Trump sues Deutsche Bank and Capital One to stop release of financial records
President and his children move to stymie Congressional investigation into financial affairs
Donald Trump has sued Deutsche Bank and Capital One in a bid to stop them from handing over financial records in response to congressional subpoenas issued by Democrats.
Mr Trump filed the suit late on Monday in a federal court in New York to stop the banks giving Congress years of records about his business dealings. The move is the latest attempt by the president to frustrate efforts by Democrats to dig into his personal affairs.
The lawsuit asked the court to declare subpoenas from the House intelligence and financial services committees invalid, and prevent Deutsche Bank and Capital One from complying with them.
He was joined in the suit by his sons Donald and Eric, his daughter Ivanka, who is also a White House adviser, and several related entities, including the Trump Organization.
The filing claimed the subpoenas were issued to “harass” Mr Trump and “to ferret about for any material that might be used to cause him political damage”.
“No grounds exist to establish any purpose other than a political one,” said the filing.
Deutsche Bank had no immediate comment. Capital One did not immediately respond to a request for comment late on Monday evening.
The move by Mr Trump was the latest salvo in a battle between the president and Democrats in the House of Representatives who are investigating his administration and his business dealings.
Earlier this month Mr Trump sued Mazars USA, his accounting firm, and Elijah Cummings, the Democratic chairman of the House oversight committee, after Mr Cummings issued a subpoena to the firm for records regarding the president.
Democrats are also seeking Mr Trump’s tax records, using a law that gives the House ways and means committee the right to access any individual’s tax returns. The Trump administration has missed two deadlines to hand over the president’s tax filings.
Last week, Mr Trump made his clear his intention to resist requests for records from Democrats in Congress, telling reporters: “We’re fighting all the subpoenas.”
Maxine Waters, chair of the House financial services committee, and Adam Schiff, who chairs the House intelligence committee, said in a joint statement on Monday that Mr Trump’s latest lawsuit was “meritless”.
“This lawsuit is not designed to succeed; it is only designed to put off meaningful accountability as long as possible,” they said.
Ms Waters and Mr Schiff had issued subpoenas earlier this month to Deutsche Bank and other banks as part of their investigations into illicit finance and foreign influence in US politics.
Mr Trump’s lawsuit said the subpoenas to Deutsche Bank sought a broad sweep of banking and financial records about himself, his family and his businesses stretching bank to 2010. For some types of records, such as account applications, the subpoenas placed no time limitation, according to the lawsuit.
Both Deutsche Bank and Capital One had intended to begin handing over documents in response to the subpoenas by May 6, the lawsuit said.
Mr Trump’s relationship with Deutsche Bank has been a key area of focus for congressional investigators, particularly after Michael Cohen, the president’s former lawyer, told Congress that documents Mr Trump submitted in connection with a potential loan in 2014 had “inflated” his wealth.
Mr Cohen is due to begin a three-year prison term in May for crimes including campaign finance violations, lying to Congress and tax evasion.
Deutsche Bank has been a longtime lender to Mr Trump, continuing to work with him even after other financial institutions were put off by a spate of Trump business bankruptcies in the 1990s.
Earlier this month the bank said it was “committed to providing appropriate information to all authorised investigations in a manner consistent with our legal obligations”.
Stocks in Asia retreated Tuesday amid disappointing readings on China’s manufacturing and earnings at the world’s biggest phone maker. The dollar gained against major peers.
Hong Kong, South Korean and Australian stocks slipped in trading that was quieter than usual amid the closure of Japanese markets. Korean giant Samsung Electronics Co. posted profit that missed analysts’ recently reduced estimates. Shares rose in Shanghai. Futures on the S&P 500 declined after the index on Monday edged up to a new record. European futures signaled stocks will open lower. The Australian dollar, a proxy for bets on China’s economy, underperformed in the wake of declines in Chinese manufacturing PMI readings for April. Treasury yields fell in early London trading.
