Deutsche Bank under pressure to raise capital

Some of them are pushing for executives to raise equity, not least because they fear an aggressive plan to reduce the bank’s outsized debt-load is severely damaging its fixed income trading business.

“It is very difficult for them to say we got it wrong. But I clearly think they need to raise capital as they have already harmed their business by not doing it,” said a top 20 investor in the bank.

Read More Deutsche Bank to cut US arm’s assets

Anshu Jain, co-chief executive, is trying to build up capital by reducing assets and retaining earnings. A €3bn equity rise 12 months ago had prompted him to declare the bank’s capital “hunger march” over, but since then it has been hit by fresh rules on how much debt a bank may have compared with its equity capital.

Deutsche’s core

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Cramer’s secret positive underneath market

“The Fed has been tapering on a methodical basis and it hasn’t caused rates to rise one bit,” Cramer noted. As it turns out, the taper was not the proverbial sword of Damocles hanging over the market as so many pundits had feared.”

In turn, the fear went from getting caught in a Fed-induced decline to missing the advance that has accompanied the taper. Buying has ensued.

That’s a new reality in the market. And it isn’t the only one.

In addition, many pros expected a lackluster earnings season. “But it’s been quite the opposite. We are seeing very big revenue growth at Boeing, Delta, United Technologies, Wells Fargo, Alcoa and American Express, Netflix, Coca-Cola and General Electric,” Cramer said.

Pros must now reconcile that the state of American business may be better than expected.

That’s another new reality in the market.

In turn, these new

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Upside sure, but not for the faint of heart: Cramer

The short-term bull case

Cramer said bulls may prevail over the short-term because Micron’s largest business has changed significantly over the past 10 years.

“Micron is a maker of Dynamic Random Access Memory chips or DRAMs,” Cramer explained. “It accounts for 70% of the company’s sales.”

A decade ago there were a dozen DRAM suppliers which drove significant fluctuations in supply. And when supply increased too much, profits slipped as did Micron shares.

However, Cramer says the dynamic has changed; now there are only three major players in the space; Samsung, Hynix and Micron.

“That makes Micron a part of an oligopoly,” Cramer said, and the “Mad Money” host is a big fan of companies with that kind of industry leverage.

Read more from Mad Money with Jim Cramer
Amazing Halliburton results present opportunity

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