Das Bank: Deutsche Bank Cuts Its Common Stock Dividend to Zero For 'Two Years'

"Und der Haifisch, der hat Zähne
und die trägt er im Gesicht
und Macheath, der hat ein Messer
doch das Messer sieht man nicht."

Berthold Brecht, Die Moritat von Mackie Messer, 1928

This is not a big surprise, since there were hints of this sort of drastic action in an obviously troubled bank since early October, but it is always newsworthy when one of The Global Banks feels troubled enough to eliminate its stock dividend for the foreseeable future.

Their goal is apparently to build up capital assets while cutting risky assets from the balance sheet and exiting certain markets.

And so a key global banking counterparty checks itself into rehab for an estimated two years.

Es ist eine Party!

Deutsche Bank scraps dividend for two years, sets financial goals
By Arno Schuetze, Frankfurt

Oct 28 Deutsche Bank is scrapping this year's and next year's dividends as new Chief Executive John Cryan overhauls Germany's biggest bank to restore growth and put past scandals behind it.

The lender said on Wednesday it was targeting a capital ratio of at least 12.5 percent from the end of 2018.

It is also now targeting a leverage ratio of at least 4.5 percent at the end of 2018 and at least 5.0 percent at the end of 2020 and a return on tangible equity of more than 10 percent by 2018.

"The plan is based on the elimination of the Deutsche Bank common share dividend for the fiscal years 2015 and 2016. The management board expects to recommend the payment of common share dividends commencing from fiscal year 2017 at a competitive payout ratio," Deutsche Bank said. (Reporting by Arno Schuetze; Editing by Georgina Prodhan)

Related:  Deutsche Bank Downgraded by JP Morgan

US Dollar Gets a Boost Higher From Perceived Hawkish FOMC Statement

The US dollar caught a bid on that 'hawkish' Fed statement, sending a number of commodities including the precious metals gold and silver lower.

Gold and silver looked like a pump and dump with the early rally higher which smelled like a set up.

About the last thing that the real economy needs is a truly stronger dollar.  And I do not believe that most of the FOMC members would wish for that, but with the rest of the developed world seeming to ease, and some aggressively so, it is a difficult position for them to manage with credibility.

The primary beneficiaries of a strong dollar policy are the big holders of dollars who can use them to buy up attractive foreign assets more cheaply, and the holders of dollar denominated debt.

It be roughly said to be a policy that sets Main Street versus Wall Street, although the courtiers of the moneyed interests will proclaim the benefits of even more cheaper imports.  Too bad the public has little spare income with which to purchase them.  But that is a tradeoff that in the short term also benefits Big Money with little domestic wage pressure as more people have less employment prospects.

It is hard to say what the Fed will do for sure, and I doubt that even they know what they will do.  Today was designed to dampen the asset bubble a bit, and to once again caution the market that a rate increase may be coming, provided the data gives the Fed cover to do so without becoming the bag-holder for another recession going into an exceptionally political season.

It is much too early to tell, but judging from the SP stock futures, the Street is not necessarily buying what the Fed is selling, at least for today.

But in the short term, antics may prevail.

The October FOMC Statement

The Fed would like to raise interest rates, and seeks to justify that decision whether the data indicates that it does or not.  The data will be massaged, and if sufficiently so, the Fed will move when it wills.  They would like to do so for policy purposes, and do not wish to do so close to the Presidential elections so that their actions will not be labeled as politically partisan.

For immediate release

Information received since the Federal Open Market Committee met in JulySeptembersuggests that economic activity ishas been expanding at a moderate pace. Household spending and business fixed investment have been increasing moderatelyat solid rates in recent months, and the housing sector has improved further; however, net exports have been soft. The labor market continued to improve, with solid job gains and declining unemployment. On balancepace of job gains slowed and the unemployment rate held steady. Nonetheless, labor market indicators, on balance, show that underutilization of labor resources has diminished since early this year. Inflation has continued to run below the Committee's longer-run objective, partly reflecting declines in energy prices and in prices of non-energy imports. Market-based measures of inflation compensation moved slightlylower; survey-based measures of longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term. Nonetheless, tThe Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labor market indicators continuing to move toward levels the Committee judges consistent with its dual mandate. The Committee continues to see the risks to the outlook for economic activity and the labor market as nearly balanced but is monitoring global economic and financialdevelopments abroad. Inflation is anticipated to remain near its recent low level in the near term but the Committee expects inflation to rise gradually toward 2 percent over the medium term as the labor market improves further and the transitory effects of declines in energy and import prices dissipate. The Committee continues to monitor inflation developments closely.

To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate. In determining how long to maintainwhether it will be appropriate to raise thise target range at its next meeting, the Committee will assess progress--both realized and expected--toward its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen some further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term.

The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. This policy, by keeping the Committee's holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.

When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run.

Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Charles L. Evans; Stanley Fischer; Dennis P. Lockhart; Jerome H. Powell; Daniel K. Tarullo; and John C. Williams. Voting against the action was Jeffrey M. Lacker, who preferred to raise the target range for the federal funds rate by 25 basis points at this meeting.

Source: Fed Statement Tracker