Is Soros On The Ropes?

Although multi-billionaire hedge fund tycoon and international political pot-stirrer George Soros lost big with the election of Donald Trump as president of the United States and the victory of the Brexit referendum in the United Kingdom, he stands to lose further ground, politically and financially, as the winds of political change sweep across the globe.
Soros, who fancies himself as the master of placing short put options on stocks, often cleaning up to the tune of billions of dollars in the process when the stock values collapse, has been dealt a few financial body blows. Recently, the Dutch securities market regulator AFM accidentally revealed on line all of Soros’s short trades since 2012. Soros’s trades were revealed on AFM’s website and were removed after the regulator realized the error. However, the Soros data had already been captured by automatic data capturing software programs operated by intelligence agencies and brokerage firms that routinely scour the Internet looking for such mistakes.
Among the bank shares targeted by Soros was the Ing Groep NV, a major institution and important element of the Dutch economy. After campaigning against Brexit, Soros bet against the stock of Deutsche Bank AG, which he believed would fall in value after Britain voted to leave the EU. Deutsche Bank stock fell 14 percent and Soros cleaned up. But Soros’s celebration was temporary. With Trump’s election, Soros lost a whopping $1 billion in stock speculation. Surrounded by his fellow financial manipulators, Soros explained his recent losses while attending the recent World Economic Forum in Davos, Switzerland.
Soros’s mega-wealthy cronies placed their own bets against smaller Dutch firms. Those firms included Ordina, an information technology firm; Advanced Metallurgical Group; and the real estate group Wereldhave N. V.

This post was published at Zero Hedge on Jan 29, 2017.

Nothing fake about the top 0.1% holding the same amount of wealth as the bottom 90%.

While people argue about what is real and fake news the widening gulf of inequality in the real world only continues to expand. This is actually happening and for the ultra wealthy that hold most of the wealth, all of this distraction is a good thing. The latest wealth report from Deutsche Bank Research shows that wealth inequality is at levels last seen during the Roaring 20s. The problem with this kind of inequality is that it has come from largely hollowing out the middle class and also creating a large crony financial system that is designed to suck out productivity in the real economy and shuffle it over to folks in suits sitting behind Bloomberg terminals. In other words, those that work and build the economy get shafted from the financial hubs of the world. This global financial drain does not adhere to national borders but is driven by the worldwide financial elite that collect trophy apartments in major metro areas. All this happens while your typical American family struggles to buy a home. There is nothing fake about the current level of wealth inequality.
The wealth spectrum
One of the most startling figures in the latest report is that the top 0.1% hold as much wealth as the bottom 90%. And this is happening in the United States, the wealthiest nation in the world.

This post was published at MyBudget360 on November 26, 2016.

Five Things You Should Know About the Deutsche Bank Train Wreck

Too big to fail is about to get tested once again.
Deutsche Bank – Germany’s largest, and in many ways the embodiment of the global financial system – as you may have heard, is in a spot of bother.
The U. S. government is considering imposing a fine of around $14 billion on the bank for selling faulty mortgage-backed securities in the run up to the financial crisis. That’s on top of the fact that Deutsche and other European banks have been struggling with negative interest rates, which are squeezing profits. In all, Deutsche Bank’s DB 6.79% market cap has now shrunk to nearly its proposed fine, provoking fears that the bank might have to be helped out the German government, or be wiped out. So far, Germany’s Chancellor Angela Merkel has said that there will be no bailouts for Deutsche Bank.
But while Germany says it won’t stop a Deutsche bank failure, how worried should the U. S., and investors, be about it? Ultimately, the new regulations put in place since 2008 to contain Too-Big-To-Fail banks should mean that there will be no direct impact on the average American. But here are a few reasons why you should still keep an eye on it.
Too Big to Fail was always a bit of a misnomer. What really makes a bank a risk to the financial system as a whole is the degree to which it is interconnected with other institutions, i.e., its ability to spark chain reactions of non-payment if it should ever default. By this measure, Deutsche is frighteningly indispensable. It’s a counterparty to virtually every major bank in the world, in virtually all asset classes. This illustration from an IMF report in June gives you some idea. This is why I argued yesterday that the German government, which together with the European Central Bank is responsible for supervising Deutsche, would be highly unlikely to let it fail in a disorderly manner la Lehman Brothers.

