Friday 30 September 2016

Europe’s Banking Crisis, Terminal?

Baltic Dry Index. 888 -24    Brent Crude 48.88

LIR Gold Target in 2019: $30,000.  Revised due to QE programs.

"We shouldn't pour cold water on everything.  We, the eight or nine players in global investment banking, have a very good future."

Deutsche Bank, CEO Josef Ackermann. Davos, January 2007.
Is Deutsche Bank the next Lehman? One way or another we are about to find out. Eight years of from the collapse of Bear Stearns, Lehman Brothers and AIG, nothing in Europe’s banking system has been fixed apparently, and the Great Nixonian Error of fiat money, communist money, is entering its next dysfunctional phase.
Below, the elephant in the room, that officially isn’t there.
“What me worry?”

Deutsche Bank with apologies to Mad Magazine.

Deutsche Bank crisis threatens to roil global markets

Published: Sept 29, 2016 4:46 p.m. ET

 Worries about European banks aren’t just trained on Deutsche Bank

Europe’s problems with some of its largest financial institutions could spill over into the rest of the global market.

Deutsche Bank’s shares tumbled on Thursday on a report that a group of hedge funds were reducing their exposure to the giant financial institution

Earlier in the week, one financial blogger, Wolf Richter, wrote that deep-seated concerns about Deutsche Bank’s ability to raise enough cash to give the market comfort that it is on a sound footing speaks to a larger problem that Europe’s embattled banking sector must combat. Richter, the editor of financial blog site Wolf Street, said “the banking crisis [in Europe] has the potential to transmogrify into a financial crisis.”

He went onto say: “All it takes is for one of the big [banks] to suddenly topple. The flow of credit would freeze up instantly. In an economic system that depends on credit, and whose lifeblood is credit, such an event is a financial crisis.”

Deutsche Bank’s U.S. listed shares DB, -6.67% sank 6.7% on Thursday, underscoring a brutal week of losses for the Frankfurt-based bank.

The bank, run by CEO John Cryan, has seen its cost of borrowing steadily ratchet higher as questions about its ability to pay a potential $14 billion fine from the U.S. Justice Department, according to a Sept. 16 report from The Wall Street Journal.

Against that backdrop, Deutsche Bank’s hardest hit debt securities are its so-called contingent convertible bonds, which have plunged in price as worries about its shrinking cushion have intensified. A U.S.-dollar denominated “CoCo” bond with a perpetual duration has been trading around 70 cents on the dollar, MarketWatch’s Joseph Adinolfi writes.

And it isn’t just Deutsche Bank swooning.

A combination of factors continue to dog European banks and Europe’s economy:
1). The emergence of negative interest rates, as central banks employ radical monetary policies to juice growth in Europe, has hampered eurozone banks’ ability to make money, by eroding profits between their short-term borrowing costs and what they can charge for long-term loans. The German 10-year government bond TMBMKDE-10Y, +0.00% known as the bund, was yielding negative 0.15% as of Wednesday. Bond yields fall as prices rise.
2). Also, many banks have been late to restructure in the wake of the 2008-09 financial crisis that roiled global markets.
3). Italian banks are saddled with billions of souring loans and are seen as a possible threat to the eurozone economy.
4). And many other banks, namely Deutsche Bank, are set to face sizable fines in the fallout from selling dicey mortgage-related securities, which could further tax their capital cushions.
In the following chart, Richter shows how eurozone financial institutions have performed since hitting recent 52-week highs.

