Business

For the past two years, while largely nonchalant with broader price levels, the Fed has been warning about two particular asset bubbles: that of easy lending particularly in junk bond, and of a commercial real estate bubble. Following the recent rout which has seen the biggest HY selloff since the financial crisis, especially in the energy sector, it is safe to say that the junk bubble has burst - the only question is how much worse it will get before it bottoms (UBS had some unpleasant thoughts on that matter).

In our column last week we were warning you about Deutsche Bank’s problems and potential issues with its derivatives portfolio and its capital structure. The story continued to unfold in the past week and Deutsche Bank was pushed into a corner as more and more investors started to lose confidence in the bank. A plan to buy back $5.4B in debt in a desperate move to reassure the capital markets. In fact, Deutsche’s move is so desperate it will even start buying back debt that was issued less than six weeks ago.

Originally posted at The Daily Bell,

Stock markets suspect Federal Reserve has interest rate jitters ... Hints that the Fed won't raise interest rates in March are proving to be good news for miners and oil producers' share prices The Federal Reserve's William Dudley said further strengthening in the dollar could have 'significant consequences' for the health of the US economy. – UK Guardian

Blame it on the dollar!

"Change" you just can't believe...

Source: Investors.com

The text that follows may be the best summary of what has happened on Wall Street - both forensically and philosophical - over the past 7 years, explaining how central banks broke the "market", and why traders, investors, regulators, policy makers, and everyone else suddenly has no idea either what is going on or what to do next. Not surprisingly, it comes from Deutsche Bank, which this week has been staring at the corpe of Lehman Brothers and wondering if it is next...

From DB's Aleksandar Kocic

Asphyxiation -- code orange?