Macro :
- China PMI Drop Brings Reality Check to Risk Assets: Macro Squawk
- Swiss Investigating Oil Trader Gunvor for Foreign Bribery
- German May GfK Consumer Confidence +10.4; Est. +10.3
- Bpifrance Is Weighing New Fund to Counter Activists: Les Echos
Keep an eye on :
- ABI BB : AB InBev Drops One Case Against Heineken as Beer Battle Goes On
- AIR FP : Airbus Takes EU368m 1Q Hit From Net Adjustments
- AIXA GY : Aixtron 1Q Ebit Beats Highest Estimate, Confirms Guidance
- AMS SW : AMS Second Quarter Revenue Forecast Beats Estimates
- AZA IM : Italy’s Government Is Said to Extend Deadline for Alitalia Bids
- BAYN GY : Bayer Board Is Said to Plan Meeting After Investors Rebuke CEO
- BBVA SM : BBVA: 10% FX Decrease in Turkey Deducts 55 Bps From CET1
- BEI GY : Beiersdorf First Quarter Sales Beat Highest Estimate
- BP/ LN :BP First Quarter Adjusted Net Matches Estimates (1)
- CABK SM : CaixaBank First Quarter Net Income 3.3% Below Estimates
- CEC GY : Ceconomy Approves Reorganization & Efficiency Program
- CEVA SW : CEVA Logistics Elected New Chairman, CEO At Meeting
- CLAB SS : Cloetta’s CFO Has Bought Shares for SEK1.41m
- CWD LN : Countrywide Sees FY Earnings in Line With Expectations (1)
- CTT PL : CTT First Quarter Net Income EU3.7 Mln
- DANSKE DC : Danske Bank First Quarter Net Income Misses Lowest Estimate
- DDASA NO : Dolphin Drilling Gets Full Lenders Backing for Reorganization
- DSV DC : DSV 1Q Adjusted Operating Profit Beats Highest Est.
- GNFT FP : Genfit Cash Position EU314M End March
- GIL GY : DMG Mori AG Sees Full Year Free Cash Flow About EU150 Mln
- DSY FP : Medidata Solutions Pares Earlier Surge Ahead of Tuesday Results
- DB1 GY : Deutsche Boerse First Quarter Adjusted Basic EPS Beats Estimates
- ELM LN : Elementis Sees FY19 Results ‘Slightly’ Below Expectations
- EL FP : Essilor Luxottica: ISS Backs Proposal for Independent Directors
- ENGI FP : Engie’s Regulated Gas Prices to Drop 0.6% on May 1st: Parisien
- EPIA SS : Epiroc First Quarter Revenue Meets Estimates
- EURN BB : Euronav First Quarter EPS Misses Estimates
- EXM BB : Exmar Orders Two VLGCs With Jiangnan for Equinor LPG Contract
- FLOW NA : Flow Traders Fined EU0.1m For Not Reporting 2017 Transactions
- GOOGL US : Alphabet Revenue Misses Analysts’ Estimates; Shares Fall 6.5%
- GLEN LN : Glencore Lowers 2019 Production Forecasts for Copper to Oil
- GNK LN : Greene King Like-for-Likes Up 2.9% After Strong Easter
- HEIA NA : AB InBev Drops One Case Against Heineken as Beer Battle Goes On
- HIAG SW : Hiag CEO Martin Durchschlag to Step Down
- HOC LN : Hochschild:On Track to Meet ’19 Gold Equivalent Output Target(1)
- KLO GY : Kloeckner Posts 1Q Loss of EU10m on Negative Price Effects
- LOGN SW : Logitech CFO Departure Offsets Earnings Beat, UBS Says
- LHA GY : Lufthansa to Cut Eurowings Capacity Growth
- MATRA SS : Matra: Auditor Report Contains Uncertainty on Going Concern