Commerzbank Plans to Cut Jobs, Suspend Dividend in Overhaul

September 29, 2016 — 8:05 AM BST Updated on September 29, 2016 — 10:30 AM BST
Commerzbank AG plans to reduce 9,600 jobs, or about a fifth of the workforce, and suspend dividends as Chief Executive Officer Martin Zielke seeks to shore up profitability at the German lender.
Under the draft plan, which was presented to the supervisory board, Commerzbank will merge its Mittelstandsbank, catering to small and medium-sized companies, with the corporates and markets unit and scale back securities trading operations, the Frankfurt-based bank said in a statement on Thursday. The management board on Friday will decide on the restructuring plan, which will cost about 1.1 billion euros ($1.2 billion).
Zielke, 53, has been under pressure to counter a slump in earnings that forced him to scale back full-year profit targets just months after taking the helm of Germany’s second-largest lender. Under his predecessor Martin Blessing, the bank eliminated 5,200 jobs to counter volatile markets and record-low interest rates as regulators demanded lenders hold higher capital buffers against risky activities.
“This looks like it could be the long-awaited broad overhaul and the targets that Zielke is setting even look realistic,” said Daniel Regli, an analyst at MainFirst.
The shares fell 0.5 percent to 5.97 euros at 11:27 a.m. in Frankfurt, paring earlier gains. The bank has lost about 38 percent of its market value this year.
----Goodwill and intangible assets of the two merged units will cause a writedown of about 700 million euros in the third quarter, in a move that’s seen sparking a loss in that period. In the full year, the lender expects a “small net profit,” when targeting revenue of between 9.8 billion euros and 10.3 billion euros by 2020 as part of Zielke’s plan.
The lender earlier this year paid a dividend of 20 cents per share for 2015, its first payout since 2007. It was expected to pay a dividend of 30 cents per share for this year, according to the Bloomberg Dividend Forecast.

If Merkel Wants to Help Deutsche Bank, She Has Few Options: Q&A

September 29, 2016 — 12:01 AM BST
Investors in Deutsche Bank AG are looking to Berlin for an indication of what, if anything, German Chancellor Angela Merkel will do to shore up the lender whose shares have plummeted more than 50 percent this year.

The prospect of bailing out Deutsche Bank is politically noxious for Merkel, who’s deciding whether to seek a fourth term in an election next year. After a magazine article stirred speculation, Merkel’s spokesman said the government sees “no grounds” for talk of state funding for the bank as the U.S. seeks a multibillion-dollar fine.

That hasn’t quelled expectations of a bailout. Andreas Utermann, chief investment officer of Allianz Global Investors AG, said for example that the German government would have to step in if Deutsche Bank “was really in trouble.”

John Cryan, Deutsche Bank’s chief executive officer, told the Bild newspaper that raising capital “is currently not an issue,” and accepting government support is “out of the question for us.”

Under European Union laws that Merkel championed to keep taxpayers off the hook in a crisis, it’s now much more difficult for governments to prop up banks. For starters, the Bank Recovery and Resolution Directive, the cornerstone of Europe’s efforts to tackle too-big-to-fail banks, assumes that the need for “extraordinary public financial support” indicates that a firm is “failing or likely to fail,” triggering resolution.

State support for viable banks is tightly restricted, so if Merkel intervenes on Deutsche Bank’s behalf, she’ll be choosing from a small pool of options.

Lawmakers from Merkel’s governing coalition said they expect the government to step in if Deutsche Bank were at risk of collapse due to a capital shortfall. At that point, the need for some kind of state intervention would outweigh calculations about the political fallout, according to four lawmakers from coalition parties who asked not to be identified discussing a scenario the government wants to avoid.

Some lawmakers in Berlin want Cryan to do more. Two of the legislators said the bank needs to restructure its business to make it less risky; one pointed to planned job cuts at Commerzbank AG as a possible model.

Fines, Withdrawals, Job Cuts. It Was an Ugly Day for Global Banks

September 29, 2016 — 10:50 PM BS
Even before the opening bell in New York, Thursday looked like a grim day for some of the giants of global banking.

But few expected the barrage of bad news that soon hit on both sides of the Atlantic -- a rat-a-tat-tat of job cuts, scandal and financial worry that sent bank shares tumbling and left many investors wondering just where or when the pain would end.

It began in Germany, where long-struggling Commerzbank AG unveiled yet another plan to regain its footing, this time by cutting one in five of its employees. In Washington, came still more blistering attacks on John Stumpf, whose grip atop embattled Wells Fargo & Co., the largest U.S. mortgage lender, remains tenuous amid the uproar over a scandal involving unauthorized accounts.

And then, back in Germany, came the bombshell: revelations that some hedge funds were moving to reduce their financial exposure to Deutsche Bank, now the biggest worry in global finance. Before Stumpf left the U.S. House chambers after more than four hours of grilling, news broke his bank would be hit with more penalties after improperly repossessing cars owned by U.S. soldiers.

