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Takeaway: “All it takes is for an external match to come in and ignite the situation.”

4 Things To Watch On Deutsche Bank - deutsche bank 1

Hedgeye Financials analyst Josh Steiner cut through the clutter on The Macro Show yesterday with Hedgeye CEO Keith McCullough. Steiner worries about…

  • Lack of Profitability: “The ECB’s negative rates have made it virtually impossible for Deutsche’s core business to make money.”
  • Counterparty Risk: Deutsche Bank’s $50 trillion (“yes, trillion with a T”) in gross derivatives which exposes Europe to a “reflexive downward spiral if fear sets in.”
  • Gravity of Situation: The bank’s derivate exposure is 14X the size of the German economy.
  • Uncertain Political Climate: “German Chancellor Angela Merkel has drawn a line in the sand” making it virtually impossible, in an election year, to rescue Deutsche without massive political backlash.

What happens next?

“All it takes is for an external match to come in and ignite the situation,” Steiner says. Watch him in the video below discuss.

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