Wednesday October 5 20916 Housing and Economic stories

TOP STORIES:

Pressure is rising on Germany to show it's ready to rescue Deutsche Bank - (www.cnbc.com) German officials could be about to find themselves in an uncomfortable position: Being called on to show they're ready to rescue a bank in a part of the world where such operations are considered taboo. Deutsche Bank came under intensified market fire Thursday, the latest salvo being a Bloomberg report that a small number of hedge funds are trimming their sails at the German bank. In a broad perspective, the move would represent a minor dent in Deutsche's derivatives clearing business. Barry Bausano, chairman of Deutsche's hedge fund business, told CNBC on Thursday that while there have been some outflows, there have also been inflows, which he said is "part of the typical ebbs and flows" of the prime brokerage business. But at a time when investors are fearing what the future holds for the highly leveraged institution, such news is enough to cause ripples. Shares tumbled more than 7 percent in mid-afternoon trading. The plunge took the broader market down as well.

Commerzbank says to cut nearly 10,000 jobs, halt dividend - (www.reuters.com) Germany's Commerzbank (CBKG.DE) will cut more than a fifth of its workforce and suspend its dividend as it tackles the challenges of low interest rates, weak profits and the shift to online banking. Germany's second biggest lender said on Thursday it plans to cut 9,600 of its 45,000 full-time positions, a more drastic move than the 10 percent staff reduction at larger rival Deutsche Bank, which remains under pressure for deeper cost cuts. Squeezed by the European Central Bank's money printing policy, German lenders have been seeking ways to boost revenue by passing on costs to corporate customers and increasing fees for retail depositors, but profit margins remain thin in one of Europe's most competitive banking markets.

The Loophole for Deutsche Bank’s Bailout: Game almost Over? - (www.wolfstreet.com) Judging by the slow-motion meltdown of a growing number of large banks in Europe, including Deutsche Bank (in the IMF’s words, the “world’s most important net contributor to systemic risks”), confidence in their solvency is evaporating. And the denial and blame games have begun. Deutsche Bank CEO John Cryan denied any need to raise capital or ask for a bailout. That was followed by furious denials from Mario Draghi that the ECB’s low rates are partly responsible for Deutsche Bank’s current woes. Roughly half of all of Deutsche’s profits have traditionally come from loan interest; now, thanks to the madcap negative-interest-rate policies, that source of income is disappearing.

Some Deutsche Bank Clients Reduce Collateral on Trades - (www.bloomberg.com) Amid mounting concern about Deutsche Bank AG’s ability to withstand pending legal penalties, about 10 hedge funds that do business with the German lender have moved to reduce their financial exposure. The shares slumped. The funds, which use the bank’s prime brokerage service, have moved part of their listed derivatives holdings to other firms this week, according to an internal bank document seen by Bloomberg News. Among them are Izzy Englander’s $34 billion Millennium Partners, Chris Rokos’s $4 billion Rokos Capital Management, and the $14 billion Capula Investment Management, said a person familiar with the situation who declined to be identified talking about confidential client matters.

Gundlach: "The Market Will Keep Pushing Deutsche Bank Lower Until It Is Bailed Out" - (www.zerohedge.com)  "The market is going to push down Deutsche Bank until there is some recognition of support. They will get assistance, if need be. 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."

OTHER STORIES:

Oil Extends Rally as OPEC Said to Reach Output Deal; Stocks Rise - (www.bloomberg.com)
Yellen Sees Solid Job Growth, No Fixed Timetable for Rate Rise - (www.bloomberg.com)
Traders Doubt Yellen’s December Resolve as Credibility Attacked - (www.bloomberg.com)
California Suspends ‘Business Relationships’ With Wells Fargo - (www.bloomberg.com)

China's Red-Hot Property Market Risks Missing Lessons From Japan's Crash - (www.bloomberg.com)

Political support for 'dinosaur' banks must end: Bundesbank's Dombret - (www.reuters.com)
Italy set to cut growth forecasts, hike deficit - (www.reuters.com)
Draghi Goes Head-to-Head With German Critics of ECB’s Low Rates - (www.bloomberg.com)
Vancouver, London Top List of Cities at Risk of Housing Bubble - (www.bloomberg.com)