-----Eight years after the financial crisis, the global banking industry is groping for a way forward. Global regulators have sought to make banks look more like boring utilities, but that road has proven steep. Emboldened by an international populist groundswell, they continue to dole out fines and penalties, and firms are scrambling for ways to make money as trading volumes decline and capital requirements become more stringent. 

The 38-company Bloomberg Europe Banks and Financial Services Index has tumbled 24 percent this year, while the KBW Bank Index of 24 U.S. lenders has slid 4.6 percent, led by Wells Fargo’s 18 percent decline.
"We finished the year, and we reported that we had $17 billion of cash sitting at the bank's parent company as a liquidity cushion. As the year has gone on, that liquidity cushion has been virtually unchanged."
Alan Schwartz, CEO Bear Stearns, March 12, 2008. Bust March 16, 2008.
At the Comex silver depositories Thursday final figures were: Registered 30.42 Moz, Eligible 142.72 Moz, Total 173.14 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Below, more on “God’s work,” at Goldie.
In a time of universal deceit, telling the truth is a revolutionary act.

George Orwell.

Hot Mess: How Goldman Sachs Lost $1.2 Billion of Libya’s Money

When Wall Street’s most aggressive bank took on the world’s most incendiary client, someone was going to make a killing.
By Matthew Campbell and Kit Chellel | September 29, 2016
Moammar Qaddafi’s Libya was a miserable place for a business trip.
In 2008, a few years after renouncing its nuclear and chemical weapons program, the desert nation remained a menacing and ugly place, with cratered highways, awful restaurants with no booze, and Qaddafi’s leathery visage everywhere, staring balefully down from billboards. The dreary capital, Tripoli, sat at the edge of the Sahara, in the least barren sliver of a country defined in the West by dictatorship, terrorism, and billions of dollars’ worth of oil.
Goldman Sachs’s Youssef Kabbaj was one of the few that enjoyed the commute. A securities salesman based out of the bank’s London headquarters, Kabbaj found that Libya reminded him of his native Morocco, and he considered the ruins in Tripoli’s old quarter enchanting. The city had a single decent hotel, the Corinthia, a crescent hulk the color of sand, and that year Kabbaj was such a frequent guest that he stored a rack of pressed suits there at all times. With slick black hair, round cheeks, and a mischievous smile, he was fluent in English, French, Arabic, and the language of international finance.
Qaddafi’s peaceful turn had reopened Libya to Western banking for the first time in two decades. Its $60 billion in oil wealth, no longer dammed up by international sanctions, was ready to flood into the market, as directed by the Libyan Investment Authority, Qaddafi’s brand-new sovereign wealth fund. With his North African pedigree, Kabbaj had been one of the first at Goldman to spot the opportunity. The LIA had become his biggest client, transforming him in a year from rookie salesman into possibly the No. 1 rainmaker at the world’s most profitable investment bank. He was 31 years old.
On July 23, 2008, Kabbaj was in his room at the Corinthia, waiting anxiously for his mobile phone to ring. It finally did around 9 a.m., and he grabbed a pen and paper to take notes. On the line was Michael Daffey, a senior Goldman executive in London. Daffey praised Kabbaj’s work in Libya and said that after some negotiation, the bank was willing to guarantee him $9 million in pay. It was an astonishing sum, even at Goldman.
Kabbaj immediately asked for more. He knew he’d been instrumental in extracting an unusual amount of money from a highly unusual client. Who else on the planet could sell a billion dollars of derivatives to a regime whose theatrical despot slept in a tent under an all-female warrior guard?
----Zarti again interrupted. “Youssef,” he said, “I’m asking you.” Before Kabbaj could say much more, Zarti exploded. Screaming in a mix of English and Arabic, he accused Kabbaj of deceiving the LIA into deals it didn’t understand. He called Goldman “a bank of Mafiosi” and said that he could behave like a Mafioso, too. He stormed out of the room, leaving Kabbaj, Pentreath, and a clutch of LIA staffers in a Marlboro haze.
Shaken, Kabbaj asked Zarti’s aides what had just happened. None had an answer. After a few minutes, Zarti burst back in, angrier than ever. Catherine McDougall, an Australian lawyer who was in the office that day, later recalled Zarti’s words as along the lines of “F--- your mother, f--- you, and get out of my country.” Kabbaj and Pentreath packed up their things.
Zarti followed them into the corridor. If Kabbaj didn’t make amends, he shouted, “we will go after your own family in Morocco!” The Al-Fateh Tower elevators were agonizingly slow to arrive. “What are you still doing here? Get out of my building!” Zarti screamed. He told Pentreath that if he didn’t get in the lift soon, he’d throw him out the window.
Kabbaj was white with shock. Zarti had saved his most chilling remark for him. “You are only a Moroccan here in Libya,” he said. “I can make you disappear, and nobody will ever hear back from you.”
The story of Goldman’s seduction of Libya—based on court evidence, testimony from witnesses, and interviews with people who were involved in the transactions—is as brief as it was costly. Barely 12 months elapsed between Zarti’s first tour of the bank and his threat to murder its brightest young star, and Libya wound up losing $1.2 billion. Goldman enjoyed its payday, the exact size of which it has never disclosed. But whatever the level, the matter is now before a London judge, and the Libyans have a chance to extract an even more damaging toll.
----The reemergence of Libya, and its vast oil wealth, coincided with an era of nearly unbridled avarice on Wall Street—and nowhere more so than at Goldman Sachs. The same year that Qaddafi established the LIA, Goldman posted the largest profit in Wall Street history. The bank paid employees an average of $622,000, with many times that amount available for bankers who nailed down the biggest deals. A stupendously wealthy petro state desperate to buy into a bull market was a dream client—the kind of “elephant,” in Goldman argot, that could make careers.