- MTX GY : MTU Aero First Quarter Adjusted Ebit Beats Estimates
- NRC NO : NRC Finland Gets EUR 220M Pact for Light Rail Line Construction
- NOG LN : Nostrum Oil & Gas First Quarter Avg Production 32,646 Boe/D
- NHY NO : Norsk Hydro Says Overall Production Volumes in 1Q Fell (1)
- NYR BB : Nyrstar Gets Support From Creditor Groups for Recapitalisation
- OBEL BB : Orange Belgium to Buy Upsize Units BKM, CC@PS for EU52.4m
- ORA FP : Orange Says Mkt Environment Still Intense in France, Spain: CFO
- PARK LN : Park Group Sees FY Pretax ’Marginally’ Below Estimates
- REP SM : Repsol First Quarter Adjusted Net Beats Estimates
- RXL FP : Rexel 1Q Rev. EU3.32b, Est. EU3.26b
- RIB GY : RIB Software Full Year Revenue Forecast Beats Highest Estimate
- SAN FP : Sanofi CEO Could Be Replaced in Next Few Months, Figaro Reports
- SAA1V FH : Sanoma First Quarter Operating Ebit Beats Highest Estimate
- STJ LN : St James’s Place 1Q Net Inflows Fall to GBP2.18b; FUM Rise (1)
- SEBA SS : SEB PPOP Beat ‘Low Quality,’ Morgan Stanley Says After 1Q
- SKFB SS : SKF CFO Christian Johansson Leaves, Replaced By Niclas Rosenlew
- STAN LN : StanChart Beats and Buyback Earlier Than Expected, JPMorgan Says
- SXX LN : Sirius Minerals Plans GBP400m Share Placing: Sky, Sirius Minerals to Raise Funds Via Placing, Bonds, New Loan (1)
- SY1 GY : Symrise First Quarter Sales Beat Highest Estimate
- HO FP : Thales Missed on Orders and Revenues, Outlook Unchanged: Goldman
- TKA AV : Telekom Austria First Quarter Adjusted Ebitda EU395 Mln
- TEL NO : Telenor First Quarter Ebitda 1.4% Above Estimates
- TFI FP : TF1 Confirms FY Guidance; 1Q Oper. Profit +61% to EU62.9m
- TFI FP : TF1: EU-Wide Production M&A ‘Complicated’ Due to Local Tastes
- DG FP : Vinci Wins Canada Contract Worth EU1.7B For Ottawa LRT
- WEIR LN : Weir FY Constant Currency Rev, Profit Expectations Unchanged
- WTB LN : Whitbread Sees Weakening Demand Since FY20, RevPAR Down (1)
- ROSE SW : Zur Rose to Boost Capital If Swiss Corporate Tax Reform Passes
>>> Up
* Fielmann Upgraded to Buy at HSBC; PT 70 Euros
* PARAGON ID Upgraded to Hold at Kepler Cheuvreux; PT 29 Euros
* Salmar Upgraded to Hold at ABG; PT 399 Kroner
* Salvatore Ferragamo Raised to Outperform at MainFirst
>>> Down
* Assa Abloy Downgraded to Hold at Kepler Cheuvreux; PT 213 Kronor
* Aurubis Downgraded to Hold at Nord/LB; PT 42.50 Euros
* Boliden Downgraded to Sell at Deutsche Bank
* Hexagon Downgraded to Hold at Handelsbanken; PT 565 Kronor
* Intu Downgraded to Sell at AlphaValue
* Lectra Downgraded to Hold at SocGen; PT 24.50 Euros
* Metsa Board Cut to Hold at Pareto Securities; PT 5.70 Euros
* Novo Nordisk Cut to Hold at Pareto Securities; PT 345 Kroner
* Qiagen Downgraded to Hold at Kepler Cheuvreux
* Renault Downgraded to Hold at DZ Bank; PT 60 Euros
* RDI REIT Downgraded to Hold at Berenberg
* Rightmove Downgraded to Hold at Deutsche Bank
