Deutsche downgrades Venture Global on valuation into earnings
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Yahoo
an hour ago
- Yahoo
Jerome Powell's Jackson Hole Speech Could Make or Break the Stock Market Rally
Key Takeaways All eyes are on Federal Reserve chair Jerome Powell, whose speech at the central bank's annual Jackson Hole Symposium could test the stock market rally that's lifted stocks to record highs. Deutsche Bank analysts warned in a note on Tuesday that Powell's comments "could create uncertainty about September cut prospects." A hawkish Powell could spell trouble for the market as a whole, but especially for rate-sensitive stocks like homebuilders and small caps, which have rallied in anticipation of cuts. Federal Reserve chair Jerome Powell is scheduled to speak at the central bank's annual Jackson Hole Symposium on Friday, an event that could be a major test of the stock market's post-"Liberation Day" rally. Investors are likely to read into Powell's comments for signs of what Fed officials will do at their next policy meeting in September. The Fed cut rates three times last year—by 50 basis points in September, 25 bps in November, and another 25 bps in December—but has stood pat this year as policymakers have waited to see how President Trump's tariffs and immigration crackdown rippled through the economy. Market participants are confident the Fed is poised to resume rate cuts next month after big downward revisions to jobs growth in July's employment report and mostly better-than-feared consumer price data. Federal funds futures trading data on Wednesday put the odds of a rate cut at about 83%, down from 100% a week ago but well above last month's 60%, according to CME Group's FedWatch Tool. Nonetheless, Wall Street's jitters about Friday's speech have been apparent this week. The S&P 500 and Nasdaq Composite fell for a second straight day on Wednesday, dragged by slumping tech stocks. What Is Powell Expected to Say? Market participants will be listening for evidence that Powell's thinking about the labor market and inflation outlook has changed in light of recent data. When the Fed chair last spoke in July, he "struck a notably hawkish tone, arguing that the labor market was 'solid' and that inflation was still too high, even excluding tariff effects," according to Deutsche Bank economists. Deutsche Bank expects Powell to strike a different tone this week, and nod at the possibility that July's disappointing jobs report may foretell more weakness ahead. But they also anticipate he'll "reiterate reasons why he and his colleagues are more focused on measures of labor market slack," like the unemployment rate, "than headline payrolls figures." The White House's immigration crackdown has caused labor supply growth to slow dramatically this year. As a result, fewer jobs need to be created to maintain a stable unemployment rate and satisfy the "maximum employment" side of the Fed's dual mandate. Powell pointed to this dynamic when he called the labor market "in balance" last month. Deutsche Bank expects him to strike a more cautious tone this week, "while still prioritizing measures of slack," like the unemployment rate. That emphasis on labor supply factors, they said, "could create uncertainty about September cut prospects, at least relative to current elevated pricing." How Would Markets Reach To a Hawkish Powell? A hawkish Powell—one who signals concern about the impact of tariffs on inflation and skepticism about recent signs of labor market weakness—would be bad news for a market that expects interest rates to go down next month. Analysts at Evercore ISI warned in a note on Sunday that stocks could pull back by 7% to 15% into October if today's optimistic, pricey market interprets Powell's "balanced view" as hawkish. The stocks most at risk of a Powell pullback are those that have benefited the most from recent rate-cut optimism. Shares of homebuilders D.R. Horton (DHI) and Lennar (LEN) rose about 25% and 18%, respectively, in the last month as investors front-ran rate cuts. Home-improvement retailers Lowe's (LOW) and Home Depot (HD) have seen similar boosts from confidence that rate cuts would reinvigorate America's sluggish housing market. How Stocks Might React If Powell Turns Dovish A dovish pivot by Powell could spur a rally in small-cap stocks and shift leadership among large caps, according to Bank of America. Bank of America equity analyst Jill Carey Hall observed in a note on Wednesday that small caps usually outperform in rate-cutting cycles that coincide with recessions, but that performance is more mixed outside of economic contractions. However, "a cut in the absence of weaker macro data could be more positive than historically given the increased sensitivity of small caps to interest rates/elevated refinancing risk," wrote Hall. The sustainability of a rate cut rally, Hall said, "will likely depend on the profits backdrop," which itself will rest on the macroeconomic effects of tariffs, tax cuts, and other policy shifts out of Washington. In a separate note last week, BofA's Savita Subramanian noted the firm's "US Regime Indicator," a business cycle measure, strengthened in July, and could enter the "Recovery" phase if it strengthens again in August. That would bode well for the smaller stocks in the large-cap S&P 500, which tend to outperform in that phase. "History would suggest there is more to go in cap-weighted dominance," wrote Subramanian of the trend over the last 8 years of the largest stocks in the S&P 500 outperforming the broader index. "But if the Fed's next move is a rate cut, and if the Regime indicator is shifting to a Recovery, we think the run may be closer to done." Read the original article on Investopedia
Yahoo
14 hours ago
- Yahoo
Deutsche Bank chief faces scrutiny about role in risky trades over a decade ago