“Call it the Goldman Sachs test. If this is something Goldman would do to its clients, don't do it."

Felix Salmon.

Solar  & Related Update.

With events happening fast in the development of solar power and graphene, I’ve added this section. Updates as they get reported. Is converting sunlight to usable cheap AC or DC energy mankind’s future from the 21st century onwards? DC? A quantum computer next?

Mass producing graphene using microwaves

Date: September 27, 2016

Source: Ulsan National Institute of Science and Technology (UNIST)

Summary: A simple new method for producing large quantities of the promising nanomaterial graphene has been discovered by an international team of researchers.
Dr. Jieun Yang, an alumna of UNIST is part of an international team that has discovered a simple new method for producing large quantities of the promising nanomaterial graphene.
Graphene, a material that could usher in the next generation of electronic and energy devices, could be closer than ever to mass production, thanks to microwaves.
A new study by an international team of researchers from UNIST and Rutgers University has proved that it is now possible to produce high quality graphene, using a microwave oven. The team reports that this new technique may have solved some of graphene's difficult manufacturing problems. The findings of the research have been published in the September issue of the journal Science.
This study was jointly conducted by Dr. Jieun Yang, an alumna of UNIST, Prof. Hyeon Suk Shin (School of Natural Science) of UNIST, Prof. Hu Young Jeon (School of Natural Science) of UNIST, Prof. Manish Chhowalla of Rutgers University, and five other researchers from Rutgers University, New Brunswick, NJ, United States.
Graphene comes from a base material of graphite, the cheap material in the 'lead' of pencils. The structure of graphite consists of many flat layers of graphene sheets. One of the most promising ways to achieve large quantities of graphene is to exfoliate graphite into individual graphene sheets by using chemicals. However, the oxygen exposure during the process may cause some inevitable side reactions, as it can ultimately be very damaging to the individual graphene layers.
Indeed, oxygen distorts the pristine atomic structure of graphene and degrades its properties. Therefore, removing oxygen from graphene oxide to obtain high-quality graphene has been a significant challenge over the past two decades for the scientific community working on graphene.
Dr. Yang and her research team have discovered that baking the exfoliated graphene oxide for just 1-to-2 second pulses of microwaves, can eliminate virtually all of the oxygen from graphene oxides.
"The partially reduced graphene oxides absorb microwave energy, produced inside a microwave oven ," says Dr. Yang, the lead author of the study. She adds, "This not only efficiently eliminates oxygen functional groups from graphene oxides, but is also capable of rearranging defective graphene films."

The monthly Coppock Indicators finished August.

DJIA: 18401  +18 Up NASDAQ:  5213 +16 Up. SP500: 2171 +18 Up.

Thursday 29 September 2016

Saudi Open Season Starts.