* Telefonica Cut to Reduce at Kepler Cheuvreux; PT 6.70 Euros
* TF1 Downgraded to Hold at SocGen; PT 9.50 Euros
>>> Initiation
* ConvaTec Rated New Neutral at Citi
* FW Thorpe Rated New Buy at Liberum
* Getlink SE Downgraded to Hold at HSBC; PT 13.60 Euros
* LVMH Resumed at Citi With Buy; PT 392 Euros
* Osram Rated New Buy at Liberum
>>> Call
- Beiersdorf (BEI TH) +1.8%
- Beiersdorf First Quarter Sales Beat Highest Estimate
- Bayer (BAYN TH) +0.7%
- Bayer Board Is Said to Plan Meeting After Investors Rebuke CEO
- Fresenius SE (FRE TH) +0.4%
- Vonovia (VNA TH) +0.2%
- Munich Re (MUV2 TH) +0.1%
- Deutsche Telekom (DTE TH) -0.2%
- DOJ’s Delrahim Says Has Not Decided on Sprint/TMUS Deal: CNBC
- VW (VOW3 TH) -0.2%
- Lufthansa (LHA TH) -0.3%
- Lufthansa Halts Eurowings Capacity Growth as Fare War Bites (1)
- SAP (SAP TH) -0.4%
- Daimler (DAI TH) -0.7%
- Daimler Ending Electric Smart Car Sale in U.S.,Canada:TechCrunch
MDAX:
- Nemetschek (NEM TH) +2.4%
- Nemetschek First Quarter Ebitda EU36.7 Mln
- Fielmann (FIE TH) +1.6%
- Fielmann Upgraded to Buy at HSBC; PT 70 Euros
- Deutsche PBB (PBB TH) +0.8%
- Telefonica Deutschland (O2D TH) +0.7%
- Osram (OSR TH) +0.6%
- Osram Rated New Buy at Liberum
- Aareal Bank (ARL TH) +0.1%
- Freenet (FNTN TH) +0.1%
- Commerzbank (CBK TH) flat
- Hannover Re (HNR1 TH) -0.9%
- Hannover Re Cut to Sell at Goldman; Price Target 120 Euros
- Qiagen (QIA TH) -1%
SDAX:
- Ceconomy (MEO TH) +4.1%
- Ceconomy Approves Reorganization & Efficiency Program
- Steinhoff (SNH TH) +3.3%
- Steinhoff Stopped From Selling, Diluting Tekkie Town, BD Says
- RIB Software (RIB TH) +3.2%
- RIB Software Full Year Revenue Forecast Beats Highest Estimate
- SGL (SGL TH) +1.3%
- SMA Solar (S92 TH) +1.1%
- Nordex (NDX1 TH) -0.1%
- Kloeckner (KCO TH) -0.7%
- Kloeckner Posts 1Q Loss of EU10m on Negative Price Effects
- Borussia Dortmund (BVB TH) -1%
- Aixtron (AIXA TH) -3.1%
- Aixtron 1Q Ebit Beats Highest Estimate, Confirms Guidance (1)
- Krones (KRN TH) -3.2%
- AMS (DQW1 TH) +6.7%
- AMS Second Quarter Revenue Forecast Beats Estimates
- Nemetschek (NEM TH) +2.4%
- Nemetschek First Quarter Ebitda EU36.7 Mln
- Beiersdorf (BEI TH) +1.7%
- Beiersdorf First Quarter Sales Beat Highest Estimate
- Imperial Brands (ITB TH) +1.1%
- MTU Aero (MTX TH) +1%
- MTU Aero First Quarter Adjusted Ebit Beats Estimates
- Fiat Chrysler (2FI TH) +0.8%
- Total (TOTB TH) +0.8%
- Watch Miners, Steelmakers, Luxury on Softer Chinese PMI Data
- BP (BPE5 TH) +0.6%
- BP Avoids Drag on Refining as Net Profit Meets Estimate: TOPLive
- Bayer (BAYN TH) +0.3%
- London Exchange: Bayer joins Sensyne Health consortium
- Osram (OSR TH) +0.3%
- Osram Rated New Buy at Liberum
- Covestro (1COV TH) -0.6%
- Symrise (SY1 TH) -0.6%
- Symrise First Quarter Sales Beat Highest Estimate
- Daimler (DAI TH) -0.7%
- Detroit Bureau: As Sales Spiral Down, Daimler Kills Smart — in the U.S.
