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.
A Wall Street research firm issued a report Tuesday questioning the leadership and the short-term future of Deutsche Bank.
In the report Autonomous Research stated that the troubled German bank may be “beyond repair” barring a “miracle” boom at its fabled bond-trading business.
Autonomous co-founder Stuart Graham wrote that the past decade of scandals have left Deutsche with a horrible reputation on the street and after paying billions in penalties the bank’s underinvestment in technology has left it a “clear laggard” to rivals like JPMorgan.
As bitcoin has recovered some of its JPM chief Jamie Dimon/China crackdown attack of last week, it awaits the next onslaught.
Trading roughly a $1,000 off its almost $5,000 high earlier this month the cryptocurrency has better resolve than other currencies including the US dollar.
The dollar has lost roughly 10% of its value against other currency this year. Trading near a high of 94 on the WSJ dollar index, today it stands at 85.3. The chart is one long slope down with no peaks since January.
Funny how this metric never comes up in Federal Reserve meeting or discussions. Cheapen the dollar to spur growth is not a sound basis to build a recovery. But Wednesday when the Fed announces its rate decision, we will not hear anything about the dollar’s worth vs. world currencies.
So how much of the roughly $3,000 price gain in 2017 can be attributed to dollar weakness? I would say it can take credit for almost half the gains as more sophisticated investors sought a hedge against a depreciating dollar. Especially the Chinese, which have their yuan pegged to the dollar.
Look for bitcoin to rise further after the Fed holds rates on Wednesday. This will give you more of an indication of who is using bitcoin as a hedge.