Tag Archives: Deutsche Bank

Famous Last Words – Deutsche Bank: “We Don’t Need A Bailout”

“[The] share price is low but that is not what is worrying us and that is not what we are looking at. What is really important to us is our credit story which is very strong, it is fundamentally strong.” – Jorg Eigendorf, head of communications at DB on CNBC (sourced from Zerohedge)

“The credit story is strong?”  To begin with, I’m not sure what the head of communications is doing on bubblevision talking about “credit.”  If he understood the meaning of the words he was regurgitating from script, he would not have made that statement if he were under oath.

From a German politician (as reported in Zerohedge):  “you can’t compare Deutsche Bank with Lehman. The bank is in a position to get out of this situation on its own.”  As the adage goes:  A rumor is confirmed as fact once that rumor is denied three times by politicians…

DB stock is down over 7% today.  It’s likely the primary reason that the SPX is down 13 points as I write this (that plus the dismal new home sales report).  DB stock has hit another all-time low.  DB has lost 51% of its market value this year.  The BKX bank stock index is down only 4% this year.  The relative performance isn’t just a red flag, it’s a “code red” five-alarm danger signal.

Here’s the biggest indicator that DB not only has credit problems, but its assets are significantly overvalued by its auditors and internal financial people:   DB’s stock market capitalization is 30% of it’s book value – i.e. DB trades at less than 1/3 its book value.   The amount of cash on DB’s balance sheet is nearly 7x greater than its market cap.

There’s no telling just how catastrophically insolvent DB is because we can’t look at its off-balance-sheet “assets,” which are primarily very risky OTC derivatives.  I also do not believe that DB is the infamous “black swan” because we all see it coming – especially the Central Banks.

But at some point some counter-party to DB is going to ask the bank to post more collateral against some type derivatives contract.  That’s when the fun will begin.  My bet is that right now the Bundesbank – with help from the Fed – is helping DB reinforce its collateral positions.   But if DB’s stock keeps dropping, the collateral calls will likely intensify and come from places that are hidden from even Central Bank view.

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As I was writing this, DB stock has been continuously hitting new lows.  Note the huge increase in monthly volume in the graph above (yellow box).  That’s institutional investors jumping off the sinking Titatanic into life rafts.  There has not been any insider share activity in the last 12 months because insiders don’t own any shares, other than a meaningless amount of unvested compensation shares.

Something ominous in the financial markets is unfolding behind the “curtain,” off-balance-sheet and out of the view of anyone who might care to know the truth.  DB’s balance sheet is a weapon of mass financial destruction in and of itself.  But the hidden financial bombs a DB blow-up will trigger is what the market should really be worried about…

IRD On Kennedy Financial: Janet Yellen Is A Complete Embarrassment

Predictably, the FOMC once again fell flat on its face with regard to its continuous threats over the last month to hike rates. Despite the politically motivated rhetoric about the strengthening economy and tight labor market flowing from Yellen’s pie-hole, the fact that the Fed is afraid to raise rates just one-quarter of one percent tells us all we need to know about the true condition of the economy.

If I didn’t despise the fact that Yellen has been an incompetent political hack originally inserted into the Federal Reserve system as a political tool since her first tenure as an economist at the Fed in 1978, I would almost feel sorry for her. But the fact that she can stand in front of the public and read off of a sheet of paper scripted with lies about the state of the economy forces me to despise her as much as I despise the entirety of Washington, DC

This analysis of Yellen underscores my view that Yellen is either tragically corrupt or catastrophically stupid:  How Yellen Rationalizes Financial Bubbles

Phil and John Kennedy invited onto their podcast show to discuss the FOMC, Yellen, Gold, Deutsche Bank and some other timely topics:

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Bye Bye Deutsche Bank

It smells like death.

No way to know for sure when the Bundesbank, Fed and ECB lose control of Deutsche Bank’s balance sheet.  But its stock price just hit an all-time low since its NYSE-listing in October 2001.

Anyone who owns the Deutsche Bank “Tier 1” bonds should sell them now. They are currently yielding about 8%, which puts on the same “tier” as U.S. triple-C (CCC/Caa) rated credits.

I’ve been wondering for quite some time if DB’s demise would be the 2016 “Lehman” event, but I don’t think it will be.  Why?  Because Germany has a fabled history in which it has demonstrated a willingness to print trillions to keep its system from collapsing.

Orwell’s Nightmare In Real-Time

“They” know they are losing control.  “THEY” are the elitists who stand silently – some invisibly – behind Capitol Hill and run the country.  “They” includes the Deep State, CEO’s and directors of the largest corporations and the country’s wealthiest families and individuals.  If you would like to see names of some of the latter, read this:  Meet Wealthy Political Donors.

But that list is far from complete.  Missing are people/families/foundations like Warren Buffet, Bill Gates, Phil Anschutz and the Walton family.

Also see, Rogue’s Gallery – Exposing the Group of 30, to better understand who writes the monetary policies and be introduced to another branch of “They”. These are real people, not made-for-TeeVee characters, but actually people that dictate our lives.

The United States’ system of Government has become a pure “Money-ocracy.”  If you have enough money in your bank (and you might own the bank) and are willing to write the checks to the proper depositories (like the Clinton Foundation and the DNC, for instance) then you are part of the Money-ocracy.  If you are not part of the Money-ocracy, you are a middle class yeoman and soon a serf (per Warren Buffet).

In today’s Shadow of Truth (aka the RUCK Report – Rainbows, Unicorns and Cute Kittens), we discuss the transformation of the United States into the largest Banana Republic in history:

The 2008 Collapse Will Continue Without More QE

Craig “Turd Ferguson” Hemke invited me onto this Thursday A2A podcast show last Thursday.  As usual, Turd does a great job of blending irreverent humor and truthseeking in order to flush out cutting-edge insight on the issues affecting our markets.  In this episode we discuss:

  • The history of DeutscheBank and how this is all still relevant today
  • Jim Rickards and his role as a “spokesperson” for gold
  • The relative safety of working with different custodians and online clearing firms
  • The benefits of owning shares in streaming/royalty companies
  • And, as usual, a whole lot more

You can hear our conversation and the excellent questions asked by the members of Turdville here:   A2A with Dave Kranzler of Investment Research Dynamics

Paper Gold Is Legalized Fraud

A lot of questions were raised when it was reported that Deutsche Borse failed to deliver physical gold in exchange for its Xetra-Gold Notes.  But the only real answer to those questions is simple:  the only way you ever own physical gold is if you buy actual physical gold and take possession.

The allegations that Xetra-Gold or Deutsche Bank or Deutsche Borse committed fraud or failed to deliver gold are strictly false.  One thorough reading of the Xetra-Gold prospectus dispels those allegations.  The prospectus little more than a blanket legal disclaimer.   The language is clear.  It says right in the prospectus that the an investment in the Notes “does not constitute a purchase or other acquisition of Gold.”  There is not case for fraud because none of the participants in Deutsche Borse, and Deutsche Borse itself, did not commit any breach of contract per the terms of the prospectus.

The term “economic” in the prospectus is defined (pg 12) to mean that the “bears the market risk associated therewith. If the gold price decreases, provided that all other conditions remain unchanged, such decrease may result in a partial or complete depreciation of the invested capital. If the gold price increases, provided that all other conditions remain unchanged, such increase may result in an increase in the invested capital.

In this latest episode of the Shadow of Truth we discuss why buying paper forms of gold like GLD or Xetra-Gold is nothing more than an investment in a paper claim to the rate of return on gold during the period in which you own the security.  If you don’t hold your gold in your own possession, you don’t own it:

Is The Financial System On The Brink Of Collapse Again?

Craig “Turd Ferguson” Hemke invited me on his podcast series for a discussion about somewhat hidden developments occurring behind the carefully crafted western propaganda facade.

For those who have at least been able to “blow the Orwellian smoke” away from the war on gold, you’ve noticed that the Fed/bullion banks are having a lot of trouble pushing gold lower.  In fact, the current line of battle is at $1300 and I believe that barrier will soon be breached decisively to the upside.

We also discussed the ongoing “controlled demolition” of Deutsche Bank, which currently poses perhaps the biggest threat to the western financial system.  You listen to our conversation in mp3 format with this LINK or by clicking on the graphic below:

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“Thanks for the heads up on LULU and SHW. Bought the SHW July 15 270 strike puts and did well on exit this morning before market reversal” – “Sal,”  Short Seller’s Journal subscriber

“The comparative pittance you charge for the MSJ has already paid off quite well for me and my younger brother.” – “Bill,”  Mining Stock Journal subscriber

Deutsche Bank Is Collapsing – But It’s Not The “Black Swan”

The global financial system is close to going supernova.

Both Credit Suisse and Deutsche Bank stocks are hitting all-time lows.  Both are collapsing despite billions in Central Bank – Fed, ECB, Bundesbank, Swiss National Bank – monetary support.

Deutsche Bank had been advertising a 5% interest rate to customers in Belgium on  90-day deposits of at least 50k euros .  Bank deposits are essentially “loans” to a bank from the depositor (creditor).  This implies that the rate that DB had to pay to attract deposits is equivalent to a triple-C rated credit (although the 10-yr junk bond rates for double-B  rated bonds are around 5.5%, keep in mind that DB is paying 5% for 3-month money).   This is the unmistakable sign of a company that is collapsing.

