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The star of "The Big Short" recommends shortening Deutsche Bank

The name Steve Eisman, a cash manager from Neuberger Berman Group, may not tell you anything, but you probably think of his character from the popular movie "The Big Short". This is the analyst, who predicted the financial collapse before the 2008 crisis.
And Eisman has a new offer to investors who wonder what company to shorten ... And it is - Deutsche Bank AG. The largest German bank, which is facing serious difficulties and is in a period of crisis, on its way to restructuring.
Deutsche Bank really has problems with its profitability, said Isman, in a special interview for Bloomberg Television, in Hong Kong. According to him, Deutsche Bank is a troubled bank. Eisman believes that its shares should be drastically reduced, the expert also said, adding that the low-capitalized bank would probably have to raise its capital next year.
Eisman also recommended short stakes against Canadian financial companies, confirming that he is still short with the Wells Fargo & Co. bank.
Earlier Eisman's bets against the mortgage market before the 2008 crisis were described in Michael Lewis's 2010 "The Big Short" book, based on the stories of cash managers who benefited from the financial crisis.
Eisman joined New York-based Neuberger Berman after he closed his Emrys Partners hedge fund in 2014.

Oil rises after Trump withdraws from the deal with Iran

Oil rose during the Asian trading session after President Donald Trump announced that the US would withdraw from the nuclear agreement with Iran and re-sanction the country. This has led to an increase in oil prices.
US crude oil rose $1.58 to $70.64 a barrel after it fell by 1.67 dollars to 69.06 dollars a barrel on Tuesday. Brent rose 1.85 dollars to 76.70 dollars a barrel, after losing the previous day of 1.32 dollars.
Meanwhile, the Japanese Nikkei 225 fell 0.4 percent to 22 412.96 points, while the South Korean leading index lost 0.1 percent of its value. Hang Seng, Hong Kong, added 0.5% to 30 552.57 points.
According to market observers, geopolitical risks are rising, especially related to Iran and the price of oil.

The dollar took a breather

The central event in world markets is still the news of the US withdrawal from the nuclear deal with Iran. This news has pushed up the prices of crude oil, which are already getting support on the wave of the still-ongoing OPEC pact and the decline in oil and petroleum products in the States.
The foreign exchange market was characterized by low activity yesterday. The dollar first accumulated gains in the European session, but then lost almost all of its growth against the background of weaker than expected data on industrial inflation in the US.
According to the data provided, the producer price index (PPI) in annual terms grew less than expected. It was assumed that the indicator will add 2.8%, but it grew by only 2.6% against the growth for the previous period under review by 3.0%. On a monthly basis, the index added 0.1% against the forecast of an increase of 0.2% and growth in March by 0.3%. The base value of the producer price index (PPI) also declined year-on-year, adding only 2.3% against expectations of 2.4% and the previous value of 2.7%.
The US dollar on the wave of these figures stopped pressure on major currencies and rolled back from the local peaks.

US stocks fell due to Trump's decision to withdraw from the Iranian contract

US stocks fell on Tuesday after President Trump announced his intention to abandon a nuclear deal with Iran. The S&P 500 fell 0.03% to 2,671.92. At the same time, seven of the 11 main sectors completed trading in the red zone. The Dow Jones index added 0.01% to 24360.21. The Nasdaq index rose by 0.02% to 7130.70. Strengthening of the dollar continued: the ICE dollar index, which rates the US dollar to a basket of six major currencies, rose by 0.3% to 90,055 and now it continues to grow. Futures on the stock indices indicate mixed opening today.
President Trump's statement that the US is withdrawing from a multilateral nuclear deal with Iran, concluded in 2015, has become the main driver of the market, as the reporting season for the first quarter ends. So far, 78% of S&P 500 component companies reported earnings that were higher than expected. But optimistic reports have not provided the expected increase in the stock market, as investors are concerned about the impact of tightening the monetary policy of the Fed and the possibility of a trade war between the US and China.