This post was published at David Stockmans Contra Corner on September 30, 2016.

It’s Not Really About Deutsche Bank

It is never a good thing when official sources either named or unnamed are quoted in the media as denying bailout discussions. For any bank such rumors and denials are harmful because, obviously, they are a reflection of common perception. Furthermore, most people know all-too-well the true nature of any denials, thus reinforcing only that much more the troubling perceptions in the first place.
For Deutsche Bank to be the institution in question is altogether different. When Germany’s Commerzbank, for example, was forced to request a capital injection from the state’s bailout fund SOFFIN in November 2008 that was a sign of the times. It was just another bad sign in an ocean of them. Should Deutsche Bank even get connected to something like that is perhaps a sign of renewal of those times.
Deutsche Bank is not Commerzbank; in many ways Deutsche is the last remaining remnant of what is left of the reigning wholesale, eurodollar system. Where other banks long ago saw this depression for what it was (all risk, no reward), DB was siding with central bankers and deploying ‘capital’into EM’s and junk bonds. The bank was reticent to reject its derivatives book, once a source of nearly all its power and strength. And it was dreams of reclaiming lost grandeur that drove the bank into its currently perilous state. When the firm first announced estimates for its coming loss in October last year, I wrote:

This post was published at David Stockmans Contra Corner by Jeffrey P. Snider ‘ September 26, 2016.

At a Time of Political Darkness in America, Our Whistleblowers and Activists Give Us Reason to Hope

Over the past week Rasmussen polls have captured the epic disgust of voters in the direction America is heading. Only 31 percent of likely voters believe the country is heading in the right direction;67 percent of voters are angry at the current policies of the federal government; and just 24 percent trust the federal government to do the right thing most or nearly all the time.
The smooth functioning of the U. S. economy is based on citizens having confidence in the country’s leaders. Over two-thirds of the U. S. economy stems from consumer spending. When consumers lack confidence, they scale back spending. When businesses lack confidence, they lay off workers or stop hiring. When new home buyers lack confidence, they postpone signing a contract. Last Friday, Bloomberg News reported that the CEO of Signet Jewelers Ltd., Mark Light, was blaming a slowdown in diamond wedding ring sales on ‘a presidential campaign season that has scared couples into closing their checkbooks.’
No Federal agency has done more to drain investor and consumer confidence than the crony Securities and Exchange Commission. Public revulsion of the SEC has now reached such epic proportions that a whistleblower, Eric Ben-Artzi, has turned down his half of a $16.5 million whistleblower award from the SEC for alerting the agency that his former employer, Deutsche Bank, had been inflating the value of its credit derivatives to avoid taking losses. The SEC imposed a $55 million fine on the bank but took no further actions against the employees who were responsible for misspricing the derivatives and hiding the losses.

This post was published at Wall Street On Parade on August 30, 2016.

There’s been a ‘serious and dangerous’ slowdown in productivity

When the US gross-domestic-product growth was released last Friday, the numbers were disappointing. The US economy grew at an annualized rate of just 1.2% in the second quarter, much weaker than expected. When combined with the results of the first quarter, the economy is growing at about a 1% annual rate, according to The Wall Street Journal – the worst first-half performance since 2011.
Many economists think one of the big reasons for this weak expansion is a slowdown in total-factor productivity, a phenomenon that has been occurring in the US – and, to some extent, other developed countries – since 2004.
A Deutsche Bank research note, which was sent out before the release of the GDP numbers, lamented productivity as ‘abysmal’ and a ‘substantial risk to the growth outlook.’
‘Annualized productivity growth has been just 0.9% during the current expansion, and even this low reading has been buoyed by large productivity gains early in the cycle due to massive economy-wide layoffs in the aftermath of the recession,’ the report said.
And the recent trend has been even weaker, the note said: ‘Productivity has grown at just 0.7% over the last four quarters and at an annualized pace of only 0.6% since the start of 2010.’
This ‘productivity puzzle’ was the subject of a recent episode of ‘Alphachatterbox,’ the Financial Times’ podcast about economics and business. ‘Puzzle’ refers to the seemingly paradoxical idea that our productivity isn’t going up, despite all the innovation around us, said Isabella Kaminska, the host of the podcast.