DB stock was down over 3% yesterday on a day when most big TBTF banks for down 1% or less. It’s down another 2.8% 3% as I write this today, trading below $15/share for the first time ever.   This bank is obviously collapsing and any money manager who holds onto this stock for clients is in serious breach of fiduciary duty.  This is the 2016 version of Enron.

But it won’t be a “Black Swan” event.  The Central Bank authorities knew DB was going to collapse when Anshu Jain was fired in June 2015, literally about  2 weeks after DB’s board had given Jain even more control over bank operations.  However, the Central Banks mentioned above collectively had a year to put a “ring” around the collateral damage – i.e. the derivative counter-party default risks – that occurs from DB collapsing.

The Credit Suisse problems have been far less visible but the behavior of the stock is signalling to us that CS’ problems are on par with DB’s.  I don’t know if both banks will ultimately end up being monetized by a combination of taxpayer bailiouts (including U.S. Taxpayers) and bail-ins.  I would suggest that bail-in capital available would not even remotely address the derivatives-related liabilities embedded in the Credit Suisse’s and DB’s balance  sheets.

My point here is that – unless there’s even bigger problems hidden from the Central Banks, which have had a year now to address the DB/CS situation – a DB collapse will likely cause a sell-off in the stock market, but would not be the “Black Swan” for which everyone is searching.

I don’t know what the Black Swan is or what it will look like.  Otherwise it wouldn’t be a Black Swan, right?  What I will suggest is that the day in which the “box” with Schrodinger’s cat appears and we look into to it to see a dead cat is quickly approaching.  I would also suggest that this is why those who have been calling for a short-term wipe-out in the price of gold have been proved wrong for over two months, despite the blatant daily attempts by the Fed/ECB/bullion banks to push the price of gold lower.

This is a development that no one is talking about – but I believe that is represents a hidden slow-motion financial collapse that will soon accelerate:

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Deutsche Bank Burns – Silver Is The Trade Of The Decade

If I’m right and this is the start of what happened starting in late Oct.2008, guys like Bron and [Jeffrey] Christian and Trader Dan are going to end up looking like the biggest assholes in the world.  Although I think that trip is booked and the train has already left the station, no matter what the price of gold does.  – comments from me to some long-time colleagues

Deutsche Bank management spent Tuesday and Wednesday trying to make the case that it had plenty of liquidity and a gameplan to address structural issues.  They threw the hail Mary yesterday when they announced the possibility of using available “liquidity” to repurchase a few billion euros worth of senior bonds.  I have quotes around “liquidity” because, as I outlined in my blog post about this yesterday, DB is technically insolvent.

What has unfolded this week at the zombie bank is almost exactly the path to collapse taken by Bear Stearns.  In fact, just like he did with Bear Stearns when he issued a table-pouding, booyah screaming buy on Bear Stearns about two weeks before it collapsed, Jim Cramer was out earlier this week telling investors not to worry about Deutsche Bank and that, “the European banks have a plan. The government has a plan…This is not 2008, because they learned from 2008.”

Cramer has proved to be a remarkably accurate contrarian indicator on stocks just ahead of a collapse in price.  DB stock has already partially collapsed since August, falling more than 50% since then.

If you want to dismiss my view, that’s fine.  But ignoring the action in the credit default swaps is a big mistake.  The CDS on DB’s subordinated debt have gone parabolic, jumping to a spread over Treasuries of well over 500 basis points today.   Over the past week, the CDS spread on both the senior and subordinated debt of DB has gone parabolic.  This is the clearest possible signal, other than the truth from upper management, that DB is on the ropes.

CDS investors are among the smartest in the market because they tend to be closest to the real inside information at banks.   I know this because when I traded junk bonds which, prior to the proliferation of CDS, were the “smartest” eyes in the market, our desk was right next to the bank debt trading desk.  The bank debt crew always had access to internal numbers on the companies they traded.  We were very tight with the bank debt traders, if you know what I mean.

This leads me  to silver. I’l be going on record tomorrow in a podcast with Silver Doctors that silver is the trade of the decade.   Also, the LBMA silver fraud fix was the cartel’s last gasp effort to grab as much physical silver as cheaply as possible.  That silver fix event was outright theft of silver from the sellers of physical silver on the LBMA that day.

I believe, just an educated guess, that the accumulation of silver was out the necessity to make deliveries under paper obligations –  LBMA contracts, Comex futures, OTC derivatives.  I believe the looming shortage in physical silver is worse than in physical gold and last summer was an omen of what’s coming.

