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Why Huge Problems at Nomura and Deutsch Bank Could be Troubling for the Stock Market

After years of mismanagement, Japan’s Nomura and Germany’s Deutsch Bank are in deep trouble. As the charts below show, their stocks are at multi-year lows while the stock market is at near-record highs. Why should we worry? Both financial giants are tremendously overleveraged. They are servicing billions and trillions of dollars in swaps and derivatives. Since financial institutions globally are so closely linked via trading and other businesses, a market-forced restructuring, including massive asset sales, could spread like cancer to other institutions and the global markets.

Why Huge Problems at Nomura and Deutsch Bank Could be Troubling for the Stock Market
Why Huge Problems at Nomura and Deutsch Bank Could be Troubling for the Stock Market

Brad Lamensdorf

Brad Lamensdorf, the founder and portfolio manager of Active Alts, is a principal and co-manager of the AdvisorShares Ranger Equity Bear ETF. He previously managed a long-short investment partnership from 1998-2005 under the name Tarpon Capital Management. Earlier in his career Mr. Lamensdorf was an equity trader/market strategist for the Bass Brothers’ trading arm. He managed a short only portfolio in addition to co-managing a $1bil hedging program. He also served as in-house market strategist for the entire internal and external network of Bass Brothers money managers.

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