Cryan didn’t know what he was getting into at Deutsche

As many of you who have followed this blog for a time know, Deutsche Bank is a troubled bank that I have written about for the last four years.

Its culture has been one of fraud and corruption that I believe led to murder in three instances.

Into this fray entered CEO John Cryan in 2015. I don’t believe Cryan knew the full extent of what he was getting into. The bank’s culture was one of running operations that bordered on the criminal and crossed that line on many occasions.

Just prior to the Libor scandal breaking wide open, a Deutsche top-tier executive who was in charge of risk was found hanged in his London home.

In New York City a managing director, who worked with the Securities and Exchange Commission to keep the bank out of hot water, was found hanged in his house in Brooklyn.

I believe these executives were whistleblowers on Deutsche’s activities in cheating Libor to make higher profits. To that end they were sidelined.

Deutsche has paid more than $3.5 billion in fines and penalties to settle US, British and EU probes into Libor manipulation since Cryan has taken the helm.

It’s no surprise that Deutsche is the only global banking firm not to see a stock price rebound after the financial crises of 2008. The Street knows its recent pedigree and is staying far away from investing in the troubled bank.

Cryan should have known that when he was going in. I’m sure he is well aware of it now.


Both Powell and Q-Anon on hot seats

New Fed chief Jay Powell ends his first two-day meeting with a press conference Wednesday.

The market has a 90% expectation for a 0.25% rise in Fed Funds Rate to 1.5%-1.25% range. More importantly is Powell’s comments on the economy. Since the Fed is the 800-lbs gorilla in the government bond market, I don’t expect anything sensational coming from his comments.

Any policy changes will be on the edges as traders parse the statement for future moves.

The key to the statement is whether there would be 3 or 4 hikes this year. Powell in Congressional testimony has been perhaps overly optimistic on the economy.

I am on the record saying there will only be this hike for 2018, as Corporate America is addicted to cheap money to pump up share prices by borrowing cash to fund stock buybacks.

The steeping of yield curve — while very good for bank profits if they ramp up lending — increases current borrowing costs at a time of greater issuance to fund corporate tax breaks.

The Austin, Texas bomber killed himself in an explosion this Wednesday morning after a shootout with the police and FBI.

Interesting Q-Anon posted last night that the FBI opened a file on the entity because of the use of BOOMs in his posts and a possible connection to the bomber.

Q-Anon says it’s a ruse to cut off communications, but it will fail.

Big news from small businesses

This is the effect of a pro-business White House means to the US economy.

Main Street’s businesses are looking at a far brighter future, according to the latest survey taken by the National Federation of Independent Businesses.

Small business posted its second highest optimistic score in the history of the survey in February with a reading of 107.6. Continue reading

Deutsche Bank executive woes continue

Deutsche Bank announced over the weekend that its top C-Suite executives would not be getting a bonus again this year.

CEO John Cryan strangely made the announcement Friday night at Austin’s South By Southwest conference, stating that for the third consecutive year top execs would forego year end payouts as the bank struggles to pull itself out of the mire of questionable trading practices.

As many of you may know I wrote extensively three years ago about the rash of suicides within the bank just as the Libor scandal was breaking.

The German uber bank did note that bonuses for other employees would total just over $2B for 2017.

The news comes as the 10-year anniversary of Bear Stearns’ demise hits Thursday, which led to the Great Recession. On March 14th 2008, the Federal Reserve agreed to provide a $25B loan to keep the bank solvent for 28 days as they unwound Jimmy Cayne’s troubled bank.

As the Fed dug deeper into Bear’s books that offer was pulled a day later and on the 16th of March, JPM CEO found the pot gold scooping up Bear for seven cents on the dollar with a $2 a share offer.

Dimon also made sure that nothing on the troubled bank’s books could come back and bite him with Fed chief Ben Bernanke assuring Dimon the Fed would take the hit as it put up $29B and JPM invested $1B for the sale.

In the following week a Bear shareholder lawsuit was filed and JPMorgan raised its offer price from $2 a share to $10 a share to quell the suit. As a point of contrast Bear Stearns stock was trading at $93 a share in late February 2008.

Cohn’s departure impact: Meh

Well what do you know, the sun came up Thursday morning just as it did before Gary Cohn was fired for insubordination from the White House for his Tariff Tantrum.

Oh and the market sell off that the media warned about? Futures are green this morning after a tepid down day on Wednesday.

Cohn was asked to step aside after failing to voice support for the president’s directive to place tariffs on imported steel and aluminum. In an Oval Office showdown Cohn declined to answer Trump when asked.

The key word in Cohn’s title was White House Economic ADVISOR. Pretty foolish of him if he didn’t realize that the President takes advice from many quarters and decides.

The alleged architect of the Trump tax overhaul, which certainly is a misnomer since much of the tax plan was devised during the campaign, while Cohn was still finding busy work to do at Goldman Sachs.

And two points on these dreaded tariffs. One, Trump said on the campaign that he would try to help the little remaining metal-processing industries left in the rust belt states and two, the import taxes charged for the metals is more token than hardship for the manufacturers buying the raw material.

What I don’t understand is how Cohn and the media were surprised by the tariff move. The Trump administration has always been more nationalistic than globalist on trade agreements and economic initiatives.

So all of a sudden now a trade war is striking fear in the hearts of Washington? Or is it that Cohn was a Democrat?

Anyway, good riddance. Gary take your now tax-free half a billion dollar buyout from Goldman and ride off into the sun set, because the sun did come up today.