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Deutsche Bank, UBS stocks sink as fear of European banking crisis returns | CNN Business

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Deutsche Bank, UBS stocks sink as fear of European banking crisis returns | CNN Business


London
CNN
 — 

Europe’s banking shares tumbled Friday as traders acted on their lingering worries that the latest crises at some banks may spill over into the broader sector.

Europe’s Stoxx Europe 600 Banks index, which tracks 42 large EU and UK banks, closed 3.8% decrease. The index is down 18% from its excessive in late February. London’s bank-heavy FTSE 100 index closed down 1.3%.

Shares in Germany’s greatest financial institution, Deutsche Financial institution

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(DB), plunged as a lot as 14.5% earlier than paring its losses to shut 8.5% decrease. Shares in UBS

(UBS) and Credit score Suisse

(CS) had been 3.6% and 5.2% down respectively.

The price of insuring in opposition to a doable default by Deutsche Financial institution on its debt has soared in latest days. Deutsche’s five-year credit score default swaps (CDS) skyrocketed to 203 foundation factors Thursday, based on information from S&P Market Intelligence. That’s their highest stage since early 2019.

The swaps rose once more Friday to commerce at 208 foundation factors at noon ET.

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German Chancellor Olaf Scholz mentioned Friday that there was “no purpose to be involved” about Deutsche Financial institution.

“It’s a really worthwhile financial institution,” he informed reporters in Brussels, the place EU leaders issued a joint assertion describing the European banking system as “resilient, with robust capital and liquidity positions.”

Deutsche Financial institution declined to remark.

“The rising value of insuring CDS senior debt is weighing on Deutsche Financial institution, in addition to different European banks, on considerations over the influence of rising charges on the broader financial system and banks’ stability sheets,” Michael Hewson, chief market analyst at CMC Markets, informed CNN.

Final week, the European Central Financial institution caught with its plan to hike rates of interest by half a proportion level, judging that inflation posed an even bigger risk to the financial system than latest turmoil within the banking sector.

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Then, on Thursday, the Financial institution of England raised its fundamental rate of interest by 1 / 4 of a proportion level after information confirmed a shock spike in inflation final month.

However Susannah Streeter, head of cash and markets at investing platform Hargreaves Lansdown, informed CNN that market nerves had been out of step with actuality.

“Worries about contagion are once more rearing up despite the fact that extra deposits seem to have been flowing into the German lender because the banking scare erupted, and it’s thought to have capital reserves properly in extra of regulatory necessities,” she mentioned.

Some analysts mentioned traders had been rattled by Deutsche Financial institution’s announcement Friday that it could pay again considered one of its bonds 5 years earlier than its maturity date. Traders would normally interpret such a transfer as an indication that an organization is in good monetary well being and capable of pay again its collectors early.

However — after two financial institution collapses in the US and an emergency takeover of Credit score Suisse this month — some traders might have interpreted the announcement as an indication that Deutsche Financial institution is nervous in regards to the state of the banking sector and making an attempt to overcompensate, Jonas Goltermann, deputy chief markets economist at Capital Economics, informed CNN.

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Goltermann mentioned the financial institution’s determination “appears to have backfired.”

Deutsche Financial institution’s determination to pay again the bond forward of schedule was pre-planned and never a response to latest market developments, a supply aware of the matter informed CNN. The bond would have regularly misplaced its eligibility as a type of regulatory capital based on guidelines introduced in after the 2008 monetary disaster, the supply mentioned.

The financial institution changed the bond by issuing one other bond of the identical kind in February, they added.

Shares of Germany’s Commerzbank

(CRZBF) and France’s Société Générale additionally suffered heavy losses, closing 5.5% and 5.9% decrease respectively.

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Final week, Switzerland’s greatest financial institution UBS purchased its embattled Swiss rival for 3 billion Swiss francs ($3.25 billion) in an emergency takeover brokered by the Swiss authorities.

