Layoffs have started at Deutsche Bank. 18,000 jobs are going - CNN

CEO Christian Sewing confirmed during a conference call that layoffs had started Monday in Asia. He said Deutsche Bank teams in other parts of the world would also be affected.

Sewing unveiled a restructuring on Sunday that will eliminate roughly one in five jobs at the German bank.

"I am very much aware that in rebuilding our bank, we are making deep cuts," the CEO said in a letter to employees. "I personally greatly regret the impact this will have on some of you."

Deutsche Bank has not given details on which offices will bear the brunt of the downsizing. The bank has said its workforce will shrink to roughly 74,000 employees by 2022.

In addition to Asia, it has big offices in London and New York and branches and outposts throughout the world.

"We will only operate where we are competitive," Sewing said Monday. "We tried to compete in nearly every corner of the banking market at the same time. We simply spread ourselves too thin."

Deutsche Bank (DB) will shrink its investment bank as part of the overhaul, shutter its equities sales and trading business and create a "bad bank" for €74 billion ($83 billion) in assets.

It's a dramatic shift for a bank that has been in business for nearly 150 years. But urgent action was needed after recent attempts at restructuring failed to produce consistent profits.

Investors reacted with skepticism. After an initial move higher on Monday, shares reversed course and were down over 7% in afternoon trade in Frankfurt. The stock has shed more than 40% since Sewing became CEO 15 months ago.

Retreat from Wall Street

Germany's biggest bank at one point dreamed of dominating investment banking, competing with the likes of American heavyweights Goldman Sachs (GS) and Morgan Stanley (MS).

Those ambitions were made clear in 1999 with the purchase of US investment bank Bankers Trust.

But the bank — and its investment banking team in particular — struggled to find direction following the global financial crisis. The bank reported an annual profit last year for the first time since 2014.

A sluggish European economy and a reluctance to reform made it harder for Deutsche Bank to compete in the expensive sector.

The investment bank continued to suck up resources even as it fell further behind competitors. The resignation last week of the division head, Garth Ritchie, signaled that major changes were coming.

The shift announced Sunday will let Deutsche Bank take a step back from investment banking and prioritize more reliable lines of business such as corporate money management.

But the restructuring effort won't come cheap.

The bank said that costs related to the overhaul would push it to a net loss of €2.8 billion ($3.1 billion) for the second quarter. The total cost of the restructuring will hit €7.4 billion ($8.3 billion) by 2022.

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https://www.cnn.com/2019/07/08/investing/deutsche-bank-layoffs/index.html

2019-07-08 13:33:00Z
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Elon Musk says free self-driving chip upgrade could come to older Teslas this year - The Verge

Tesla CEO Elon Musk says the company will “most likely” start retrofitting its new, more powerful processing chip into older vehicles near the end of the year. The new FSD chip is the first to have been designed in-house. Tesla says it offers 21 times the performance of the Nvidia chips it replaces — a claim Nvidia disputes. The new chip has been shipping in Model S, X, and 3 cars since before its announcement, but soon it will be offered as a free upgrade to half a million Tesla owners.

Elon Musk has made big promises about the new chip, which he claims has enough power to eventually allow for fully self-driving cars, if and when the software catches up. The upgraded FSD computer includes two of these new chips for redundancy. Despite being a lot more powerful, the company says the new chip costs 20 percent less than its previous “HW2+” Nvidia hardware, and only draws a bit more power.

End of Q4, most likely

— Elon Musk (@elonmusk) July 8, 2019

The FSD chip upgrade will be offered for free to any Tesla owners who have paid for the company’s “Full Self-Driving” add-on package, which costs $6,000. That’s about 500,000 cars, according to Musk’s estimate. The option currently gives you access to Tesla’s Navigate on Autopilot feature, which is capable of guiding you from “on-ramp to off-ramp” on highways, meaning it can suggest lane-changes, navigate highway interchanges, and can proactively take exits. Without it, cars are limited to regular autopilot, which offers automatic steering on highways and adaptive cruise control.