Baltic Dry Index. 912 -18    Brent Crude 48.61

LIR Gold Target in 2019: $30,000.  Revised due to QE programs.

The quickest way of ending a war is to lose it.

George Orwell.

The big news yesterday was Saudi Arabia surrendering in the oil wars. But it all has the feel of too little too late. The real winners out of this output cut, if it actually happens at the end of November, are the Russian, the Iranians and those US frackers that haven’t already gone bust. But this being lying, cheating, stealing OPEC, few think that this is the end of the oil wars.

Below, OPEC sort of reaches an agreement. There will be jam all round tomorrow, maybe.

OPEC reaches understanding on output cut

Published: Sept 28, 2016 3:11 p.m. ET

Cartel considers cut to between 32.5-33 million barrels a day

ALGIERS—OPEC on Wednesday reached an understanding that a crude-oil-production cut is needed to lift petroleum prices, people familiar with the matter said, but the cartel will wait until November to complete a plan to tackle a supply glut that has lasted longer than expected.

The consensus was reached after a 4 1/2 hour meeting in the Algerian capital. It represents the first acknowledgment from the Organization of the Petroleum Exporting Countries that it needed to take action to alleviate an oil-price slump that has wreaked havoc on the economies of oil producers. OPEC, the 14-nation cartel that controls over a third of world oil output, has been producing at record levels as its members compete among themselves for buyers.

A person familiar with the matter said the cartel was considering cutting production to between 32.5 million barrels a day and 33 million barrels a day—down from August levels of 33.2 million barrels a day.

Exactly how the production cuts would be achieved is unclear. The person said a committee would be formed to study how to carry out the cuts and then report to the cartel at its next meeting on Nov. 30 in Vienna.

In U-Turn, Saudis Choose Higher Prices Over Free Oil Markets

September 29, 2016 — 12:41 AM BST Updated on September 29, 2016 — 1:07 AM BST
It took the kingdom’s new oil minister, Khalid Al-Falih, just six months to blink, ending the country’s two-year policy of pump-at-will.

The decision at this week’s meeting of the Organization of Petroleum Exporting Countries in Algiers to cut production was necessitated by Saudi Arabia’s tattered finances. The kingdom has the highest budget deficit among the world’s 20 biggest economies, it’s enduring a delay in its first international bond issue and now faces fresh legal uncertainty as the U.S. Congress voted Wednesday to allow Americans to sue the country for its involvement in 9/11.

“Saudi Arabia wants higher prices,” said Amrita Sen, chief oil analyst at consultancy firm Energy Aspects Ltd. in London.

The consequences could be vast. Giants such as Exxon Mobil Corp. may soon be flush enough to revive abandoned projects. Finances of cash-strapped OPEC countries like Venezuela will get a boost. Russia and other independent oil-rich countries will have to decide whether to follow Saudi Arabia’s lead. U.S. shale producers, which OPEC hoped it could push into bankruptcy, will use higher prices to drill new wells, and American consumers, who’ve enjoyed the lowest gasoline prices in more than a decade, will pay more at the pump.

Doubts linger over OPEC’s preliminary deal on oil output

Published: Sept 28, 2016 5:20 p.m. ET
The Organization of the Petroleum Exporting Countries has a preliminary plan that would cap oil production slightly below its current pace, but traders are debating whether it will make a lasting difference.

“Any production restraint is a big deal,” said Phil Flynn, senior market analyst at Price Futures Group.

The 14-nation group of major oil producers is targeting a production cap that would hold output to between 32.5 million and 33 million barrels a day. OPEC’s latest monthly oil report pegged current member output at 33.24 million barrels a day. But the output agreement won’t be completed until at least Nov. 30.

----“This downshift is likely to help” rebalance the global oil market, said Robert Haworth, senior investment strategist with U.S. Bank Wealth Management. But the market will still have to “work through the excess of U.S. and OECD oil inventories.”

“For now our view remains that upside here is limited, with prices above $50 per barrel likely rekindling U.S. oil production and limiting further prices gains,” he said.

The scale of the production cut isn’t terribly impressive, analysts noted.

