!"

And It's Gone

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~Martin Luther King, Jr.

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— Albert Szent-Gyorgyi, 1937 Nobel Laureate: “Discovery of the Vitamin ‘C’ COMPLEX”…

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~Andrew Jackson

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D503, Zerohedge Comment

In reply to by yogibear

ted41776 Fri, 02/02/2018 - 12:42 Permalink

what risk? that the virtual printing presses are going to run out of virtual paper to print worthless virtual fiat on? how do i join the too big to jail too big to fail boys club so i can get unlimited loans at no interest that never have to be paid back? give me a fucking break

MusicIsYou Fri, 02/02/2018 - 12:48 Permalink

Oh they must mean because banks have done the exact same thing that caused the 2008 crisis but only the last decade banks did it X 1000. I.E. chasing bad money with good, rolling up bad assets/loans into derivatives to be sold off to other institutions. Yeah that's why the next crisis will be 2008 X 1000. But this time to can add to the stress the new Petro-Yaun.

MusicIsYou Fri, 02/02/2018 - 13:03 Permalink

Want to know why banks inundate your mailbox with so many ads to refinance your home? Because they want to take your good name and asset so they can package it into a derivative with the bad assets the bank is holding. You can tell the health of the economy just by how many refinancing ads that show up in your mail. Banks must be holding assloads of bad assets because I get tons of advertisements to refinance.

MusicIsYou Fri, 02/02/2018 - 13:23 Permalink

You can determine the health of the economy just based on the level of junk mail that comes in the mailbox, the more junk mail the worse the economy. And the economy is in real bad shape, I don't need to read their irrelevant financial charts. That has to be pointed out to the low IQ crowd. They'd like me to believe the economy is doing better, but actions speak louder than words, and a mailbox full of ads is an action.

MusicIsYou Fri, 02/02/2018 - 13:43 Permalink

They'd like me to believe the economy is doing better but they aren't showing me anything to make me believe it. Instead they show me things like Reverse Mortgages which is only banks trying to get their hooks into good assets. And if banks are so hawkish on chasing good assets, well they must have assloads of bad assets.

Blankfuck Fri, 02/02/2018 - 20:23 Permalink