Trump failed the cryptomarkets

Major cryptocurrencies on Wednesday are falling in price, as world markets are in turmoil after US President Donald Trump broke off a nuclear deal with Iran. At the same time, after a significant collapse on Tuesday evening, on Wednesday, the rate of decline of the cryptocurrencies has slowed somewhat and, probably, in the short term it will be already on such significant levels.
The bitcoin rate declined 0.13% overnight, to $9,112 with a capitalization of $155.7 billion. The rate of Litecoin was weakened by 3.25% to 154.6 dollars with capitalization $8.7 billion. Ethereum at the same time dropped by 1.16% to $725.8, its capitalization is $72.4 billion. The rate of Ripple fell by 2.5% overnight, to $0.78 with a capitalization of $30.6 billion. The total market capitalization of the cryptocurrencies reached 422.3 billion dollars.

Powell: The process of normalizing the policy of the Fed is without prejudice to the financial markets

The Fed has made it clear to the markets that it intends to raise the interest rate gradually, and investors are probably not surprised by the actions of the Central Bank, said the head of the Federal Reserve, Jerome Powell.
The process of normalizing the Fed's policy is taking place without damage to the financial markets, and the expectations of traders regarding the future policy of the Central Bank seem to be in good agreement with the expectations of the Fed's management, he said at a conference organized by the International Monetary Fund (IMF) and the Swiss Central Bank.
According to Powel, if the situation in the economy meets expectations, the markets are probably not going to be surprised by Fed's actions.
The Fed raised the rate six times since December 2015, each time by 25 basis points. The last time the rate was raised in March 2018 - up to 1.5-1.75% per annum, and the leaders of the Federal Reserve made it clear that they expect two more hikes this year.
The gradual increase in the rate helped to maintain the Fed's stimulating policy, which supported the growth of employment and economic recovery in the US, and also contributed to a gradual increase in inflation.

Nomura: Shorten the dollar in the summer

Temperatures are rising, and hence the tensions in foreign exchange markets. Japan's largest financial institution, Nomura Holdings Inc., has one offer for currency traders. And it is - to shorten the dollar in the summer.
The financial institution is of the opinion that a short dollar may be a good idea for the next three to four months. The recommendations are to shorten the dollar against the yen and the euro.
Since January, green money has been the strongest base currency, backed by Fed's rising interest rates.
Yesterday, the Fed kept the level of interest unchanged, warning that inflation was almost at the target level. Nonetheless, Nomura is of the opinion that the interest rate increase, which was not implemented yesterday, may begin to slow down.
And in an environment of expectation of ending the incentives from other leading banks around the world, the dollar may begin to decline compared to other major currencies, Nomura said.
Together with rising US inflation, Nomura believes that further interest rates, albeit at a slow pace, will have a very negative impact on the bond market.

Fed kept interest rates unchanged

The Fed kept the interest rate unchanged yesterday, but signaled that the inflation target was reached. Thus, the reserve, though disappointing investors expected an increase in interest rates at this meeting, opened its way to a June increase in interest rates.
The dollar initially declined, but subsequently recovered its losses. The euro returned at trading levels below 1.2000, with the pound continuing with its exceptionally strong impairment. Early this morning, a pound is exchanged for 1.3595 dollars.
The renewal of the Fed's inflation target is a major step after nearly six years in which consumer price growth in the world's largest economy is below the target of 2%.
The Fed also commented on the weak recent data on the labor market, saying labor market activity was slowing down, but it has performed well over the past few months.
In any case, at the next meeting on June 12-13, the Fed is expected to raise interest rates by 25 basis points after not doing so yesterday. Or, the market has bet almost 100%, that we will see a rise next month, unless something really dramatic happens.

Platinum and silver became even cheaper than gold

Platinum and silver continue to fall cheaper than gold. Indeed, yesterday, platinum was threateningly approached the psychological limit of $900 per ounce. Silver tried to test its bottom at $16.15.
And while at this stage both metals are able to hold on to the important support, a breakthrough could initiate extremely massive sales and closing down long positions after triggered stops.
It is quite possible to see spikes in platinum and especially in silver, which is extremely volatile and is traded at relatively weak volumes.
Such a spike can safely take the silver with a dollar, and why not with a dollar and a half down. Recall that there are plenty of holidays in many places around the world, which would further weaken the liquidity.
So, all investors should be extremely careful. Meanwhile, we see how the platinum-gold ratio is already close to its record bottom after it is at a level of 0.6870.
At the same time, the gold-silver ratio is at a level of 80.5, which is also extremely high, according to historical standards.
By comparison, in the long run, this ratio was about 40, as every time when it reached this level, it rebounced above the psychological limit of 80.