Wednesday, July 06, 2016

Time to Buy Deutsche Bank?

The stock hit a 30 year low today so it might be time to pull the trigger and buy them on the cheap.
Germany's Deutsche Bank (DB) plunged further on Wednesday, at one point slipping to a record low  €11.370 ($12.57), down 6.7% on Tuesday's already weak closing price of €12.13. The continued fall, as the share plumbs depths unseen for 30 years, comes as Barclays analysts reduced their earnings per share target for Deutsche Bank, Credit Suisse (CS) and UBS (UBS) , citing capital gaps and restructuring challenges as the dominant issue.
One of their subsidiaries failed the Treasury Stress tests thus making them drop like a rock. Also you add Brexit fears and you get a perfect storm of a 30 year low. The interesting part is that DB has $1.7 trillion (with a T) in cash on hand. So they could recapitalize that DB Trust unit that failed the stress test if they have to. Also I have to agree with Cramers statement:
"Do you think that the richest country on Earth, Germany, is going to let Deutsche Bank be Lehman? Do you think they are going to teach Deutsche a lesson, the way that Hank Paulson thought might be the right thing to do when Lehman was on the ropes? I think they ARE Deutsche Bank," said Cramer.
I have to agree that if DB fails Germany fails. From what I read DB is tangled quite a bit in the German economy by holding the debt of many things in Germany. Thus if they fail it means recession time for Germany. I'm sure Merkel would not let that happen since they are pulling the European sled. Too bad you don't get any dividend to help you wait out any further problems though.

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