The name of the Full-Self Driving package has been controversial. In October last year, the company stopped promoting the option, claiming that it was causing “too much confusion” for its customers. That’s understandable, since the Navigate on Autopilot feature it enables is a far cry from the “full self-driving” functionality implied. In spite of the criticism however, the option soon returned in February.

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2019-07-08 11:03:44Z
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Weaker growth will offset a Fed rate cut—so sell stocks, warns Morgan Stanley - MarketWatch

So we start the week with U.S. stock market indexes just a few steps away from all time highs.

That is even after Friday’s extra strong jobs data rattled some investors, who worried that the Fed could be deterred from cutting interest rates in a few weeks. But according to CME Group, that cut is happening.

Our call of the day though, kicks things off with a warning from Morgan Stanley which is “putting our money where our mouth is” and downgrading global equities to underweight from equal-weight.

Here’s why: ‘The most straightforward reason for the shift is simple—we project poor returns,” said Andrew Sheets and a team of strategists.

The S&P 500, MSCI Europe, MSCI Emerging Markets and Topix Japan indexes are currently only about 1%, on average, below Morgan Stanley’s current price targets—or their best guess for the indexes’ fair value. “There comes a point for every analyst where you need to change your forecast or change your view. We’re doing the latter,” wrote Sheets and team.

Morgan Stanley is expecting a rate cut, but Sheets argues history shows that when central banks cut because growth is weak, it is the weakness that matters more for stocks in the end. “If you don’t believe us, we have some European stocks from April 2015, shortly after the European Central Bank’s first QE program was announced, that we’d like to sell you”, he added.

The Stoxx 600 index of leading European shares is down 3.6% since April 1 2015.

Read: A strong economy and Fed rate cuts: The stock market wants to ‘have its cake and eat it, too’

Sheets and team are mindful of the “many ways we could be wrong”, Sheets wrote, with exhibit A being the chance that economic data could come in strong, and the Fed cuts rates anyway. That could lead to higher inflation expectations, and a boost for commodity prices, he added.

The market

The Dow YMU19, -0.21% S&P ESU19, -0.16%  and Nasdaq NQU19, -0.36% futures are down modestly after that Friday pullback on the stronger-than-expected jobs data.

Gold GCQ19, +0.50% rose decisively, oil US:CLN19 US:CLN19 is up modestly and the dollar DXY, +0.02% was down a little.

Europe stocks SXXP, +0.04% are flat-to-mixed, while Asia ADOW, -1.09% finished sharply down.

The chart

Is cash still trash? Our chart of the day from TopDownCharts.com shows how fund managers and others are already beginning to bake that expected Fed rate increase into their portfolios. Their allocations to cash are beginning to creep up from record lows.

TopDownCharts.com

Investor Asset Allocations — Cash Allocations

The buzz

A dark day for Germany’s biggest lender, as Deutsche Bank DB, +2.82%  unveiled the biggest restructuring probably of any bank since the aftermath of the 2008 financial crash. The troubled German giant—which once hoped to be Europe’s answer to Wall Street titans like J.P. Morgan or Goldman Sachs—is to reduce head count by 18,000 and call time on a big chunk of its global investment banking ambitions.

This earnings season, zero is the number to beat. Expectations couldn’t be much lower, reports Barron’s.

Meanwhile, good news for those hoping to take cryptocurrencies—to date largely the preserve of day traders and hedge funds—into the mainstream. Fidelity Investments has long been known as one of the keenest among the big mutual-fund managers on developing main-street crypto investments; now its non-U. S. sister company Fidelity International is following suit. Staff have been given a game that allows them to simulate trading crypto, with cash prizes for the winners. Sounds like fun, though we do wonder; why not crypto prizes?

And, of course, congratulations to the U.S. women’s soccer team, who look set to be rewarded for their World Cup victory with a ticker-tape parade in Manhattan.

Random reads

Two Americans were among those gored by bulls in Spain’s annual bull-running festival in Pamplona.

Meet the dog-owners using DNA tests to reunite their pooches with long-lost relatives.

