Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Todd Harrison: Trading Deutsche Bank and the Tape

By

Looking for pairs in all the long places.

PrintPRINT
Editor's Note: Todd posts his vibes in real time each day on our Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO.

Deutsche Bank (NYSE:DB) painted the tape yesterday and it was none-too-pretty. According to the WSJ:  "Financial reports produced by some of the bank's U.S. arms "are of low quality, inaccurate and unreliable. The size and breadth of errors strongly suggest that the firm's entire U.S. regulatory reporting structure requires wide-ranging remedial action."

The bank responded by saying, "We have been working diligently to further strengthen our systems and controls and are committed to being best in class." The bank is investing €1.0B as part of this effort, and we have appointed 1,300 colleagues to focus on it as part of a dedicated program. That includes 500 compliance, risk and technology employees that the bank plans to hire in the US this year.

We've been talking about this stock for a few weeks, given that it lost 1/3 of its entire market capitalization since the January high.  I don't claim to know how much of this latest news is "in" the stock, but I would venture to guess that some of it is.

As the news (and the stock got) hit late yesterday, I nibbled on some upside calls (in real-time on the Buzz & Banter), fully aware that we could see some analyst downgrades this morning (I haven't seen any yet). It's a small position as these things go, consistent with my current stylistic approach of surgical trading.

Someone pinged me on Twitter last night to opine that DB could be a modern day Lehman Brothers, and that "Sloppy accounting - sell." I don't believe that to be true, but lest there is more to the story than meets the eye, those calls are currently paired against the SPY puts I've layered into the last few sessions, although that exposure is this close from being stopped out above recent highs.

A chart of the two positions -- a tale of two fates -- can be found below.

s and p 500


Click to enlarge

Random Thoughts:
  • The VXO is again trading in the single digits again. Some historical perspective for these historic times:
 

 
Click to enlarge
 
  • Goldman Sachs (NYSE:GShas been thumbing its nose at the insider sales window.
  • Herbalife (NYSE:HLF) is provided Mr. Ackman with an equity enema yesterday, following his presentation on the company. These things happen, even to the very best investors on the street.
  • We walked through the four primary metrics that determine stock prices yesterday; if you missed it, click here!

As always, I hope this finds you well.
 
 

R.P.

Twitter: @todd_harrison

Follow Todd and over 30 professional traders as they share their ideas in real time with a FREE 14 day trial to Buzz & Banter.

< Previous
  • 1
Next >
Author holds position in SPY and DB.

Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at todd@minyanville.com.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE