While Deutsche Bank had once sought to compete with America’s big banks on Wall Street, the German lender has been pummeled by scandals, probes and massive fines stemming from the financial crisis and other issues in recent years. The latest overhaul will see Deutsche (NYSE:DB) exit the global equities business and shed 18,000 jobs, booking charges of €7.4B through 2022, while it won’t pay a dividend this year or next. The German bank also expects to report a net loss of €2.8B for the second quarter, before it narrows its focus on serving European companies and retail-banking customers.
Friday’s jobs report, which showed American employers added a much-higher-than-expected 224K jobs to the economy last month, has triggered a broad re-pricing in markets around the world. Traders are now looking for a smaller July rate cut of 25 basis points, and perhaps only one more after that for 2019. Shares in Asia fell on the news, with the Shanghai Composite leading a retreat across the region by closing down 2.5%, while U.S. stock futures point to a modestly lower open. Dow and S&P are showing losses of 0.2%, while the Nasdaq is off by 0.4%.
In another setback for Boeing (NYSE:BA), Saudi Arabian budget airline Flyadeal said it will cancel its order for up to 50 737 Max jets, a deal worth $5.9B when it was announced last December. The low-cost carrier will instead buy up to 50 A320neo planes and become an “all-Airbus (OTCPK:EADSY) fleet,” marking one of the first tangible signs the 737 Max crisis could shift business to Boeing’s European rival. The Max continues to be grounded following two fatal crashes – Lion Air Flight 610 in October 2018 and Ethiopian Airlines Flight 302 five months later.
Following the disappointing public debuts of Uber (NYSE:UBER) and Lyft (NASDAQ:LYFT), shared office space manager WeWork (VWORK) is hoping to shore up confidence in its business before it goes public. The company, which lost $1.9B last year, is reportedly looking to raise as much as $3B-$4B in coming months through a debt facility, assuring investors that it could fund growth initiatives until it can turn a profit. The capital would be separate from funds WeWork would receive in an IPO and may grow as big as $10B over the next few years.
Marvel has struck gold with Spider-Man: Far From Home as the film fetched nearly $600M at the box office during its first 10 days in theaters. That’s the best six-day record for Sony (NYSE:SNE), which produced the movie with Disney’s (NYSE:DIS) Marvel Studios, in a partnership that will have broad implications for future films in the franchise. Meanwhile, after 73 days in the theaters, Avengers: Endgame has hauled in $2.772B globally and is now just $15M shy of the record to beat Avatar as the highest-grossing film of all time.
Greece’s opposition conservatives returned to power with a landslide victory in snap elections on Sunday, unseating the incumbent leftist Syriza party, which was blamed for foisting a bailout on the country. New Democracy leader Kyriakos Mitsotakis has pledged to cut tax rates – to 20% on businesses in two years from 29%, and on lower individual incomes, while slashing property taxes. He’s also promised a major round of deregulation, with a focus on investment and growth, as he takes the helm of Europe’s most indebted nation.
Iran has increased its uranium enrichment beyond the limit allowed by its 2015 nuclear deal with world powers, edging closer toward weapons-grade levels while calling for a diplomatic solution to an escalating crisis. The move marks the end of a 60-day deadline Tehran issued in May for European nations to do more to offset the economic impact of sanctions by the U.S., which pulled out of the pact last year. Iran sent another letter to the EU issuing another two-month deadline to take further action, but didn’t disclose details about those measures.
The Turkish lira declined as much as 3% against the dollar overnight after President Erdogan dismissed the central bank governor, reigniting concerns about independence and fueling concerns borrowing costs will be lowered faster than expected. Governor Murat Cetinkaya, whose four-year term was due to run until 2020, was replaced by his deputy Murat Uysal, just weeks before the central bank is scheduled to decide on policy. Turkey is also expected to take delivery of Russian S-400 missile defense systems in the coming days, a development likely to trigger U.S. sanctions and that could put the lira under renewed pressure.
What else is happening…
‘Your emotional state can help or hurt your trading performance’ writes contributor David Lerner.
Export engine revs up in Germany, but Q2 still looks weak.
Venezuela’s opposition to hold talks with Maduro regime.
Africa’s largest economy joins AfCFTA free trade agreement.
In Asia, Japan -1%. Hong Kong -1.5%. China -2.6%. India -2%.
In Europe, at midday, London -0.1%. Paris -0.3%. Frankfurt -0.3%.
Futures at 6:20, Dow -0.2%. S&P -0.2%. Nasdaq -0.4%. Crude -0.1% to $57.47. Gold +0.5% to $1406.70. Bitcoin +6.3% to $11940.
Ten-year Treasury Yield -1 bps to 2.03%
Today’s Economic Calendar