- RTL (RRTL TH) -0.8%
- Fortum (FOT TH) -0.9%
- Hannover Re (HNR1 TH) -0.9%
- Street Insider: Goldman Sachs Downgrades Hannover Rueck SE to Sell
- Qiagen (QIA TH) -1%
- Qiagen Downgraded to Hold at Kepler Cheuvreux
- Rio Tinto (RIO1 TH) -1.1%
- Iron Giant Sees Inventory Slump on Supply Woes, ‘Strong’ China
- BHP Group PLC (BIL TH) -1.2%
- Iron Giant Sees Inventory Slump on Supply Woes, ‘Strong’ China
- Danske Bank (DSN TH) -1.2%
- Danske Cuts Outlook as Laundering Case Hits Funding, Margins
After Hours Summary: PI +24%, CGNX -14%, GOOG -7%, WDC -5% among notable earnings/guidance movers, WAGE +25% on M&A speculationAfter Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: PI +24%, SANM +10.4%, CURO +10.3%, WWD +7%, THC +3.4%, CLR +3.1%, AKS +2.8%, YUMC +2.8%, VRNS +2.6%, TNET +2%
Companies trading higher in after hours in reaction to news: WAGE +24.9% (higher on Reuters report of HealthEquity [HQY] bid), GTHX +21.6% (provided a regulatory update on trilaciclib; plans to submit marketing applications in the U.S. and Europe for trilaciclib for myelopreservation in small cell lung cancer), NPTN +5.4% (initiated with Buy at MKM Partners), ARNC +2.2% (ahead of earnings tomorrow before the open), PNNT +1.3% (ticking higher; initiated with Outperform at Raymond James), HON +0.6% (authorizes the repurchase up to $10 bln of common stock - including ~$2.3 bln of remaining availability under its previously announced $8 bln share repurchase authorization)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: CGNX -14.4%, HLIT -10.5%, IIN -10% (also appoints CFO Scott Longval to additional role of COO; elects Philip Smith as Chairman of the Board), GHL -7.5% (light volume), GOOG -7.1%, TXRH -7.1%, WDC -5%, CHGG -4.8%, NBIX -4.8%, ETH -3.1% (light volume), MGM -3.1%, LEG -1.6% (light volume)
Companies trading lower in after hours in reaction to news: MBIO -9.6% (announces proposed public offering of common stock; size not disclosed), PRGO -6.2% (received revised Notice of Proposed Adjustment from the IRS team auditing Athena Neurosciences), HQY -4% (under pressure after Reuters reported the company made WageWorks bid), MGTA -2.9% (files for 4.25 mln share common stock offering ), ADC -1.9% (announces public offering of 2.75 mln shares of common stock in connection with forward sale agreements), RGEN -1.7% (announces public offering of $175 mln in shares of its common stock), THO -0.7% (files for 2,256,492 share common stock offering by selling shareholders), MU -0.5% (WDC earnings/guidance sympathy)
Google (GOOG / GOOGL) earnings/guidance is weighing on FAANG names: AAPL -0.7%, AMZN -0.5%, FB -0.4%, NFLX -0.2%
China's "Neutron Bomb" Returns: Bad Loans Surge Most In 3 Years
The last time we did a closer look at China's bad debt, a topic that has been particularly sensitive for an economy whose financial sector is now over $40 trillion, was in late 2015 when CLSA stumbled on what we then dubbed China's "neutron bomb": Chinese banks' bad debts ratio could be as high 8.1% a whopping 6 times higher than the official 1.5% NPL level reported by China's banking regulator!
So if one very conservatively assumes that loans are about half of China's total asset base of $35 trillion (realistically 60-70%), and applies an 8% NPL to this number instead of the official 1.5% NPL estimate, the capital shortfall is a staggering $1.1 trillion.
Our conclusion back in 2015 was that "while China has been injecting incremental liquidity into the system and stubbornly getting no results for it leading experts everywhere to wonder just where all this money is going, the real reason for the lack of a credit impulse is that banks have been quietly soaking up the funds not to lend them out, but to plug a gargantuan, $1 trillion, solvency shortfall which amounts to 10% of China's GDP!"