By Tom Sims and John O'Donnell FRANKFURT (Reuters) -In 2013, Deutsche Bank handed Christian Sewing, a rising star, the sensitive assignment of investigating derivatives trades under scrutiny in Italy. More than a decade later, Sewing, now CEO, faces criticism in a lawsuit by a former Deutsche employee over his handling of the task. The suit has prompted Deutsche to review how the bank and Sewing, chief auditor at the time, managed the situation, according to a person with knowledge of the matter. Dario Schiraldi, a former banker at Deutsche who was involved in the trades, claims in a 152-million-euro ($178 million) lawsuit seeking damages from the bank that the lender's actions, including the audit overseen by Sewing more than a decade ago, harmed Schiraldi's reputation and earnings, according to court documents seen by Reuters. Deutsche Bank in its review in recent months of its investigation into the trades found no wrongdoing, the person familiar with the matter said. Nonetheless, the lawsuit - due to be heard in a Frankfurt court in December - puts Sewing, CEO since 2018 and credited with cleaning up Deutsche Bank's image, in the spotlight by publicly examining his role at the height of the global financial crisis. Schiraldi, five other former bankers of the German lender, and the bank were acquitted in 2022, after initially being convicted by an Italian court in 2019 for colluding with Italian bank Monte dei Paschi (MPS) to hide losses at MPS by using complex derivatives trades. In Germany, Deutsche's accounting of the transactions was also the focus of regulators. Schiraldi's lawsuit claims the bankers were made to take the blame for trades while Deutsche Bank management - including Sewing as chief auditor - sought to conceal their tacit approval for risky and lucrative deals. Deutsche Bank disclosed Schiraldi's lawsuit in its 2024 annual report released earlier this year, in a list of potentially significant civil litigation and regulatory matters. "The facts of this long-standing matter are well known and have been discussed in detail over the past decade. The Supervisory Board supports the Management Board in defending the bank against this litigation," Chairman Alexander Wynaendts said in a statement earlier this month. Sewing declined to comment for this story via a spokesperson. As CEO, he has slimmed down and returned Deutsche Bank to profit and restored its image after years of management churn, legal turmoil, losses and fines that threatened to topple the bank. He was reappointed in March for a third term as head of Deutsche, which is playing a key role in German Chancellor Friedrich Merz's "Made For Germany" initiative to pump the sagging economy. For this report, Reuters reviewed documents - including previously unreported details from the initial lawsuit, a March filing and email correspondence - and spoke to four people with direct knowledge of the matter on condition of anonymity. Reuters is reporting for the first time fresh details of the case, having reviewed Schiraldi's claim, and how Germany's largest bank is responding. Schiraldi, since leaving the bank, has held other jobs in finance, including leading a Swiss-family investment company, according to his LinkedIn profile. A central plank of Schiraldi's lawyers' argument is that Sewing and the bank scapegoated Schiraldi and a handful of colleagues and later failed to set the record straight. In 2014, Deutsche Bank took the findings of the bank's audit into the MPS trades to its local regulator, the Italian central bank, blaming the "Deal Team" - which included Schiraldi - for "insufficient and selective disclosure" on the trades. The information that was allegedly withheld – how the bank was fetching billions of dollars of bonds that underpinned the deals - allowed Deutsche to book the trades as loans rather than derivatives, the findings from the bank's audit showed. That helped reduce the amount of capital it had to hold to cover risks, making it more profitable. "An appropriate handling ... would have resulted in the transactions either being declined or escalated," Deutsche told the Bank of Italy in 2014, according to slides seen by Reuters. Schiraldi disputes that there was any such cover up of information and that the deals were widely understood. Reuters could not ascertain management's role in signing off on the deals. Deutsche Bank confirmed to Reuters that the "audit identified material failings" but declined to comment on communication with regulators. Schiraldi's lawyers claim Deutsche Bank's audit of the trades had a predetermined outcome and drew on only a fraction of the available documents. In the course of their dispute with the bank, they have successfully obtained the release of several million emails and documents, which they say, in a March 2025 court document seen by Reuters, show flaws in the way the bank handled the case. Reuters could only review a small fraction of the documents. PUBLICITY SEEKING As the bank seeks to quash Schiraldi's claims, one of its management board members has reviewed the case, sifting through emails and documents from the time, according to the person with direct knowledge of the review. Deutsche Bank, in a lengthy response to questions from Reuters, said the allegations were "false", that the audit had been thorough and independent, and that executives involved "discharged their responsibilities appropriately". Sewing had been a credit officer before the audit and approved parts of some other similar deals. "We stand by the audit's core findings," a Deutsche Bank spokesperson said. While the case is due to come before a German court later this year, such disputes may also be settled out of court. In its statement to Reuters, the bank said the claims made in the lawsuit are "based on incorrect allegations", and "an attempt to generate publicity by seeking to cause serious harm to the good reputation of executives.' ($1 = 0.8529 euros)
Yahoo
15 hours ago
- Yahoo
Deutsche Bank chief faces scrutiny about role in risky trades over a decade ago