This post was published at David Stockmans Contra Corner on August 5, 2016.

Deutsche Bank Issues Blistering Attack – – Says Desperate Draghi Risks Destroying Entire ‘European Project’

The European Central Bank’s loose monetary policy risks destroying the European project, Deutsche Bank has warned.
In a blistering attack, Deutsche suggested the ECB had ‘los[t] the plot’ and that its ‘desperate’ actions raised the risk of a potentially ‘catastrophic’ mistake by the central bank.
David Folkerts-Landau, Deutsche’s chief economist, said negative interest rates and quantitative easing had hurt savers and allowed politicians to delay badly-needed structural reforms.
‘ECB policy is threatening the European project as a whole for the sake of short-term financial stability,’ he said in a note titled ‘The ECB must change course’.
It said: ‘The longer policy prevents the necessary catharsis, the more it contributes to the growth of populist or extremist politics.
‘The benefits from ever-looser policy are diminishing while the litany of distortions, perversions and disincentives grows by the day. Savers are punished and speculators rewarded. Bad companies survive while good companies are too scared to invest.’
The German economist also warned that the ‘whatever it takes’ stance taken by president Mario Draghi and the ECB had ‘distorted the market-based pricing of government bond yields’.

This post was published at David Stockmans Contra Corner on June 9, 2016.

Bigger Than Subprime – -China’s Bulging Debt Bubble

Here’s yet another sign that China’s economy may be teetering on the brink of a massive debt crisis.
Unproductive debt in China – that is, debt that’s used to drive up asset prices – swelled in 2015, eclipsing the level seen in the U. S. in the run-up to the Great Financial Crisis, said Torsten Slok, chief international economist at Deutsche Bank, in a note to clients published Tuesday.
Slok’s findings are illustrated in the chart below, where he compares the level of credit growth required in the U. S. and China to generate 1 percentage point of gross domestic product growth. (He notes that the red bar for 2015 also grew, suggesting more credit growth is now required in the U. S. to produce one percentage point of GDP growth).

This post was published at David Stockmans Contra Corner By Joseph Adinolfi MarketWatch – June 2, 2016.

It’s Not Different This Time – -Junk Defaults Spreading Beyond Energy

Bond investors appear to have placed their faith in commodities exceptionalism, with many positing that the recent pick-up in U. S. default rates will defy historical trends and remain confined to that industry.
New research from Deutsche Bank AG pours cold water on that idea, arguing that there are already signs of contagion in junk-rated debt outside of the commodities space.
A look at previous peaks in default rates shows the potential for more pervasive corporate stress. While default rates were higher amongst particular sectors – such as telecoms in the early 2000s or financials during the 2008 crisis – the rate for junk bonds excluding these specialized industries also increased significantly.

This post was published at David Stockmans Contra Corner on May 24, 2016.

Mind The Rebounding Dollar – – – There’s Much More To Come

The dollar’s three-week rally is just the beginning, according to Deutsche Bank AG.
A slump by the greenback earlier this year has ‘likely run its course,’ analysts at the world’s second-largest currency trader wrote in a note Friday. The bank favors buying the U. S. currency versus emerging markets – such as China, Mexico and South Korea – following a shakeout in speculative bets on the dollar, George Saravelos, co-head of global foreign-exchange research in London, wrote.
With policy makers from the Group-of-Seven economies meeting in Japan, the Federal Reserve this week gave the dollar a boost by signaling that it may raise interest rates as soon as June. That helped send the greenback to a seven-week high, providing relief to policy makers outside the U. S. who have watched with dismay as a weaker dollar eroded the stimulatory effect of interest-rate cuts and bond purchases.
‘The dollar still has some legs,’ said Sebastien Galy, a strategist at Deutsche Bank in New York. ‘The global dollar trend is probably far less appealing than it used to be, but there’s still some opportunity there.’ The Bloomberg Dollar Spot Index, which tracks the dollar versus 10 peers, added 0.8 percent this week. The greenback rose 0.8 percent to $1.1224 per euro and gained 1.4 percent to 110.15 yen.

