I have been writing about Deutsche Bank for about six months now. My first post, back in October 2015, showed how DB, then trading above $29/share, was sitting on multi-decade support. The chart was showing warning signs that bad things were on the horizon, particularly if it broke below $25.
Low and behold, price did indeed break below $25 which I noted in my December 11, 2015 post titled Deutsche Bank: Something is Seriously Wrong. I showed again not only how broken the long-term chart was, but how DB had grossly underperformed relative to its financial peers (re-posted here):
While Credit Suisse isn’t as “systemically risky” as DB, it’s still a huge bank, the second largest in Switzerland in fact – only behind UBS in terms of assets.
OK, the chart looks terrible, so what? Well, for one thing, when two of Europe’s largest banks are trading at or near 20 year lows while equity markets are just a stone’s throw from all-time highs, something must be seriously wrong. I have a feeling there are major problems under the surface that smart money has already identified but the companies have yet to announce publicly. What else could account for such poor price performance? These banks are easily “too big to fail” so they will have an implicit central bank backstop – and yet they both still languish. I think we’ll soon find out what kind of skeletons are hiding in the closet, but, unfortunately, by that time it will be too late.