1. Volatile Action in DB Last Night…Opened Down 4%…Now up over 1%.
Deutsche Bank AG Chief Executive Officer John Cryan failed to reach an agreement with the U.S. Justice Department to resolve a years-long investigation into its mortgage-bond dealings during a meeting in Washington Friday, Germany’s Bild newspaper reported. “The risks in our derivatives book are massively overestimated,” DB Chief Risk Officer Stuart Lewis said. He said 46 trillion euros in derivatives exposure at Deutsche appeared large but reflected only the notional value of the contracts, while the bank’s net exposure to derivatives was far lower, at around 41 billion euros – DB opened DOWN 4% in Frankfurt, and is now UP 1.6% on the day…
Kathleen Brooks, Research Director at City Index, says in an email on Friday morning: “Apparently it was a rogue algorithm that triggered the sell off after it picked up comments made by the French President Francois Hollande, who said if Theresa May and co. want hard Brexit, they will get hard Brexit.
“These days some algos trade on the back of news sites, and even what is trending on social media sites such as Twitter, so a deluge of negative Brexit headlines could have led to an algo taking that as a major sell signal for GBP. Once the pound started moving lower then more technical algos could have followed suit, compounding the short, sharp, selling pressure.”