“A 2% cut in cartel production is a lawn chair off the Titanic with regards to global supply. Unless OPEC follows up with announcements for the methodology of the cut, the specific magnitude of it, and the intent to enact a program that appreciably affects global supply going forward, expect to see the spot price of oil settle back into the range it’s inhabited since the second quarter of this year,” said Scott Cockerham, managing director at Huron.

Relief arrives for U.S. shale firms as OPEC folds in price battle

Thu Sep 29, 2016 | 12:06am EDT
It was a moment U.S. shale oil producers have been waiting on for more than two years: OPEC nations finally agreed to cut production on Wednesday in a move that lifted low prices ravaging their budgets.

Two sources in the Organization of the Petroleum Exporting Countries said the group would reduce output to 32.5 million barrels per day (bpd) from current production of 33.24 million bpd, by around half the amount of global oversupply.

The agreement effectively establishes a floor on prices near $50 a barrel - around where many U.S. shale oil companies can make money and drill new wells. The floor is twice as high as where oil languished in the depths of the downturn.

"This gives U.S. producers more confidence,” said James West, partner at the investment firm Evercore ISI in New York. “They may become a touch more aggressive than they had planned to be.”

U.S. benchmark crude rose more than 5 percent to $47 a barrel on the news, pending final details about the cut, which won't be known until after another OPEC meeting in November.

One U.S. shale oil industry veteran likened the results of the prolonged price war to a bruising 12-round boxing match that ended in a technical draw.

After OPEC in mid-2014 let oil prices fall as it sought to regain market share, dozens of small and high-cost U.S. producers fell into bankruptcy.

Meanwhile, budgets of OPEC members from Venezuela to Angola shrank on a 60 percent slide in crude prices. And two days before the deal was announced, Saudi Arabia cut ministers' salaries by 20 percent and scaled back financial perks for public sector employees.

But in the United States the big shale companies - the ones responsible for the bulk of all new onshore domestic crude output - survived. They confounded OPEC by cutting costs and finding new ways to squeeze more oil from rock.

The other big news yesterday was the US Congress declaring open season on Saudi Arabia’s US assets. Yesterday Christmas came early for America’s tort bar. Now comes the cat and mouse game of hide and try to find the hidden assets. I would expect a whole lot of countries to pass similar legislation.

Congress rejects Obama veto, Saudi September 11 bill becomes law

Wed Sep 28, 2016 | 7:50pm EDT
Congress on Wednesday overwhelmingly rejected President Barack Obama's veto of legislation allowing relatives of the victims of the Sept. 11 attacks to sue Saudi Arabia, the first veto override of his presidency, just four months before it ends.

The House of Representatives voted 348-77 against the veto, hours after the Senate rejected it 97-1, meaning the "Justice Against Sponsors of Terrorism Act" will become law.

The vote was a blow to Obama as well as to Saudi Arabia, one of the United States' longest-standing allies in the Arab world, and some lawmakers who supported the override already plan to revisit the issue.

Obama said he thought the Congress had made a mistake, reiterating his belief that the legislation set a dangerous precedent and indicating that he thought political considerations were behind the vote.

"If you're perceived as voting against 9/11 families right before an election, not surprisingly, that's a hard vote for people to take. But it would have been the right thing to do," he said on CNN.

Obama's 11 previous vetoes were all sustained. But this time almost all his strongest Democratic supporters in Congress joined Republicans to oppose him in one of their last actions before leaving Washington to campaign for the Nov. 8 election.

---- The law, known as JASTA, passed the House and Senate without objections earlier this year.

Support was fueled by impatience in Congress with Saudi Arabia over its human rights record, promotion of a severe form of Islam tied to militancy and failure to do more to ease the international refugee crisis.

The law grants an exception to the legal principle of sovereign immunity in cases of terrorism on U.S. soil, clearing the way for lawsuits seeking damages from the Saudi government.

Riyadh has denied longstanding suspicions that it backed the hijackers who attacked the United States in 2001. Fifteen of the 19 hijackers were Saudi nationals.
---- Obama argued that JASTA could expose U.S. companies, troops and officials to lawsuits if other countries passed reciprocal legislation, and may anger important allies.

Q: How many US lawyers does it take to screw in a light bulb?
A: Three, One to climb the ladder. One to shake it. And one to sue the ladder company.

