Halister News

--AMY THOMSON

(Bloomberg) -- German Finance Minister Wolfgang Schaeuble says he isn’t worried about Deutsche Bank.

• “No, I have no concerns about Deutsche Bank,” Schaeuble says
• Schaeuble comments to Bloomberg Television after press conference in Paris
• NOTE: Cryan Says Deutsche Bank ‘Rock Solid’ Amid Rising Capital Fears Link

(Bloomberg) -- “The severity of the recent moves have extended oversold conditions in stocks and overbought condition in Treasuries, creating a dynamic which points to the need for a meaningful correction,” CRT strategist David Ader says in note.

• “That said, as we’ve seen, the markets can stay in over- bought/sold conditions for a while before any significant reversal”
• “Our conviction has undoubtedly waned on the need for any back-up in rates ahead of the 10- and 30-year auctions, if for no other reason than if we’re heading into another European credit crisis,” then “Treasury market’s supply and demand balance becomes far less relevant’
• Other observations from strategist morning notes:
• BMO (Aaron Kohli): “Critical question for investors is whether the markets are signaling something about the economic picture that has yet to be picked up by street economists or if the market’s price action indicates positioning and the fear of further declines”
  • “We are still of the view that the positive improvements in core inflation, in combination with reasonable domestic economic data, will keep the Fed from writing off rate hikes as the market has,” and “expect this even as volatility and tighter financial conditions will keep them on pause for the time being”
• Marty Mitchell (independent): “Because of the numerous and increasing bond friendly factors at play globally, we see no reason to alter the view that buying on dips down to support is the most prudent strategy”
  • “While it may seem difficult at times, remain patient for a correction to the 10-day moving averages before adding to long exposures”
• FTN (Jim Vogel): “As for other messaging from the Fed Chair, current volatility might make her more reluctant to signal any changes in policy for fear of creating additional volatility when/if her comments are blown out of proportion,” and “her biggest risk” is “coming across too blasé about present challenges,” while “investors are very very tired of the word ‘headwinds’ from the Fed”
• RBS (John Briggs): “Fed chair is unlikely to tread new ground in semiannual Congressional testimony,” and “to the extent that Yellen is passively hawkish by simply reiterating the bulk of the January statement message at least in the prepared remarks, there is some room for a modest move higher in yields”

(Bloomberg) -- Recommend investors increase exposure to globally-exposed U.K. credits for relative safety as spreads may widen further going into the referendum on EU membership, BofAML analysts write in client note.

• Alternatively could switch into credit denominated in other currencies, specifically USD credit
• Recommend buying protection on RBS, Barclays senior CDS from sell protection, and move to neutral on subordinated CDS from sell protection
  • Lower BOE rates for longer, weaker growth outlook, risks to property prices and turmoil in financial markets very likely to impact U.K. banks in the event of Brexit; Santander and Bank of Ireland could also be affected
• Among other sectors, retail and consumer sectors are likely to be some of the more volatile sectors in the run-up to the referendum
  • Energy names are vulnerable to funding-costs doubts, while utilities are exposed to domestic growth, higher gilts and the decoupling from EU Energy policy
  • Telecoms may underperform under a Brexit scenario as there would be a risk of regulatory change
  • Real estate is also highly exposed, but there’s value in

names with lesser U.K. exposure given current valuations

• Outflows have already started to increase but cash and CDS spreads are still to catch up, especially when compared to moves in sovereign CDS and the correlation between EUR, GBP cash
• Brexit impact on euro spreads outside of those with significant U.K. exposure is unlikely to be large, given the other factors currently in play
  • Issuance from U.K.-domiciled names may decrease slightly were the U.K. to vote to leave, that shouldn’t be enough to become a significant positive technical for euro spreads

(Bloomberg) -- 4Q net income compares with est. EU77.3m loss, EU170m net income in yr-earlier period.

• 4Q net interest income EU3.03b vs est. EU2.94b
• 4Q total revenue EU5.59b vs est. EU5.46b
• 4Q net fees and commissions EU1.94b vs EU1.88b yr earlier
• 4Q loan loss provisions EU1.22b vs est. EU1.12b
• Pro-forma FL CET1 ratio 10.94%
• 4Q other charges and provisions EU807m
• Dividend with cash/scrip option of EU0.12/share, unchanged vs yr earlier
• Statement
• PREVIEW here
• Conf call at 2:30pm CET
  • Italy: +39 02 8058811; UK: +44 121 2818003; US: +1 718 7058794
• Webcast link