And Bloomberg’s top-end wining-and-dining destination in the heart of London is experiencing a bit of a problem at weekends, when the city is largely deserted. Restaurateurs aren’t happy.

Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. Be sure to check the Need to Know item. The emailed version will be sent out at about 7:30 a.m. Eastern.

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2019-07-08 10:27:00Z
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As Deutsche Bank Axes 18,000 Jobs, Bitcoin Offers a Powerful ‘Plan ฿’ - Cointelegraph

Deutsche Bank taking an axe to 18,000 jobs and winding down its investment banking arm paints a bleak picture of traditional finance at a time of booming growth for crypto.

As reported by Reuters on July 7, Deutsche Bank’s momentous decision will entail the bank exiting its equities sales and trading business — which had reportedly raked in €1.96 billion ($2.20 billion) in revenue in 2018. 

While retaining a small-scale equity capital markets business, DB also plans to rein in its fixed-income business — in particular, its rates trading desks — Reuters notes.

The move carries an expected toll of around 18,000 jobs and a 40% shrinkage of risk-weighted assets currently allocated to DB’s trading operations — representing €74 billion ($83.06 billion), and €288 billion ($323.5 billion) of leverage exposure as of Dec. 31, 2018, according to Reuters.

In a tweet published July 7, Morgan Creek Digital Assets co-founder Anthony “Pomp” Pompliano interpreted the news as a robust endorsement for bitcoin (BTC) adoption, remarking:

“Deutsche Bank plans to fire almost 20,000 employees. Bitcoin has no employees to fire. DB is built for the old world. And Bitcoin is built for the new world.”

In his own analysis of the ailing banking sector, eToro analyst Mati Greenspan proposed that DB’s move represents a broader policy failure by the stewards of global monetary policy, noting:

“This is the effect of prolonged zero interest rate policy. Central Banks are making it impossible for investment banks to turn a profit. Even the riskiest bonds around are yielding <2%. How can they be expected to make money from that?”

Greenspan’s opinion has today been echoed in rolling news from major U.K. broadsheet The Guardian, which in addition points to DB’s encumbrance with billions of euros of derivatives contracts. Many of these will purportedly be turned over to its newly-created “bad bank,” —  a so-called Capital Release Unit, tasked with managing the wind-down of DB’s investment banking assets.

Notably, Jim Reid — head of global fundamental credit strategy at DB — had remarked that central banks’ dovish policies were positively impacting “alternative” currencies such as bitcoin while hurting investment banks. He said:

“if central banks are gonna be this aggressive, then alternative currencies do start to become a bit more attractive."

Moreover, the fact that DB’s decision broke on a Sunday points to yet another Achilles Heel for traditional finance, according to VanECK digital asset strategist and MVIS director Gabor Gurbacs, who tweeted:

“Crypto markets are at least open 24/7 to act on news. In traditional markets some just have to wait until market open to get hammered on news that are public information. To me this appears to be a serious market structure problem! It’s time for plan ฿!”

As one former equities broker today told BBC radio, the Deutsche Bank revelation is viewed by many as an inevitable and belated wake-up to the aftermath of the 2008 crash — the very cataclysm that Satoshi wryly alluded to within the bitcoin genesis block over a decade ago.

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2019-07-08 09:08:00Z
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Deutsche Bank shares turn negative as lender gets ready for major overhaul - CNBC

Deutsche Bank shares turned negative after initially jumping nearly 4%  in early morning trade on Monday as the German lender announced a mass restructuring program over the weekend. In one of its boldest overhaul, the bank will see 18,000 jobs cut by 2022 and the closure of its global equities sales and trading business in a bid to improve profitability.

The bank expects the sweeping reforms, which also involve the creation of a 74 billion euro ($83.05 billion) "bad bank", to cost 7.4 billion euros by 2022. With second quarter results due on July 25, Deutsche is expected to report a net loss of 2.8 billion euros.

Deutsche Bank chief financial officer James von Moltke told CNBC's Annette Weisbach on Sunday that this will be the last strategy overhaul, aiming to reduce global headcount to around 74,000 and cut adjusted costs by a quarter to 17 billion euros.

