More Deutsche Bank Troubles; Softbank’s GM Investment; Tariffs Begin

The Water Coolest

The Water Coolest is a free daily business news and professional advice email newsletter created for weekday warriors that is delivered fresh daily at 7 AM EST. You can subscribe at thewatercoolest.com.

 

THE HEADLINES

Don’t have 3 minutes and 18 seconds to read The Water Coolest? Listen on all of your favorite podcast outlets in 2 minutes or less.

 

DEUTSCHE BAG

Deutsche Bank is the kind of guy you don’t want your daughter bringing home. The SEC has designated DB US as “troubled,” a rare condemnation for a major financial institution.

What does this mean? The bank can’t take a piss without the SEC signing off on anything more than two shakes. Reducing trading and lending risk are on the docket, and hiring, firing, severance payments and more are subject to “windbreaker” approval.

Firms on the SEC’s capital adequacy, asset quality, management, earnings, liquidity, and sensitivity to market risk, or CAMELS, list are not disclosed but the number of institutions and total assets is tracked publicly. The list’s assets grew by 1 bank and $42.5B in Q1 … the exact asset size of Deutsche’s US outfit.

Of the roughly 1,700 banks comprising the naughty list between 2008 and 2017, 854 recovered, 523 failed, 294 merged, and 112 remained in problem status.

Water Cooler Talking Point: “Let’s pour one out for all the proud parents who bragged about their recent grads starting “promising careers” at Deutsche Bank.”

 

MOTORHEAD

Softbank is buying a roughly 20% stake in GM’s driverless car division, helping Masayoshi Son come one step closer to realizing his ‘Vision’ of world domination.

Combined with GM’s $1.1B pledge, the $2.25B investment will further GM’s autonomous ambitions and support the Detroit car marker’s goal of launching a robot ride-hailing service next year.

In semi-related, fully-autonomous, news, Alphabet’s Waymo unit plans to purchase up to 62k Chrysler minivans for its driverless program.

Water Cooler Talking Point: “Not sure how I feel about robots driving me around, but it can’t be any worse than my Uber driver last weekend who was constantly looking at his phone trying to schedule his next (Lyft) pick up while weaving through traffic. Plus I won’t have to make small talk.”

 

THAT’S SO METAL

Donald Trump is keeping his tariff hand strong this week. This time, he’s focused on some pretty useful metals coming in from Canada, the EU, and Mexico. According to the White House, a 25% tariff on steel and 10% tariff on aluminum took effect at midnight on Thursday.

Canada, the EU, and Mexico are none too pleased. A few regions have even declared a retaliatory tariff on things like pork, blue jeans, cheese, and bourbon, all of which just so happen to be made in places where DJT saw success during the election.

Foreign governments aren’t the only ones up in arms. American officials, businesses and farm groups, are already speaking out against the US tariffs.

Water Cooler Talking Point: “In typical Canadian fashion, our neighbors to the north vehemently apologized for forcing the United State’s hand and vowed to “do better” if given a second chance.”

 


IN OTHER NEWS

 

  • A Goldman Sach’s VP will be charged with insider trading, having only made $140k in profit, and just $362 on one trade. This guy may go down as the worst white collar criminal of all time.
  • Brinks, best known for its armored trucks, will buy Dunbar, its largest competitor in the cash transportation industry. Brinks will pay $520M in an all-cash deal. Obviously.
  • Sears will close 72 more stores in the near future after identifying upwards of 100 unprofitable outlets. On the bright side, there are some stores that are profitable.
  • US indices were down yesterday:
    • DOW: -1.02%
    • S&P 500: -0.69%
    • NASDAQ: -0,27%