At the Comex silver depositories Wednesday final figures were: Registered 31.44 Moz, Eligible 141.96 Moz, Total 173.40 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today, more on Deutsche Bank’s long goodbye. The on-again, off-again, long awaited rescue by Germany, seems to be off-again. Officially there is no rescue Plan-B. As goes Deutsche Bank, so goes Italy’s Three Card Monte di Sienna. Going once, going twice, …. But wait, will Turkey come to the rescue of failing DB?
“On your resume you wrote that for 3 years you worked as a pianist in a brothel.
Actually, I was a Deutsche Bank banker, but I don’t like to talk about it.”

Germany denies preparing Deutsche Bank rescue plan

Wed Sep 28, 2016 | 7:48am EDT
The German government denied it was working on a rescue of Deutsche Bank (DBKGn.DE) as Germany's biggest lender boosted its balance sheet by selling its British insurance business on Wednesday.

Deutsche is facing a $14 billion fine from the U.S. Department of Justice and concerns over its funding pushed its shares to a record low on Tuesday and heightened concerns about the health of the financial sector in Europe's largest economy.

The finance ministry dismissed a newspaper report that a rescue plan was being prepared in case Deutsche was unable to raise capital to pay for costly litigation.

Weekly Die Zeit had reported that the German government and financial authorities were working on possible steps to enable Deutsche to sell assets to other lenders at prices that would ease the strain on the lender.

The German government would even offer to take a direct stake of 25 percent in an extreme emergency, the paper said without saying where it got its information.

The government was still hoping Deutsche would not need state support and only scenarios for a potential rescue were being discussed so far, Die Zeit added.
"This report is wrong. The German government is not preparing any rescue plan, there is no reason to speculate on such plans," the finance ministry said in a statement.
Two sources close to the matter also said that German financial regulator Bafin was not working on an emergency plan.

Deutsche Bank to Take €800 Million Hit on Abbey Life Sale

September 28, 2016 — 8:05 AM BST Updated on September 28, 2016 — 10:55 AM BST
Phoenix Group Holdings said it’s buying Deutsche Bank AG’s U.K. insurance unit Abbey Life Assurance Co. for 935 million pounds ($1.2 billion).
The U.K. consolidator of closed-life insurance businesses said it will fund the deal with a share sale along with a banking facility, according to a statement Wednesday. The German lender said it will book a pretax loss of about 800 million euros ($895 million) from the sale.
Deutsche Bank CEO John Cryan, under pressure to shore up earnings and bolster the balance sheet, is selling the unit after new European regulations in January forced firms with insurance assets to hold more capital. While the lender is losing money on the Abbey Life sale, the bank said the deal is expected to lift its Common Equity Tier 1 capital ratio by about 10 basis points from the June 30 level.
----Mounting legal bills have led analysts to question the lender’s ability to avoid selling assets or take other steps to raise capital. While a public offering of its German Postbank consumer division has been put on hold, the debate over Deutsche Bank’s finances intensified after it was disclosed that the U.S. Justice Department is seeking $14 billion to resolve a probe of the lender’s pre-crisis mortgage securities business.

Deutsche Bank Should Slash Bonuses of Staff, Autonomous Says

September 28, 2016 — 8:59 AM BST
Deutsche Bank AG could raise as much as 2.8 billion euros ($3.14 billion) by taking a tougher stance on employee compensation and not giving bonuses to thousands of staff, according to Autonomous Research LLP.
“Being very tough on the 2016 bonus pool and requiring the forfeiture of unvested shares could be helpful,” according a note this week by Autonomous’s London-based Chief Executive Officer Stuart Graham seen by Bloomberg News. “This would also provide a strong signal to long-suffering shareholders, who have stumped up 13.5 billion euros of new equity” since the fourth quarter of 2009, excluding capital raised to buy its German retail unit Postbank.
Deutsche Bank, which houses Europe’s largest investment bank, has struggled to adapt to an era of tougher capital requirements and lagging trading revenue. Since laying out his strategy last October, CEO John Cryan has cut risky assets, eliminated thousands of jobs and suspended dividend payments to preserve capital. However, that’s failed to stem a decline in its share price which has slumped 53 percent this year.
Any move to make staff give up their shares could be subject to legal challenges, Autonomous said, while a zero cash bonus could save Deutsche Bank 800 million euros after tax, the report said.
A less painful alternative would be “zeroing the bonus” for the top 3,000 staff, who in 2015 accounted for some 52 percent of the bonus pool, according to the note.