Several sources have told CNBC that layoffs at the bank's offices in New York begin on Monday.

The German bank's decision to scale back on investment banking comes just two days after its investment banking chief Garth Ritchie stepped down by "mutual agreement."

Deutsche shares have risen 16% over the past month, bouncing off an all-time low in early June after CEO Christian Sewing called for "tough cutbacks" at a contentious shareholder meeting. However, the multi-year decline is evident in a share price at Friday's close of 7 euros, as opposed to 112 euros at their pre-crisis peak.

The tumbling share price has reflected the bank's long run of legacy scandals, many of which relate to anti money laundering failures, along with the collapse of merger talks with domestic rival Commerzbank, which may have eased pressure to trim or hive off its investment banking arm.

About time

Stephen Isaacs, chairman of the investment committee at Alvine Capital management, told CNBC's "Squawk Box Europe" on Monday that it was "about time" Deutsche Bank took action to improve profitability.

"Every other European bank, I'm afraid to say, has had to face up to the reality that they can't compete with the Wall Street players - go UBS, Credit Suisse and even the British banks - come on guys, it is extraordinary that it has taken this long, and only in the case of a complete collapse in the share price, and starting to see some of their key clients moving away," Isaacs said.

Isaacs said that while eventually the reforms will work for Deutsche Bank, they will be "far more painful" and the "provisions that they've talked about are not nearly adequate."

"All sorts of issues are going to crawl out of the woodwork, I'm afraid. Getting rid of all those jobs is very expensive, particularly in Europe, particularly in Germany, it's going to be very difficult," he said.

"Ultimately, the strategy of effectively doubling down on the German corporate market, just at a time when maybe the German economy is really rolling over, that in itself is not a key to profitability."

Isaacs went as far as to suggest that embattled chairman Paul Achleitner, who survived an attempt to oust him at a contentious shareholder meeting in May, should resign over the crisis.

—CNBC's Annette Weisbach and Spriha Srivastava contributed to this article.

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https://www.cnbc.com/2019/07/08/deutsche-bank-shares-jump-4percent-as-lender-gets-ready-for-major-overhaul.html

2019-07-08 07:34:18Z
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Deutsche Bank shares turn negative as lender gets ready for major overhaul - CNBC

Deutsche Bank shares turned negative after initially jumping nearly 4%  in early morning trade on Monday as the German lender announced a mass restructuring program over the weekend. In one of its boldest overhaul, the bank will see 18,000 jobs cut by 2022 and the closure of its global equities sales and trading business in a bid to improve profitability.

The bank expects the sweeping reforms, which also involve the creation of a 74 billion euro ($83.05 billion) "bad bank", to cost 7.4 billion euros by 2022. With second quarter results due on July 25, Deutsche is expected to report a net loss of 2.8 billion euros.

Deutsche Bank chief financial officer James von Moltke told CNBC's Annette Weisbach on Sunday that this will be the last strategy overhaul, aiming to reduce global headcount to around 74,000 and cut adjusted costs by a quarter to 17 billion euros.

Several sources have told CNBC that layoffs at the bank's offices in New York begin on Monday.

The German bank's decision to scale back on investment banking comes just two days after its investment banking chief Garth Ritchie stepped down by "mutual agreement."

Deutsche shares have risen 16% over the past month, bouncing off an all-time low in early June after CEO Christian Sewing called for "tough cutbacks" at a contentious shareholder meeting. However, the multi-year decline is evident in a share price at Friday's close of 7 euros, as opposed to 112 euros at their pre-crisis peak.

The tumbling share price has reflected the bank's long run of legacy scandals, many of which relate to anti money laundering failures, along with the collapse of merger talks with domestic rival Commerzbank, which may have eased pressure to trim or hive off its investment banking arm.

About time

Stephen Isaacs, chairman of the investment committee at Alvine Capital management, told CNBC's "Squawk Box Europe" on Monday that it was "about time" Deutsche Bank took action to improve profitability.