Since then, China's bad debt fears took a back stage to even bigger Chinese problems, including capital flight, a slowing economy, a sharp decline in the country's FX reserves, and most recently, a bitter trade war with the US which has crippled China's manufacturing sector.
But, sadly, that did not mean that China's bad debt problem had gone away; to the contrary, as Bloomberg reports, "China’s biggest banks are seeing bad loans grow at the fastest pace since at least 2017, as the country’s economic slowdown leaves its mark on the financial sector."
While reporting generally strong Q1 earnings, China's four largest lenders said in recent days that non-performing loans hit fresh multi-year highs in the latest quarter, reflecting risks to China’s banks as the government pushes them to lend more.
ICBC reported a 5.2 billion yuan ($770 million) rise in non-performing loans in the first three months, the biggest quarterly increase in almost three years. Bank of China saw its bad loans rise by 6.1 billion yuan - the most in three years - to the highest level since at least 2006. At Agricultural Bank of China Ltd., bad debt rose by 2.7 billion yuan, the biggest increase since the first quarter of 2017. China Construction Bank Corp.’s soured credit increased by 6.6 billion yuan, the most since 2016.
Even more striking: the surge in bed debt comes just as China made its biggest new credit injection ever in the first quarter, flooding the economy with 40% more total credit in 2019 compared to a year ago, and has once again saddled the local banks with even louder ticking timebombs on their balance sheets.
And while Bloomberg speculated that the increase in delinquent debt may give policy makers pause, we doubt it: after all prevailing consensus now is that China in coordinate with global central banks has launched a Second Shanghai Accord, and will not stop before the aggregate level of global inflation is comfortably high to delay the inevitable next recession by at least a few more quarters. Still, while China’s banks are seen as key to reinvigorating the economy, especially by lending to traditionally riskier smaller and private companies, some have expressed concerns that soured loans could continue to rise.
"Pressure to lend to small and micro-enterprises may gradually start to appear in bank’s NPLs,” said Shujin Chen, CFO of Huatai Secuirites. Weaker economic conditions will also impact bad loans though as a share of total lending it may remain little changed, she said.
The problem is only going to get worse: 45% of 202 bankers surveyed by China Orient Asset Management, one of four state-owned bad-debt managers, expect the nation’s bad-loan ratio to peak next year, according to the annual survey published in April.
The good news is that, for now at least, this growing bad debt problem has yet to appear in the income statement: despite concerns around bad loans, total earnings at the five biggest lenders, which control more than a third of China’s banking assets, are this year estimated to grow at the fastest pace in five years. "Banking stocks are likely to deliver both absolute and relative returns in the phase of monetary and credit easing," China International Capital Corp. analysts led by Victor Wang said in an April 22 note to clients.
Others aren't quite so sanguine, and as Bloomberg analyst Francis Chan writes, "ICBC and BoCom loan provisions could offset mild revenue gains, restricting earnings growth to mid-single digits in 2019. CCB may need to raise credit costs later this year. BoC earnings may get a short-term boost from robust sector loan growth, yet with full-year profit gains staying in the mid-single digits."
Investors are similarly skeptical, as shares of China-listed banks have gained "only" 19% this year, underperforming the 23% increase in the Shanghai Composite. Among their concerns: increased lending to smaller businesses may hurt their asset quality and profitability in the longer term, and some analysts predict a turn in monetary policy to avoid over-stimulating the economy.
The big question, of course, is what Beijing will do with this data. Two Fridays ago, China’s Politburo said that the economy was better than expected in the first quarter, fueling concern that the government will dial back economic support measures. If China has indeed pulled its foot of the gas pedal, and the level of stimulus is about to drop off a (record) cliff, it's time to quietly exit stage left, or as we put it last Sunday, just before the worst week for Chinese stocks in 2019, "If your bullish thesis to buy stocks in recent months has been anchored by the expectation of aggressive monetary easing by China reinforcing the narrative that "bad news is good news" for the market, you may consider selling."
The Chinese did just that.