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S&P Downgrades Deutsche Bank To BBB+

Adding insult to ruinous injury, just hours after Deutsche Bank stock crashed to all time lows after it was revealed that it had been put on the Fed's "secret" probation list one year ago, overnight S&P downgraded Deutsche Bank's credit rating by one notch to BBB+ from A-, just three away from junk, citing "significant execution risks in the delivery of the updated strategy amid a continued unhelpful market backdrop" adding that "relative to peers, Deutsche Bank will remain a negative outlier for some time."

Deutsche Bank CoCo Bonds Plunge, Shares Hit Record Low, after US Entity Makes FDIC’s “Problem Bank List”

Shares of Deutsche Bank fell 7.2% today in Frankfurt to €9.16, the lowest since they started trading on the Xetra exchange in 1992. They’re now lower than they’d been during its last crisis in 2016. And they’re down 71% from April 2015. 

This came after leaked double-whammy revelations the morning: One reported by the Financial Times, that the FDIC had put Deutsche Bank’s US operations on its infamous “Problem Bank List”; and the other one, reported by the Wall Street Journal, that the Fed, as main bank regulator, had walloped the bank last year with a “troubled condition” designation, one of the lowest rankings on its five-level scoring system.

Art Berman: Think Oil Is Getting Expensive? You Ain't Seen Nothing Yet.

A global supply crunch approaches...

 After issuing clear warnings on this program that sub-$50 oil prices were going to be short-lived, oil expert and geological consultant Art Berman returns to the podcast this week to explain why today's $70 oil prices will go higher -- likely much higher -- and start materially contricting world economic growth. 

Art explains how the current glut of oil created by the US shale boom -- along with high crude output by both OPEC and non-OPEC  producers -- is a temporary anomaly. Fundamentally, we are not finding nearly as much oil as we need to continue the trajectory of the global demand curve. And at the same time, we're extracting our reserves at a faster rate than ever. That's a mathematical recipe for a coming supply crunch -- it's not a matter of if, but when.

 6/1/18

Updated Monthly

Oil Prices: 
06/03/13....$100.52

06/01/18......$72.89   

Down 27%(rounded)
(oil prices approximately five years earlier due to weekends & holidays)
ANS West Coast prices   

 OIL INDICATOR:  Positive  Oil indicator will remain positive until it's rise is greater than 75% from five years earlier.

Oil prices are well known for their volatility in the short term, longer term due to dwindling reserves energy prices are in a secular bull market.  Technologies such as fracking will extend the life of oil fields but major new discoveries arrive at a snails pace far slower than the world's growth.  

As long as prices rise in a slow and orderly pace our economy can adjust to those changes, however if prices spike (international tensions, war etc.) high energy costs behave as a massive deflationary tax. This will send our economy tumbling down and very possibly the U.S. stock market.

If oil prices rise greater than 75% from five years earlier, investors at that time should shift their portfolio geared towards deflationary times.  This would be an oil indicator as negative.

If oil prices rise from five years earlier less than 10% or drop then the inflationary play is in effect; a positive for economic growth along with possible higher stock prices.

Where to find five year earlier oil prices?  Alaska Department of Revenue    

Oil indicator positive                

  5%  High-Yield Corporate Bonds

10%  REIT's

10%  Energy

10%  P.M.'s

65%  Small Caps

  0%  Lt. Gov't Bonds

Oil indicator negative

  5%  REIT's

10%  Energy

10%  P.M's

10%  Small Caps

65%  Lt. Gov't Bonds

Vanguard Funds

REIT's

REIT Index Admiral  VGSLX

Energy

Energy Fund  VGENX

Precious Metals (P.M.'s)

Precious Metals and Mining Fund  VGPMX

Small Caps

Small Cap Value Index Admiral  VSIAX

High-Yield Corporate Bonds

High-Yield Corporate Bond Fund VWEHX

Long Term Government Bonds

Long-Term Government Bond Index Admiral  VLGSX

DYI:  Oil prices act as if they were a tax.  If prices drop significantly from 5 years ago the Fed’s are able to loosen monetary policy without ginning up substantial consumer inflation driving asset prices higher.  Conversely when oil prices rise above the 75% threshold from 5 years prior the entire generalized economy will have in effect an added on tax in the form of energy costs.  At the 75%+ threshold it is highly likely a recession will occur dropping corporate profits significantly with the obvious bear market for corporate bonds and stocks with a flight to long term government bonds. 

Disclaimer

This blog site is not a registered financial advisor, broker or securities dealer and The Dividend Yield Investor is not responsible for what you do with your money.

This site strives for the highest standards of accuracy; however ERRORS AND OMISSIONS ARE ACCEPTED!

The Dividend Yield Investor is a blog site for entertainment and educational purposes ONLY.

The Dividend Yield Investor shall not be held liable for any loss and/or damages from the information herein.

Use this site at your own risk.

PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

DYI