By Tom Sims and John O'Donnell FRANKFURT (Reuters) -In 2013, Deutsche Bank handed Christian Sewing, a rising star, the sensitive assignment of investigating derivatives trades under scrutiny in Italy. More than a decade later, Sewing, now CEO, faces criticism in a lawsuit by a former Deutsche employee over his handling of the task. The suit has prompted Deutsche to review how the bank and Sewing, chief auditor at the time, managed the situation, according to a person with knowledge of the matter. Dario Schiraldi, a former banker at Deutsche who was involved in the trades, claims in a 152-million-euro ($178 million) lawsuit seeking damages from the bank that the lender's actions, including the audit overseen by Sewing more than a decade ago, harmed Schiraldi's reputation and earnings, according to court documents seen by Reuters. Deutsche Bank in its review in recent months of its investigation into the trades found no wrongdoing, the person familiar with the matter said. Nonetheless, the lawsuit - due to be heard in a Frankfurt court in December - puts Sewing, CEO since 2018 and credited with cleaning up Deutsche Bank's image, in the spotlight by publicly examining his role at the height of the global financial crisis. Schiraldi, five other former bankers of the German lender, and the bank were acquitted in 2022, after initially being convicted by an Italian court in 2019 for colluding with Italian bank Monte dei Paschi (MPS) to hide losses at MPS by using complex derivatives trades. In Germany, Deutsche's accounting of the transactions was also the focus of regulators. Schiraldi's lawsuit claims the bankers were made to take the blame for trades while Deutsche Bank management - including Sewing as chief auditor - sought to conceal their tacit approval for risky and lucrative deals. Deutsche Bank disclosed Schiraldi's lawsuit in its 2024 annual report released earlier this year, in a list of potentially significant civil litigation and regulatory matters. "The facts of this long-standing matter are well known and have been discussed in detail over the past decade. The Supervisory Board supports the Management Board in defending the bank against this litigation," Chairman Alexander Wynaendts said in a statement earlier this month. Sewing declined to comment for this story via a spokesperson. As CEO, he has slimmed down and returned Deutsche Bank to profit and restored its image after years of management churn, legal turmoil, losses and fines that threatened to topple the bank. He was reappointed in March for a third term as head of Deutsche, which is playing a key role in German Chancellor Friedrich Merz's "Made For Germany" initiative to pump the sagging economy. For this report, Reuters reviewed documents - including previously unreported details from the initial lawsuit, a March filing and email correspondence - and spoke to four people with direct knowledge of the matter on condition of anonymity. Reuters is reporting for the first time fresh details of the case, having reviewed Schiraldi's claim, and how Germany's largest bank is responding. Schiraldi, since leaving the bank, has held other jobs in finance, including leading a Swiss-family investment company, according to his LinkedIn profile. A central plank of Schiraldi's lawyers' argument is that Sewing and the bank scapegoated Schiraldi and a handful of colleagues and later failed to set the record straight. In 2014, Deutsche Bank took the findings of the bank's audit into the MPS trades to its local regulator, the Italian central bank, blaming the "Deal Team" - which included Schiraldi - for "insufficient and selective disclosure" on the trades. The information that was allegedly withheld – how the bank was fetching billions of dollars of bonds that underpinned the deals - allowed Deutsche to book the trades as loans rather than derivatives, the findings from the bank's audit showed. That helped reduce the amount of capital it had to hold to cover risks, making it more profitable. "An appropriate handling ... would have resulted in the transactions either being declined or escalated," Deutsche told the Bank of Italy in 2014, according to slides seen by Reuters. Schiraldi disputes that there was any such cover up of information and that the deals were widely understood. Reuters could not ascertain management's role in signing off on the deals. Deutsche Bank confirmed to Reuters that the "audit identified material failings" but declined to comment on communication with regulators. Schiraldi's lawyers claim Deutsche Bank's audit of the trades had a predetermined outcome and drew on only a fraction of the available documents. In the course of their dispute with the bank, they have successfully obtained the release of several million emails and documents, which they say, in a March 2025 court document seen by Reuters, show flaws in the way the bank handled the case. Reuters could only review a small fraction of the documents. PUBLICITY SEEKING As the bank seeks to quash Schiraldi's claims, one of its management board members has reviewed the case, sifting through emails and documents from the time, according to the person with direct knowledge of the review. Deutsche Bank, in a lengthy response to questions from Reuters, said the allegations were "false", that the audit had been thorough and independent, and that executives involved "discharged their responsibilities appropriately". Sewing had been a credit officer before the audit and approved parts of some other similar deals. "We stand by the audit's core findings," a Deutsche Bank spokesperson said. While the case is due to come before a German court later this year, such disputes may also be settled out of court. In its statement to Reuters, the bank said the claims made in the lawsuit are "based on incorrect allegations", and "an attempt to generate publicity by seeking to cause serious harm to the good reputation of executives.' ($1 = 0.8529 euros)
