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- 🔔 BlackRock, Correlations & the Monthly Deutsche Bank Lawsuit
🔔 BlackRock, Correlations & the Monthly Deutsche Bank Lawsuit
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The FT called him the ten trillion dollar man but he's not quite there yet...
Big Larry's BlackRock reported earnings today.
Assets Under Management (AUM) came in at a measly $9.4 trillion, up from just $7.8 trillion in the past year.
More AUM means more fees, and adjusted net income was up 19% to $1.69 billion & $10.95 per share, once again beating estimates.
Big Larry credits ETF & ESG demand as playing an important role:
“Organic growth was broad-based, spanning our active platform as well as in each of our ETF product categories. We delivered our 10th consecutive quarter of active equity inflows and client demand for ESG remains strong, with $31 billion of inflows across our sustainable active and index strategies.
“Our long-term strategy remains centered on staying ahead of our clients’ needs and living our purpose of helping more and more people experience financial well-being. Whether through expanding investment choices, developing new retirement solutions, or enhancing our data analytics and technology capabilities, BlackRock remains committed to investing in high growth opportunities and industry-leading innovation.”
The report was well-received and the stock is up by 10 to 846 in pre-market 👇
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Correlations are not permanent: Exhibit #45683759
Exante's Jens Nordvig did a fantastic thread on the Oil & USD negative correlation here
Over to Jens
There used to be many arguments why the dollar was NEGATIVELY correlated to oil:
The US is more energy intensive
Petro-dollar flow supports other currencies
Other central banks are more sensitive to headline inflation (=energy) than the Fed
But things change...
In 2007, the negative correlation was at it's most extreme (EURUSD moved UP in lockstep with Oil) 👇
And now, the correlation is entirely reversed 👇
The nuances around this are explained in Jens' thread, but the bigger point is that correlations change all the time.
While correlations can be extremely useful tools, they are NOT unbreakable rules.
The factors that feed the correlations (the whys) are as important as the correlations themselves and Oil/USD is a great example.
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Deutsche Bank faces €500m lawsuit in widening forex derivatives scandal (FT)
Another day, another scandal.
This latest claim is from Spanish hotel group Palladium who claim that Deutsche Bank mis-sold 'exotic financial derivative products' as safe hedges against inflation and FX rate fluctuations...
Deutsche Bank plead innocence...
And this line's a cracker...
The German lender also stressed that the lawsuit from Palladium was an isolated one and considered it to be different to those it had settled in the past. “We see no reason to expect any further individual claims of anything like this size,” it said.
Media reports of scandals are synonymous with Deutsche Bank, and it's a staggeringly consistent trend.
At the start of the year, Deutsche Bank paid a $130 million penalty to the US to resolve allegations that the German bank had devised a 'scheme to conceal corrupt payments and bribes'
“We are a different bank now,” they told journalists...
Sure. Until next month.
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