Archive

Monthly Archives: February 2019

10th February 2019

It was just too good a thing

Squeaky bum time, again… Approaching the half way point for the month and we find that credit spreads have performed better than even the most bullish of expectations. OK, there are still almost 11 months to go and the macro risks are building, but we have some good performance in the bag to help alleviate […]
Subscribers can log in to continue reading. Otherwise, purchase The Monthly Access Pass, One Year Subscription or One Year + Trade Ideas to become a subscriber.
7th February 2019

Grim reaper lurks

Limp credit markets… It’s been the limpest of weeks as far as activity has been concerned, although for credit market participants they’re at least grateful for the squeeze in spreads which has given some excellent early year performance. We’re not buying into the excuse that the earnings season has curtailed primary activity, because only a […]
Subscribers can log in to continue reading. Otherwise, purchase The Monthly Access Pass, One Year Subscription or One Year + Trade Ideas to become a subscriber.
6th February 2019

Special place in Hell? Surely not

Credit on a roll… We are barely six weeks into 2019 and we have an almighty squeeze occurring in spreads in the corporate bond market. Investment grade spreads have tightened 20bp (iBoxx index) while the solid support for the underlying has meant that we have already managed total returns of 1.5%. The high yield market, […]
Subscribers can log in to continue reading. Otherwise, purchase The Monthly Access Pass, One Year Subscription or One Year + Trade Ideas to become a subscriber.
6th February 2019

Ring (ING) in the profits | Bank Capital Insights

Beauty in its simplicity… ING reported Q4 and fully year 2018 earnings on Wednesday morning and investors seem to like the simplicity of the underlying business model and overall ease in understanding the drivers of its earnings.  Net income for 2018 came in at EUR 4.7 billion (despite the EUR 775 million of regulatory settlement […]
Subscribers can log in to continue reading. Otherwise, purchase The Monthly Access Pass, One Year Subscription or One Year + Trade Ideas to become a subscriber.
5th February 2019

Squeeze me tight

Looking for signs of life in corporate primary… The opening sessions of the week have seen little corporate bond activity amid scant signs that we might experience a material pick-up as the week progresses. It would be nice if we are proved wrong. It just seems like we are going to get bogged down with […]
Subscribers can log in to continue reading. Otherwise, purchase The Monthly Access Pass, One Year Subscription or One Year + Trade Ideas to become a subscriber.
4th February 2019

Perceptions can sometimes be wrong | Bank Capital Insights

Italian banks may be the focus but the French banks may need a re-assessment Without a doubt an Italian recession or political crisis will have significant impact on the Italian banks given the amount of government debt they hold and the ongoing reliance on ECB for funding.  And these issues are well documented and no […]
Subscribers can log in to continue reading. Otherwise, purchase The Monthly Access Pass, One Year Subscription or One Year + Trade Ideas to become a subscriber.
3rd February 2019

Credit spreads squeeze, again

Recession risks loom amid a need for yield… Forgive the pun but, unfortunately, January is not a dry run for the rest of the year. We were hit with a raft of disappointing data on the opening session of February (non-farms payrolls aside), and the stage is set for it to continue – likely leaving […]
Subscribers can log in to continue reading. Otherwise, purchase The Monthly Access Pass, One Year Subscription or One Year + Trade Ideas to become a subscriber.
1st February 2019

Darkening Business (DB) Prospects..what to do now?| Trade Ideas

Light at the end of  the tunnel or..

Deutsche Bank (DB) reported Q4 (and full year) 18 results on Friday morning and they were hardly inspiring. The bank continues to underperform its rivals driven by what we believe to be is a broken business model, excessive reliance on FICC and very high cost base. The Q4 performance demonstrated the scale of the problems given the very difficult market conditions and drop in trading volumes.

And for all its efforts in 2018, the bank generated net income of just EUR 267 million translating to a meagre RoTE of 0.5%.  On the positive side though, the bank generated annual profits for the first time since 2014.  With a cost-to-income ratio of almost 93%, it seems that the bank needs to do radical restructuring and substantially move away from the FICC business and focus entirely on corporate banking and wealth management.  In the meantime, what should AT1 investors do?

Continue reading