Erdogan Adviser Says Turkey Should Consider Buying Deutsche Bank

September 28, 2016 — 3:53 PM BST
Deutsche Bank AG’s crashing share price is prompting takeover speculation from unexpected places.
Yigit Bulut, a chief adviser to Turkish President Recep Tayyip Erdogan, said the country must consider using a new wealth fund or a group of state-owned banks to buy the Frankfurt-based company. Bulut made the proposal on Tuesday via his Twitter account, saying Germany’s largest lender should be made into a Turkish bank.

The stock of Europe’s biggest investment bank has slumped by more than 50 percent over the past year, falling to a record low on Tuesday, over concerns about its weakening financial position and penalties in the U.S. tied to mortgage-backed securities. Bulut’s comments come after Moody’s Investors Service on Sept. 23 cut Turkey to junk, citing slowing economic growth and deteriorating credit fundamentals.

"For months on TV programs, I’ve been calling on Turkey’s private and public capital: ‘Some very good companies in the EU are going to fall into trouble and we need to be ready to buy a controlling stake in them,’” Bulut wrote on Twitter. "Wouldn’t you be happy to make Germany’s biggest bank into Turkish Bank!!"

Solar  & Related Update.

With events happening fast in the development of solar power and graphene, I’ve added this section. Updates as they get reported. Is converting sunlight to usable cheap AC or DC energy mankind’s future from the 21st century onwards? DC? A quantum computer next?

First quantum photonic circuit with an electrically driven light source

Date: September 27, 2016

Source: Karlsruhe Institute of Technology

Summary: Whether for use in safe data encryption, ultrafast calculation of huge data volumes or so-called quantum simulation of highly complex systems: Optical quantum computers are a source of hope for tomorrow's computer technology. For the first time, scientists now have succeeded in placing a complete quantum optical structure on a chip. This fulfills one condition for the use of photonic circuits in optical quantum computers.
Whether for use in safe data encryption, ultrafast calculation of huge data volumes or so-called quantum simulation of highly complex systems: Optical quantum computers are a source of hope for tomorrow's computer technology. For the first time, scientists now have succeeded in placing a complete quantum optical structure on a chip, as outlined in the Nature Photonics journal. This fulfills one condition for the use of photonic circuits in optical quantum computers.
"Experiments investigating the applicability of optical quantum technology so far have often claimed whole laboratory spaces," explains Professor Ralph Krupke of the KIT. "However, if this technology is to be employed meaningfully, it must be accommodated on a minimum of space." Participants in the study were scientists from Germany, Poland, and Russia under the leadership of Professors Wolfram Pernice of the Westphalian Wilhelm University of M√ľnster (WWU) and Ralph Krupke, Manfred Kappes, and Carsten Rockstuhl of the Karlsruhe Institute of Technology (KIT).
The light source for the quantum photonic circuit used by the scientists for the first time were special nanotubes made of carbon. They have a diameter 100,000 times smaller than a human hair, and they emit single light particles when excited by laser light. Light particles (photons) are also referred to as light quanta. Hence the term "quantum photonics."
That carbon tubes emit single photons makes them attractive as ultracompact light sources for optical quantum computers. "However, it is not easily possible to accommodate the laser technology on a scalable chip," admits physicist Wolfram Pernice. The scalability of a system, i.e. the possibility to miniaturize components so as to be able to increase their number, is a precondition for this technology to be used in powerful computers up to an optical quantum computer.
As all elements on the chip now developed are triggered electrically, no additional laser systems are required any more, which is a marked simplification over the optical excitation normally used. "The development of a scalable chip on which a single-photon source, detector, and waveguide are combined, is an important step for research," emphasizes Ralph Krupke, who conducts research at the KIT Institute for Nanotechnology and the Institute of Materials Science of the Darmstadt Technical University. "As we were able to show that single photons can be emitted also by electric excitation of the carbon nanotubes, we have overcome a limiting factor so far preventing potential applicability."

The monthly Coppock Indicators finished August.

DJIA: 18401  +18 Up NASDAQ:  5213 +16 Up. SP500: 2171 +18 Up.