Last Thursday, when Deutsche Bank was flailing ahead of the now confirmed fake report of a reduced settlement with the DOJ,Reuters spoke to Jeff Gundlach about his thoughts regarding the German lender, his advice was simple: don’t touch it. “I would just stay away. It’s un-analyzable,” Gundlach said about Deutsche Bank shares and debt. “It’s too binary.” Gundlach said investors who are betting against shares in Deutsche Bank might find it futile. Maybe, but not if they cover their shorts before the max pain point, something which the market – where equity/CDS pair trades now allow a “go for default” strategy – will actively seek out.
“The market is going to push down Deutsche Bank until there is some recognition of support. They will get assistance, if need be.”
What happens then? “One day, Deutsche Bank shares will go up 40 percent. And it will be the day the government bails them out. That jump will happen in a minute,” Gundlach said. “It is about an event which is completely out of your control.”
The very next day his forecast was proven largely accurate, when DB soared some 25% from its overnight lows on, if not a bailout, then a report of a potentiel reprieve, even if the report ultimately ended up being wrong.
Then, earlier today, during the Grant’s Fall 2016 investment conference, Gundlach once again discussed the troubled German bank and said that “you cannot save your faltering economy by killing your financial system and one of the clear poster children for this is Deutsche Bank’s stock price,” Gundlach, 56, said at Grant’s Fall 2016 Investment Conference on Tuesday in New York. “If you keep these negative interest rate policies for a sufficient future period of time you are going to bankrupt these banks.”
Pakistan is making its first foray into international bond markets in almost a year as the country’s three-year, $6.6bn bailout programme from the International Monetary Fund draws to a close.
Citi, Deutsche Bank, Dubai Islamic Bank, Noor Bank and Standard Chartered have been hired to arrange the sale of a new 5-year sukuk – or Islamic bond – which will price later today.
The issuance marks Pakistan’s first appearance on international debt markets since a disappointing sale in late 2015, when the government’s hopes of borrowing $1bn were scuppered by high rates – forcing it to limit the sale of $500m.
According to the World Bank’s latest report, Pakistan has achieved greater macroeconomic stability in the last year, primarily due to fiscal discipline and a reduction in the current account deficit due to falling global commodity prices and the economy is forecast to grow by 4.7 per cent, up from 3.7 per cent three years ago. This has been reflected in higher prices for Pakistan’s existing bonds, which has pushed the yield on a 2024 bond down 2 percentage points since the start of the year to 6.4 per cent.
However the country faces a number of risks including deteriorating relations with India following an attack on Indian army base at Uri last month in which militants killed 17 soldiers. Indian officials claim the attack was perpetrated by Pakistan-based terrorist group, Jaish-e-Mohammad, and have vowed tough action in response.
Around £10bn in tax revenues and 71,000 jobs hinge on the outcome of the UK’s exit negotiations with the EU, according to fresh data on the potential impact of Brexit to the financial-services sector and to the wider economy.
A new report due to be published on Wednesday by Oliver Wyman, the consultants, concludes that the UK may only lose £0.5bn a year in tax revenues and 4,000 jobs — both around 1 per cent of the current respective totals — if the UK can secure similar access to the single market as it currently enjoys
However, those figures plunge at a worst-case scenario — described by its authors as “conservative”, as it does not take into account the wider effects such a loss would have on the wider economy as sacked bankers cut back.
In the report, published by CityUK, the lobby group that argued for a Remain vote prior to the referendum, a “hard” Brexit where there are severe restrictions on the UK’s ability to trade with the rest of the EU would result in 35,000 financial-services jobs being at risk, along with as much as £5bn in revenue that would otherwise end up in the Treasury’s coffers.
UK PM Theresa May was speaking earlier today 2 Oct 2016
I’ve been out all day but re-tweeted to you on my way home so just posting now as I arrive through the doors.
The UK PM first confirmed the much-rumoured end-March deadline to trigger Brexit in an interview on the BBC this morning and has since addressed the Conservative Party Conference where she told delegates:
“We are going to be a fully independent, sovereign country – a country that is no longer part of a political union with supranational institutions that can override national parliaments and courts.
“And that means we are going, once more, to have the freedom to make our own decisions on a whole host of different matters, from how we label our food to the way in which we choose to control immigration.”
Given the two year expiry time of the Lisbon Treaty-based trigger that means the UK will have left by the summer of 2019 and that is at least one uncertainty out of the equation.
What May also confirmed though was that immigration and UK sovereignty will be top of the negotiation agenda at the expense of the single market. That in itself only intensifies the overall uncertainty of how Brexit will pan out. She has denied that it’s “hard Brexit” per se as but the jury’s very much out on that.
The Shanghai Stock Exchange has submitted a letter of intent to buy a stake in the Pakistan Stock Exchange, The Nikkei Asian Review has learned.
The Chinese market operator intends to buy a stake of up to 40% in the PSX.
If it goes through, the acquisition would be the first by a Chinese stock exchange of a foreign bourse.
The PSX was formed in January by consolidating the Lahore, Karachi and Islamabad stock exchanges.
Ayyaz Afzal, former CEO of the Islamabad Stock Exchange, discussed the letter of intent during an interview with The Nikkei Asian Review. Afzal currently serves as a director at the National Clearing Company of Pakistan, a unit under the Pakistan Stock Exchange. He holds other posts as well.
Fitch Ratings has become the latest major rating agency to say UK-based banks and financial services firms can cope with losing their much-cherished ability to “passport” their services in the EU following the Brexit vote.
Should British banks lose their ability to operate across the continent with an EU-wide passport – a “worst case outcome” – the agency said it would not provoke any major change on lenders’ ratings.
“We believe the costs and disruption are likely to be manageable in the context of banks’ overall credit profiles,” said James Longsdon at Fitch.
The findings follow a similar verdict from rival agency Moody’s, which has called the loss of passporting rights as broadly “manageable” for the sector.
In the event the passport is lost, both agencies have touted the possibility of British banks using incoming European market rules, known as Mifid II, as easing the process of doing business on the continent following the UK’s exit.
Global nickel prices spiked on Tuesday after the Philippines, the world’s top supplier of nickel ore, announced that 20 more metals mines were at risk of being shut down for violating environmental regulations.
The 20 mines, which include the Philippine unit of Australian miner OceanaGold, were ordered to explain why their operations should not be suspended. Environment and Natural Resources Undersecretary Leo Jasareno on Tuesday said most violations were related to siltation, soil erosion, dust emissions and lack of relevant permits.
Jasareno said only 11 of 41 metal mines passed the review, which was conducted from July to August. The government earlier suspended operations at 10 mines for violating environmental regulations.
Suspended mines and those that have been recommended for suspension accounted for 55% of the value of nickel production last year, he said. UBS said shutting three-fourths of Philippine metal mines will cut about 11% of the global nickel ore supply.
Mario Draghi said little is known about the varying impacts of the European Central Bank’s extraordinary monetary policy measures on different pockets of the population, hitting back at criticism that central bank stimulus benefits only the rich.
“Little is known to date of the distributional consequences of the unconventional tools we have used, either in respect of their impact or over the medium term”, said the ECB chiefin a speech.
His comments come after former UK chancellor George Osborne said yesterday that the Bank of England’s move to cut rates and buy bonds after the financial crisis “makes the rich richer and makes life difficult for ordinary savers”.
Mr Draghi however said the absence of any action from the world’s central banks would have hurt “the most vulnerable in our society who are disproportionately affected by unemployment”.
He also reiterated his well-worn plea for governments to step up their fiscal support for monetary policy.