The ratio of price appreciation in today’s trading for gold:silver is 95:1.  A normalized GSR is 16 or lower.  The GSR hit 32 when silver was approaching its top in 2011.  My point here is that they are throwing the kitchen sink at silver right now to keep the price down as much as possible in order to limit the potential damage that is going to occur to the banking entities that are perilously short paper silver, while their counterparties are starting to pound on “the door” looking for deliveries.

We are likely transitioning into the third and final leg of the precious metals bull market.  I believe that the smart money will eschew all fiat currencies and move their capital into the best possible contra-fiat currency asset:  gold and silver.  Today, for instance, the dollar is down on a day when typically the dollar is used as a flight to safety.  Gold is up $60.   The smart money will get the train wheels rolling and the retail crowd will pile on about 2/3 of the way through the ride, paying extraordinary premiums to get physical gold and silver in their hands.

All fiat currencies are backed by nothing but promises from Governments that are leveraged up to their eyeballs.   Physical gold and silver do not have any counterparty risks as long as you do not buy them on margin and keep them in a custodial account.  The margin risk is obvious, for most people the custodial risk is non-obvious but very real.  Just ask the traders who owned physical silver in MF Global’s Comex warehouse account…

Dave, I wouldn’t be surprised if half of the JPM silver “horde” doesn’t exist and that they’ve screwed clients ala Morgan Stanley (the only mega investment bank to have been officially busted in the last 50+ years for not having customer precious metal in allocated and segregated accounts).  Ted Butler et al. have this wrong too.   It’s not clear how much fraud we’re talking about, but hey, we’re talking JPM.  – a well known market analyst and blog host and silver market expert

Glencore Mirrors The Entire Global Financial And Economic System

  • Collapsing fundamental economics
  • Plunging end-user demand for its products
  • Overloaded with debt
  • Hidden land-mines in the form of OTC derivatives

Who said “black swans” have to be hidden?   Glencore is in full view.  After a dead-cat bounce from a quick descent that took Glencore stock from 310 (pounds) to 68 in 5 1/2 months, the stock is rolling over again and headed lower:

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This isn’t just about the plunging price of copper, which is now back to its pre-financial system collapse price in 2008 and headed lower. Copper is responsible for generating only 36% of Glencore’s operating income.  This is about the plunging prices and demand for oil and all base metals.

It’s about a company (global financial system) that hides a lot of risk, debt, derivatives, corruption and fraud.  Point of example:  Glencore’s funded debt level is $50 billion and it has the capability to draw on credit lines that would take it up to $100 billion.  But the sleazebag snakeoil promoters cite Glencore as having $19 billion in “liquid” inventories so the debt number that gets quoted and widely accepted is $31 billion.   But it’s not.  It’s $50 billion.  And Glencore’s “liquid” inventory is the same base metals that are plunging in price from oversupply and lack of demand.

Furthermore, over 30% of Glencore’s EBIT is derived from what the Company lables as its “marketing” business.  But this is the legacy business that was originally Marc Rich’s commodities trading company.   It’s a corrupted commodities trading and brokerage business. That means it’s riddled with hidden counter-party risks and derivatives.  We don’t know the full extent of Glencore’s risk-exposure in this area because this an area that global financial regulators give financial firms a lot of breathing room with which to cover up the truth using insidious accounting schemes.  But what I do know for sure is that you can rip and toss out any of the research reports indicating the Glencore’s derivatives exposure is limited to $5.2 billion.   The real number is multiples of that.

With 50 billion (pounds) in funded debt and not including hidden off-balance sheet skeletons – Glencore’s debt to market capitalization (13 billion pounds) is nearly 4:1.  That is an extreme degree of leverage for a volatile, commodities-based business which is headed into an economic depression.

Glencore is a microcosm for the entire global economic and financial system.  Including and especially the United States.  And here’s the kicker.  Deutsche Bank is Glencore’s largest creditor.  We can also very safely assume that Deutsche and Glencore are counterparties to a vast web of derivatives contracts.   I’m sure Deutsche has also tried to off-load credit exposure thru the use of credit default swaps with hedge funds and other shadow banking participants.  But who are those counterparties and how is the risk of default on this “insurance” Deutsche has likely “purchased.?”  Glencore has the possibility of taking down Deutsche Bank, which in turn would take down the entire German system.

The rest will flow from there and there will be a lot of blood, including and especially in the United States.

Just like with Glencore, the true degree of ongoing economic collapse and financial risk exposure has been papered over with both QE and more debt issuance.  It won’t take much trigger a financial nuclear explosion.

I would suggest that this is why the Central Banks and the relateve propaganda machine have shifted into full-gear in their effort to prevent the price of gold from engaging in unfettered price discovery.  I would also suggest that this is why the U.S. conducted a highly visible Trident nuclear missile test along the west coast, in full view of Russia and China.