That helped restore some calm to markets rattled by the failure earlier this month of two US regional banks. However traders had been on edge once more Friday.

The falls in UBS and Credit score Suisse come after Bloomberg reported Thursday that the US Division of Justice was investigating whether or not their workers had helped Russian oligarchs evade Western sanctions.

The DOJ had despatched subpoenas to these workers earlier than UBS took over Credit score Suisse, based on the report.

Workers at some main US banks are additionally a part of the probe, Bloomberg mentioned.

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Hewson at CMC Markets mentioned “the DOJ probe into UBS is actually taking part in an element within the share value weak spot” in European banks.

UBS and Credit score Suisse declined to remark to CNN.

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After severe weather across the South, East Coast braces for potential flooding, tornadoes

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After severe weather across the South, East Coast braces for potential flooding, tornadoes

A man looks at a damaged car after a tornado hit the day before, Sunday, May 26, 2024, in Valley View, Texas. Powerful storms left a wide trail of destruction Sunday across Texas, Oklahoma and Arkansas after obliterating homes and destroying a truck stop where drivers took shelter during the latest deadly weather to strike the central U.S.

Julio Cortez/AP


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Julio Cortez/AP

A large swath of the eastern U.S. was bracing for severe weather as the Memorial Day weekend came to a close. Deadly storms over the long weekend also knocked out power to hundreds of thousands across the South and disrupted holiday travel at busy airports in the northeast.

Severe storms were expected to stretch from Alabama to upstate New York on Monday evening, according to the National Weather Service. Forecasters said the storms could lead to intense rainfall in the Northeast and Mid-Atlantic, with flash flooding possible. Hail, heavy winds and tornadoes were also possible from northeast Maryland to the Catskill Mountains of New York, according to the NWS.

The threat of severe weather Monday followed a string of powerful and deadly storms that swept through the South and parts of the Midwest over the holiday weekend. At least 23 people were killed in Texas, Oklahoma, Arkansas, Alabama and Kentucky as a result of severe weather.

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Earlier in the week, a deadly tornado also hit Iowa.

In a news conference Monday, Kentucky Gov. Andy Beshear said four people were killed in four different counties after storms ripped through most of the state Sunday. Later Monday, Beshear confirmed a fifth storm-related death.

The tiny southwestern Kentucky community of Charleston took a direct hit from a tornado, officials said.

Beshear said the twister appeared to have been on the ground for 40 miles.

“It could have been much worse,” Beshear said of this weekend’s storms. “The people of Kentucky are very weather aware with everything we’ve been through.”

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To the east of Charleston, parts of Hopkins County, Kentucky, also saw damage Sunday night. Western Kentucky, including a number of communities in Hopkins County, endured a series of devastating tornadoes in 2021 that killed 81 people.

“There were a lot of people that were just getting their lives put back together and then this,” Hopkins County emergency management director Nick Bailey was quoted by The Associated Press as saying. “Almost the same spot, the same houses and everything.”

The website Poweroutage.us reported hundreds of thousands without power on Monday. More than 120,000 customers in Kentucky were without power as of 5:30 p.m. ET, according to the website. Data showed Arkansas and West Virginia each had more than 40,000 customers without electricity.

The White House said the Federal Emergency Management Agency was on the ground conducting damage assessments with state and local authorities. President Biden has directed federal agencies to provide support as needed.

Holiday travel had also been disrupted as a result of the weekend storms.

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According to the flight-tracking website Flight Aware, more than 400 flights in the U.S. had been canceled as of 5:30 p.m. Monday — and another 5,200-plus flights had been delayed. New York’s LaGuardia Airport and Newark Liberty Airport in New Jersey were most affected by delays and cancellations.

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Jet-setting Argentine President Javier Milei courts top US tech CEOs

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Jet-setting Argentine President Javier Milei courts top US tech CEOs

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Argentina’s Javier Milei will meet tech executives including Tim Cook and Sam Altman in California this week, marking the libertarian president’s fourth trip to the US in five months as he seeks to build hype for his economic reforms.