This post was published at David Stockmans Contra Corner by Bloomberg Business ‘ May 22, 2016.

JPMorgan, Deutsche Bank, Rothschild Yanked Into Probe Of Goldman-Backed Malaysian Slush Fund

When last we checked in on the 1MDB saga, Goldman was busy tying up a few loose ends.
Tim Leissner, the banker who built the firm’s Southeast Asia operation from the ground up and the man behind a series of questionable deals that funded what would eventually become Malaysian PM Najib Razak’s personal slush fund, was essentially forced out in January, after bank investigators uncovered what they said was an unauthorized reference letter.
Apparently, Leissner tried to secure an internship for the son of a possibly shady businessman tied to an Indonesian copper mine. The story is absurd on all kinds of levels, but rather than recount the entire thing for the umpteenth time, we’ll simply give you the Cliff’s Notes version courtesy of Bloomberg:
Last year he was in talks to provide financing for a group of investors, including Sudjiono Timan, who were seeking to buy a controlling interest in Newmont Mining Corp.’s copper operations in Indonesia, according to two people familiar with the deal who asked not to be identified discussing confidential information.
Timan, whose ties to the Newmont deal haven’t been previously reported, was convicted on corruption charges in 2004. Even though Indonesia’s Supreme Court reversed the conviction in 2013, before the Newmont deal took shape, Goldman Sachs told Leissner it wouldn’t move forward on the transaction as long as Timan was a sponsor, the people said. Timan withdrew as an investor but acted as an adviser to the remaining sponsors, according to the people. When the New York-based bank learned of Timan’s continuing involvement, it decided not to proceed, they said.

This post was published at Zero Hedge on 04/01/2016.

BOJ’s NIRP Move Backfires as 0.001% Deposits Lure Cash of Fund Managers

It’s a strange world when bank accounts earning almost no interest are one of the most attractive investments around.
Despite the Bank of Japan’s efforts to spur risk-taking with negative rates, cash is flowing out of funds targeting bills and commercial paper in favor of 0.001 percent savings plans, according to Deutsche Bank AG and Monex Group Inc. Eleven money-market funds stopped accepting new investment in February as banker association data showed deposits climbed almost 6 percent.
The influx of cash is causing headaches for lenders that either have to pay to park reserves at the central bank or invest in a government bond market with negative yields in maturities as long as 10 years. It also undermines Prime Minister Shinzo Abe’s strategy of encouraging companies and households to invest more of their cash, a key part of his goal to reflate the world’s third-largest economy.
‘This is investment to savings – the exact opposite of what the government has been trying to promote,’ said Nana Otsuki, chief analyst at Monex, a Tokyo-based online securities firm. ‘The banks really don’t want excessive amounts of deposits that they can’t invest, but they do want the customers.’

This post was published at David Stockmans Contra Corner on March 16, 2016.

Behind The War On Cash – -A New Power Grab By Statist Politicians

These are strange monetary times, with negative interest rates and central bankers deemed to be masters of the universe. So maybe we shouldn’t be surprised that politicians and central bankers are now waging a war on cash. That’s right, policy makers in Europe and the U. S. want to make it harder for the hoi polloi to hold actual currency.
Mario Draghi fired the latest salvo on Monday when he said the European Central Bank would like to ban 500 notes. A day later Harvard economist and Democratic Party favorite Larry Summers declared that it’s time to kill the $100 bill, which would mean goodbye to Ben Franklin. Alexander Hamilton may soon – and shamefully – be replaced on the $10 bill, but at least the 10-spots would exist for a while longer. Ol’ Ben would be banished from the currency the way dead white males like him are banned from the history books.
Limits on cash transactions have been spreading in Europe since the 2008 financial panic, ostensibly to crack down on crime and tax avoidance. Italy has made it illegal to pay cash for anything worth more than 1,000 ($1,116), while France cut its limit to 1,000 from 3,000 last year. British merchants accepting more than 15,000 in cash per transaction must first register with the tax authorities. Fines for violators can run into the thousands of euros. Germany’s Deputy Finance Minister Michael Meister recently proposed a 5,000 cap on cash transactions. Deutsche Bank CEO John Cryan predicted last month that cash won’t survive another decade.

