JP Morgan announced back in February that the firm would be scaling back, particularly in “non-operational” deposits. These were not retail deposits in the traditional sense from regular folks doing actual banking, but rather institutional “deposits” linked to shadow conduits and wholesale functions. The idea, along with some other restructuring measures, was to cut about $5 billion in costs over [...]
The capital and now loss projections for Deutsche Bank are, as much as they can be, more straight forward. In terms of Credit Suisse, the dubiousness of the implications is proportional to the “story.” Whereas Deutsche last week shocked Wall Street (and Europe) with a huge potential loss in FICC activities (their CB&S segment), any actual surprise was far overdone [...]
You wouldn’t know it from stock trading or commodities, but when China reopened after its latest Golden Week holiday there was an obvious effect. Stocks have continued to surge while commodities overall have had a good week (copper up another $0.07 today, with WTI at about $50). Inside the money markets, however, China’s open was met with far less enthusiasm, [...]
With China prepared to open again after a weeklong holiday absence, the breaking news from Deutsche Bank signaling a huge loss expectation for Q3 is not good timing. As noted previously, China’s various wholesale “dollar” fill, in the end, is truly dependent on a good and robust “dollar” environment appearing sometime soon. Deutsche was one of the last global holdouts [...]
Before embarking on the great unknown of Q4 2015, it makes sense to try to gain a little more clarity about Q3 2015. Specifically, the “dollar” run that blasted through China and opened the prospects for both an end to Fed/Yellen faithfulness and increasing uncertainty about the true nature of economy and finance globally began around July 6; a day [...]
I think the dominant feature of August was rising interbank “dollar” rates; everything that followed out in the open was traced to “whatever” was taking place in funding markets. Repo rates shot upward, as did unsecured LIBOR (leading to serious credit risk implications via TED). All that led into the yuan crisis escalating beyond the PBOC’s rather limited control (which [...]
This morning HSBC announced plans to radically downsize its cost structure, mostly through cutting jobs. Most of the attention so far has been on the bank’s plans to use the expected profit boosts to fund a period of rising dividend expansion. Immediately, as a business, there is a bit of a conflict in that attempt as typically expanding dividends and [...]
Deutsche Bank over the weekend announced a significant dilution to existing shareholders, raising some €8 billion in equity capital in two distinct transactions. About 60 million shares are being sold in a single transaction to a new “anchor” investor, Paramount Holding Services, the investment fund of the (a?) Qatari Shiek. The second transaction is a fully underwritten offering of up [...]
With earnings season growing closer, banks are beginning to report on their initial estimates of how they fared during the “taper summer”. So far, it is not looking like they did well at all (not that that was a surprise). Despite all their elegant models and simulations, including risk/hedging systems, traditional statistical evaluation, no matter how complex, has trouble with [...]
Stay In Touch