Milei will spend Tuesday to Friday in San Francisco, meeting business leaders including the Apple and OpenAI chief executives, Google CEO Sundar Pichai and Meta chief Mark Zuckerberg, the president’s office said on Monday.

His spokesperson said the trip was designed “to position Argentina in the world once again”. The Latin American country’s tech sector is one of the region’s largest.

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Milei has travelled extensively since taking office in December, courting the global spotlight via friendships with rightwing figures such as Tesla chief executive Elon Musk, who he met at the carmaker’s Austin factory in April, and giving fiery conference speeches defending his free market “anarcho-capitalist” beliefs.

By the end of June he will have completed eight foreign tours — a record for Argentine presidents in their first six months in office, per newspaper La Nación. None have been within South America.

Opposition politicians have criticised Milei’s travel, and three lawmakers have asked police to investigate his officials for using public funds on a trip to a far-right political conference in Spain, which they argue was made in a personal capacity.

For many Argentines, roughly half of whom approve of Milei’s government, his global profile has been a “novelty”, said Cristian Buttié, director of pollster CB Consultora.

“We are not used to Argentine presidents being famous internationally; for young voters the photos with Elon Musk have a certain allure,” he said. “But the question is: will that fame benefit Argentina, or will it just benefit Milei?” 

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Analysts said international businesses were likely to hold off on investing in Argentina, which is suffering its worst economic crisis in two decades. Annual inflation was running at 289 per cent in April and economic activity was down 8.4 per cent in March compared to a year earlier.

Milei has slashed government spending to halt the use of money printing and bring down inflation. But he has yet to secure longer term reform in congress, where he controls fewer than 15 per cent of seats.

“Many, many years of a volatile investment climate have [badly damaged] Argentina’s international reputation,” said Kezia McKeague, managing director of McLarty Associates, which advises multinationals operating in Argentina. “You don’t change that in six months.”

“There is a great deal of excitement in some sectors, but companies aren’t ready to pull the trigger yet,” she said.

Negotiations are dragging on in the Senate over Milei’s first two bills, which include measures to cut the fiscal deficit and an incentive scheme for investments in mining and other sectors.

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Musk and Milei discussed lithium, the key electric vehicle battery metal of which Argentina has some of the world’s largest reserves, when they met in April, according to the president’s team. But Musk did not announce any new investment.

The government also has yet to lay out its plan for removing Argentina’s strict currency controls, which limit companies’ ability to take profits out of the country, and whether or not it will pursue Milei’s controversial campaign pledge to replace the peso with the US dollar.

“There is a lot of inconsistency . . . which makes it impossible to plan investments,” said Fabio Rodriguez, director at consultancy M&R Asociados. “That’s what I’d want to hear about if I were an investor meeting with Milei, rather than socialism and capitalism and freedom.”

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‘Serial slingshot’ suspect who terrorized California neighborhood arrested

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‘Serial slingshot’ suspect who terrorized California neighborhood arrested

An 81-year-old man who investigators say terrorized a southern California neighborhood for years with a slingshot has been arrested, police said.

While conducting an investigation, detectives “learned that during the course of 9-10 years, dozens of citizens were being victimized by a serial slingshot shooter”, the Asuza police department said in a statement.

The man is suspected of breaking windows and car windshields and of narrowly missing people with ball bearings shot from a slingshot, the statement said. No injuries were reported.

The man was arrested on Thursday after officers served a search warrant and found a slingshot and ball bearings at his home in Asuza, about 25 miles (40km) east of Los Angeles, police said.

The Azusa police Lt Jake Bushey said on Saturday that detectives learned that most of the ball bearings were shot from the suspect’s backyard.

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“We’re not aware of any kind of motive other than just malicious mischief,” Bushey told the Southern California News Group.

The man was scheduled to appear in court on Tuesday.

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