This post was published at David Stockmans Contra Corner on February 19, 2016.

When Cash Is Outlawed… Only Outlaws Will Have Cash

Control, Tax, Confiscate
BALTIMORE – Harvard economist Larry Summers is a reliable source of claptrap. And a frequent spokesman for the Deep State.
To bring new readers up to speed, voters don’t get a say in who runs the country. Instead, a ‘shadow government’ of elites, cronies, lobbyists, bureaucrats, politicians, and zombies – aka the Deep State – is permanently in power.
Put simply, it doesn’t matter which party is in power; the Deep State rules. Want to know what the Deep State is up to now? Read Larry Summers.
‘It’s time to kill the $100 bill,’ he wrote in the Washington Post (another reliable source of claptrap).
The Deep State wants you to use money it can easily control, tax, and confiscate. And paper currency is getting in its way.
France has already banned residents from making cash transactions of 1,000 ($1,114) or more. Norway and Sweden’s biggest banks urge the outright abolition of cash. And there are plans at the highest levels of government in Israel, India, and China to remove cash from circulation.
Deutsche Bank CEO John Cryan predicts that cash ‘probably won’t exist’ 10 years from now. And here is Mr. Summers in the Washington Post:
‘Illicit activities are facilitated when a million dollars weighs 2.2 pounds as with the 500 euro note rather than more than 50 pounds, as would be the case if the $20 bill was the high denomination note.’
He proposes ‘a global agreement to stop issuing notes worth more than say $50 or $100. Such an agreement would be as significant as anything else the G7 or G20 has done in years.’
What makes Mr. Summers so confident that a ban on Ben Franklins would be a good thing? It turns out that a research paper – presented by Peter Sands, the former CEO of British bank Standard Chartered, and published for the Harvard Kennedy School of Government – says so.

This post was published at Acting-Man on February 18, 2016.

It Starts – – Wall Street Is Jawing That Junk Bonds Are ‘Contained’

To an economist, the economy can bear no recession. In times of heavy central bank activity, an economy can never be in recession. Those appear to be the only dynamic factors that drive economic interpretation in the mainstream. And they become circular in the trap of just these kinds of circumstances – the economy looks like it might fall into recession, therefore a central bank acts, meaning the economy will avoid recession; thus there will never be recession. It requires that both the central bank will identify the recession correctly and then invent and apply the requisite ‘acts.’
It was never really that simple to begin with, but what happens, like now, when central banks remain in the act (monetary policy, we are told, remains ‘highly accommodative’) but the economy appears more and more like recession? The result is increasing nonsense and absurdity. Such as:
But Deutsche Bank AG Chief International Economist Torsten Slok has some counterintuitive advice for his most pessimistic clients: Buy.
‘I frequently hear clients express very negative comments about the U. S. economic outlook, including the statement that that economy is already in a recession,’ he wrote. ‘The irony is that if you have the view that things are really bad at the moment and we are currently in a recession, then it is actually a good idea to buy risky assets today.’
If there is ‘blood in the streets’, etc. The problem with that saying is that nobody ever tells you how much blood must be in the streets to actualize those sentiments; even if there appears a lot of carnage there might still be room for a lot more. In fact, this happens far more than you think. For economists, they will first tell you that such blood-letting is impossible before being forced to admit it’s there only to suggest there will be no mo

This post was published at David Stockmans Contra Corner by Jeffrey P. Snider ‘ February 1, 2016.

