European mega-banks: The walking dead?

Friday, October 30, 2015

YOUR BEST SOURCE FOR THE UNBIASED MARKET COMMENTARY YOU WON'T GET FROM WALL STREET

Dear Subscriber, Europe’s mega-banks have just warned that they will continue to struggle for years: Deutsche Bank co-CEO John Cryan said yesterday that the bank will be shedding workers and closing offices for at least two years ... Credit Suisse Group’s CEO Tidjane Thiam has issued the same warning recently ... Barclays has already been forced to cut its guidance for 2016, and ... Both Royal Bank of Scotland and UBS Group AG are also cutting costs and shrinking their operations to cope with plunging revenues. Much of the pain is self-imposed: Due to misconduct that led to the financial crisis of 2009, the banks are struggling to survive under the weight of oppressive new regulations and fines. In its struggle to survive, for instance, Deutsche Bank is firing 10% of its workforce, closing offices in ten countries and selling off assets worth 70 billion euros. At the same time, investor confidence in the banks has been shaken badly, a factor that has depressed their stock. Deutsche Bank shares plunged nearly 7% and Barclays fell 6.3% in a single day yesterday. As a Boston University economist recently put it, “Increasingly, the major banks are caught in a two-speed world, the growing U.S. economy versus the sputtering European economy. As the European banks stumble and shrink, the U.S. big six have a unique opportunity to gain greater market share.” As a result, massive capital flows are heading to the U.S. from Europe as investors there dump their investments in favor of American markets. This is precisely what I told you would begin happening in earnest this month — in October of 2015. And this is also why I have been shouting it from the rooftops: If you own investments that rise when the euro plunges ... that soar when European stocks crater ... and that spin off huge profits as trillions of euros in flight capital move into U.S. dollars and investments ... you are likely to grow rich in the weeks and months ahead. Yours for supercycle survival and profits, Larry Edelson Senior Analyst, Weiss Research Editor, Supercycle Trader P.S. Although enrollment in my Supercycle Trader has now closed, I will continue these daily updates to help keep you abreast as this crisis continues to unfold. The investment strategy and opinions expressed in this article are those of the author's and do not necessarily reflect those of any other editor at Weiss Research or the company as a whole.