"Every other European bank, I'm afraid to say, has had to face up to the reality that they can't compete with the Wall Street players - go UBS, Credit Suisse and even the British banks - come on guys, it is extraordinary that it has taken this long, and only in the case of a complete collapse in the share price, and starting to see some of their key clients moving away," Isaacs said.

Isaacs said that while eventually the reforms will work for Deutsche Bank, they will be "far more painful" and the "provisions that they've talked about are not nearly adequate."

"All sorts of issues are going to crawl out of the woodwork, I'm afraid. Getting rid of all those jobs is very expensive, particularly in Europe, particularly in Germany, it's going to be very difficult," he said.

"Ultimately, the strategy of effectively doubling down on the German corporate market, just at a time when maybe the German economy is really rolling over, that in itself is not a key to profitability."

Isaacs went as far as to suggest that embattled chairman Paul Achleitner, who survived an attempt to oust him at a contentious shareholder meeting in May, should resign over the crisis.

—CNBC's Annette Weisbach and Spriha Srivastava contributed to this article.

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https://www.cnbc.com/2019/07/08/deutsche-bank-shares-jump-4percent-as-lender-gets-ready-for-major-overhaul.html

2019-07-08 07:26:12Z
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Deutsche Bank shares turn negative as lender gets ready for major overhaul - CNBC

Deutsche Bank shares turned negative after initially jumping nearly 4%  in early morning trade on Monday as the German lender announced a mass restructuring program over the weekend. In one of its boldest overhaul, the bank will see 18,000 jobs cut by 2022 and the closure of its global equities sales and trading business in a bid to improve profitability.

The bank expects the sweeping reforms, which also involve the creation of a 74 billion euro ($83.05 billion) "bad bank", to cost 7.4 billion euros by 2022. With second quarter results due on July 25, Deutsche is expected to report a net loss of 2.8 billion euros.

Deutsche Bank chief financial officer James von Moltke told CNBC's Annette Weisbach on Sunday that this will be the last strategy overhaul, aiming to reduce global headcount to around 74,000 and cut adjusted costs by a quarter to 17 billion euros.

Several sources have told CNBC that layoffs at the bank's offices in New York begin on Monday.

The German bank's decision to scale back on investment banking comes just two days after its investment banking chief Garth Ritchie stepped down by "mutual agreement."

Deutsche shares have risen 16% over the past month, bouncing off an all-time low in early June after CEO Christian Sewing called for "tough cutbacks" at a contentious shareholder meeting. However, the multi-year decline is evident in a share price at Friday's close of 7 euros, as opposed to 112 euros at their pre-crisis peak.

The tumbling share price has reflected the bank's long run of legacy scandals, many of which relate to anti money laundering failures, along with the collapse of merger talks with domestic rival Commerzbank, which may have eased pressure to trim or hive off its investment banking arm.

About time

Stephen Isaacs, chairman of the investment committee at Alvine Capital management, told CNBC's "Squawk Box Europe" on Monday that it was "about time" Deutsche Bank took action to improve profitability.

"Every other European bank, I'm afraid to say, has had to face up to the reality that they can't compete with the Wall Street players - go UBS, Credit Suisse and even the British banks - come on guys, it is extraordinary that it has taken this long, and only in the case of a complete collapse in the share price, and starting to see some of their key clients moving away," Isaacs said.

Isaacs said that while eventually the reforms will work for Deutsche Bank, they will be "far more painful" and the "provisions that they've talked about are not nearly adequate."

"All sorts of issues are going to crawl out of the woodwork, I'm afraid. Getting rid of all those jobs is very expensive, particularly in Europe, particularly in Germany, it's going to be very difficult," he said.

"Ultimately, the strategy of effectively doubling down on the German corporate market, just at a time when maybe the German economy is really rolling over, that in itself is not a key to profitability."

Isaacs went as far as to suggest that embattled chairman Paul Achleitner, who survived an attempt to oust him at a contentious shareholder meeting in May, should resign over the crisis.

—CNBC's Annette Weisbach and Spriha Srivastava contributed to this article.

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2019-07-08 07:09:23Z
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