DB, Deutsche Bank update

The usual then, Feb. 8th, of this year and now charts;

DB feb 8 2016db dec 18 2016

At the time we mentioned that it still had a long way to go. It did, about 50% down again. However it seems to be following the anticipated script which is a double zig-zag or a-b-c X a-b-c. Often the legs are vector equal and in this case they almost are.

The bank was very vocal about how misguided the Fed. was with its low interest rate policy and, not surprisingly, the stock starts to rise almost in perfect tandem with the US rates, having gone up nearly 100% from the recent lows of about $11+.

This bank has derivatives on its books to the tune of 20X Germany’s GDP. If there ever was a bank “too big to fail” this is it. What that means , by the way, is that it wont fail. That does not mean that it cannot stay down for a long time, see for instance RBS, Royal Bank of Scotland, but it does mean that the future performance is going to be asymmetric.

Short term it should trade up to about $21, the top level of a triangle. Then it will probable fall back $5 or so as it is presently a little overbought, but after that it could easily go to $30-$45.

DB, Deutsche Bank

DB feb 8 2016

This chart is from the G&M. It does not include today’s action. The stock is now at $14.79 at the time of writing. Just in case you missed it, the stock is worth about 1/10th of what it was at the 2007 peak and is trading below the 2009 lows. What is worse is that of the two plausible EW counts, both have a way to go as we are either in wave 3 of C in an A-B-C, or we are in a 3d wave of c in a double zig-zag. Both have quite a bit further to go.

DB does not like further easing, here is what they said;

Deutsche Bank has expanded its war against the ECB to include the BOJ as well, and in a note titled "The Risks From Further ECB and BOJ Easing" it wants that with the Zero Lower Bound already breached in nearly a third of global markets, the benefits to risk assets from further easing no longer exist, and in fact it says that while central banks have hoped that such measures would "push investors out the risk spectrum" the "impact has been exactly the opposite."

Now that is refreshing. DB is in trouble. They have a large derivative book. Larger than AIG had and larger than JP Morgan. In fact it is the world’s largest at about 70 trillion gross, that is more than 20X Germany’s GDP. When it comes to gross or net the difference quickly becomes irrelevant after a first default. It is the asynchronous easing by the ECB and the BOJ relative to the Fed. that is pushing the dollar up, oil etc. down and CDS’s (Credit Default Swaps) closer to the edge.

By the way, as of today the DAX is down 27% from the peak set back in April!

NDAQ , Nasdaq Exchange, DB and X, TMX group.

NDAQ MAY 2012

This is the Nasdaq Exchange. Lately they have been accused, among many others, of bungling the Facebook IPO. The top for this stock (and most other exchanges) was back in 2007. To date it has retraced just 42% and appears to be ready to go down again. The pattern is a  simple A-B-C (in blue) or a little more complicated one with a triangle in the B-wave position. Either way the stock should go down further, perhaps even to about $5. If that sounds a tad extreme, have a quick peek at the Deutsche Börse (Frankfurt);

DB may 2012

Despite the fact that the DAX retraced much of their losses from the Great Recession , this exchange is still only trading at 1/5 of its peak value. On a comparative basis that would put the NDAQ at $10.

The big exception to this theme is. of course, our own X, TMX group or Toronto Exchange. Caught up in the bidding war the stock has been suspended in thin air for the last year.x may 2012

We would have sold it quite a while ago and would still do so today. It is not yet clear that the deal will pas scrutiny with the two dozen or so agencies, committees and so on that have a say in the matter. Should the deal pass, then at least the stock will cease to exist, a fate it would then share with a whole slew of other companies that did not consider the unintended consequences of demutualization . If it does not pass the stock will probable crater and join the other exchanges at the bottom of the charts instead of the top.

RY, DB and GS

These three financial institutions do not have that much in common but they tend to go in the same direction much of the time;

RY sept 2011

The Royal is down roughly 25% and,if the count is correct, not yet at an initial low. As indicated in a previous blog $43 is about the mean level over the past ten or so years (see previous blog), and it seems to want to go there. The DB and GS are following similar counts;

DB sept 2011 gs sept 2011

There are a number of variations and with the RY and DB it is not entirely clear when the down-trend actually started but what they do have in common is that none of them are complete!