Bank (Un)earnings: Why FICC Is Shrinking And Will Continue To

With quarterly earnings we get quarterly bank earnings. Interest in them should be heightened by all that has happened since June 2014. And it is, only for seemingly the wrong reasons. Deutsche Bank, the latest, reported shockingly negative preliminary results which only continued the trend. Even though the media largely gets it backwards, at some point as enough time passes it doesn’t even matter. We are told bank earnings and revenue are under pressure from a slew of ‘tough markets’ but what makes those markets so untenable in the first place?
Goldman Sachs, one of the purest of the former shadow banks, is shrinking. If they can’t make money in FICC then there is no money. It is bank balance sheets that manufacture the internal eurodollar ‘currencies’ that make it all work. There is no profit in it, to the point now where what little reward looks more like 2009-type levels of decay and dysfunction.
Goldman’s revenue from trading bonds, currencies and commodities (FICC) was $1.12bn, the lowest since the fourth quarter of 2008 during the depths of the financial crisis, during which the firm recorded losses from investments and trading credit products.
Bond trading by US banks has been declining since 2009, mainly due to new rules that discourage banks from taking unnecessary risks.
The connection is blatantly obvious, but the media won’t make it because economics incessantly intrudes, demanding that what is observed isn’t real in favor of what isn’t that looks less likely by the minute. The world acts increasingly like there is a monetary shortage, a dollar shortage no less, but the media can’t seem to find it. Capital rules that ‘discourage banks from taking unnecessary risks’ didn’t do any of that, as banks took a great many risks over the past few years regardless of jawboning about Basel. Those that took more than others, such as Goldman, Deutsche Bank and Credit Suisse, are the very banks that have performed the worst in trying to make money in money. FICC is the guts of wholesale money.
At Deutsche Bank, the struggle here is far less encrypted.

This post was published at David Stockmans Contra Corner by Jeffrey P. Snider ‘ January 22, 2016.

“These Are Extremely Poor Results”: Deutsche Bank Reports Titanic $7 Billion Annual Loss

When it comes to picking a poster child for everything that’s wrong with Wall Street and the financial industry in general, it’s sometimes difficult to decide just who gets the blue ribbon for ‘most nefarious.’
Indeed, since 2008 we’ve learned that virtually every systemically important financial institution on the face of the planet has at one time or another engaged in some manner of chicanery be it the manipulation of the world’s most important benchmark rates, the peddling of worthless mortgage bonds, or the rigging of FX markets.
Having said all of that, Deutsche Bank may well qualify as the institution that ‘best’ exemplifies the banking industry’s penchant for greed, corruption, and general malfeasance.
From rate rigging to book cooking to deplorable HR procedures, the German lender has it all and last summer, the bank showed co-CEOs Anshu Jain and Jrgen Fitschen the door amid shareholder pressure to reform the corporate culture and improve performance.
To be sure, new CEO John Cryan has his hands full.

This post was published at Zero Hedge on 01/21/2016.

Inside The Junk Market – -The Breakdown Goes Far Beyond Energy

Many investors blame the escalating weakness in corporate credit on falling commodity prices. But that’s only one piece of the story, one that ignores a collapsing credit cycle amid a much broader global slowdown.
Standard & Poor’s said on Tuesday that the outlook for corporate borrowers worldwide was the worst since the global financial crisis, with potential corporate downgrades outpacing possible upgrades by the most since 2009. This has been attributed largely to slower growth in China and a commodity rout that’s cut prices to the lowest since 1999.
In reality, the pain goes well beyond that. Industry sectors representing about 70 percent of the high-yield bond market have more than 10 percent of bonds trading at distressed levels, Deutsche Bank analysts Oleg Melentyev and Daniel Sorid said in a Jan. 8 report. That includes technology, media, consumer products and casino-operating companies, not just oil drillers and miners.
The ratio of deeply distressed bonds, or those yielding 20 percentage points more than benchmark rates, has continued to increase, reaching 8.8 percent for all high yield and 4.2 percent for the market excluding energy companies, the analysts wrote. This ratio is tightly correlated to default rates and points to an escalating number of insolvencies across a variety of industries.

This post was published at David Stockmans Contra Corner on January 13, 2016.