Callum Burroughs

Companies across some of the world’s murkiest industries have taken steps to save money, (and bonus: improve their less-than-squeaky clean images) by taking on "sustainability loans." A slew of commodities producers, users, and traders have joined the trend in the past 12 months across areas including the notoriously dirty palm oil industry.

Take Switzerland chocolate company Barry Callebaut, one of the world's largest cocoa producers. Last year the company, stung by an <a id="46ccdf23-ff5b-35dd-a966-b0728ec027ae" href="http://www.mightyearth.org/chocolatesdarksecret/"> accusation </a> of illegally purchasing cocao from protected parks in the Ivory Coast, linked one of its credit facilities (a form of loan) to sustainability rankings.

That means the interest rate on its loan can go lower if it performs well on sustainability criteria, which is determined by an independent ratings company called Sustainalytics. Callebaut's deal, previously unheard of, was the first of many. (Callebaut did not immediately reply to a request for comment on the cocoa purchases.)

“Market uptake has been high,” said Leonie Schreve, head of sustainable finance at ING. “Companies are realising that this is part of their transition towards a future economy aligned with the <a id="efedbd24-13d5-39de-a5a3-e71133c0bd96" href="http://uk.businessinsider.com/ap-us-backers-of-paris-accord-set-up-camp-at-climate-talks-2018-12?utm_source=intl&amp;utm_medium=ingest"> Paris Accords </a> .”

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Research by firms such as Nielsen has suggested that millennials, in particular, are more willing to spend larger amounts of money to buy products that are <a id="b91c54fa-a450-3014-a259-17d819932abf" href="https://www.nielsen.com/uk/en/insights/news/2015/green-generation-millennials-say-sustainability-is-a-shopping-priority.html"> sustainable. </a> Companies are taking note, with sustainable financing now regularly mentioned by banks, investors, and major businesses.

Major palm oil producer and trader Wilmar signed up to a similar loan last year — the first of its kind in the palm oil sector — an industry that has repeatedly drawn criticism from environmental groups.

Singaporean commodity trader Olam took similar steps this year with a $500 million bank loan linked to a range of environmental, social and governance (ESG) metrics. Importantly, if the company performs well against the metrics the cost of its debt will decrease, saving money while winning brownie points from environmentalists.

Some players in the oil industry — the climate's biggest boogeyman — are even in on the act. Switzerland-based oil trader Gunvor, announced a sustainability linked bank loan, and will be punished financially if it fails to meet the targets set out in its loan agreement. It also said any savings from meeting those targets will go towards its recently launched Gunvor Foundation which works with aid groups in Africa.

"We reward companies which choose to use innovative sustainable investments," said Esther Berkelaar, head of trade and commodity finance, agriculture at Rabobank. "On the other hand, banks will increasingly require a higher interest rate from companies which are significantly falling behind on sustainability performance, because the bank runs a higher credit risk."

Another commodity trader, ECOM, also took the step of linking its financing to its social sustainability objectives in 2018.

The companies are motivated to clean up their act, but perhaps the bigger incentive in a world of cut-throat competition and thin trading margins. To be sure, it's an uphill battle. The commodities industry has struggled with reputational hits and an array of scandals ranging from modern slavery, child labor, and bribery.

"We have clear restrictions on what we don't do," said ING's Schreve, declining to elaborate. "But more importantly, we seek opportunities to support our clients in financing their sustainable transition."

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Bad, unethical companies take note. You're going to soon cough up more for debt

Saxo Bank's annual series of outrageous predictions is here with this year's theme covering a world that is increasingly saying "enough is enough."

The Danish firm has compiled 10 possibilities with a low chance of happening, but that challenge investors to think outside the box on risk within financial markets and the world more generally. While these predictions are not Saxo's official expectations for the year ahead, they point out some of the risks that have been unallocated by the market so far.

"This year’s edition has a unifying theme of 'enough is enough,' said Steen Jakobsen, Chief Economist at Saxo Bank. "A world running on empty will have to wake up and start creating reforms, not because it wants to but because it has to."

"The signs are everywhere," he said. "2019 will mark a profound pivot away from this mentality as we are reaching the end of the road in piling on new debt and next year will see us all beginning to pay the piper for our errant ways."

Check out the compilation of Saxo's 10 outrageous predictions below.

<h1> 1. EU announces a "debt jubilee" </h1>

Saxo said that unsustainable levels of public debt, a populist revolt, rising interest rates from European Central Bank (ECB), and sluggish growth could lead the EU to announce a debt jubilee in 2019, writing off large amounts of debt across the continent.

Possible eurozone contagion could lead to the ECB backing monetisation if the EU lurches into recession. Italy's budget crisis and Greece's ongoing issues could damage confidence while the yellow vest protests in France indicate that people are unhappy with the status quo.

<h1> 2. Apple "secures funding" to buy Tesla at $520/share </h1>

Elon Musk's controversial tweet suggesting that Tesla had secured funding at $420 a share drew the ire of investors and later the SEC. Saxo playfully suggests that Apple, rather than Saudi Arabia, could be a new option for the electric vehicle maker.

Saxo points out that Apple is keen to move deeper into consumers lives and suggests that automobiles could be the next frontier as vehicles become increasingly connected to technology. A 40% premium on Tesla's share price could make another Musk "funding secured" tweet a possibility in 2019.

<h1> 3. Trump tells Powell: "You’re fired" </h1>

Former Apprentice star and current US President Donald Trump has made no secret of his displeasure at the Federal Reserve in recent months and Saxo reckons Jerome Powell could hear the immortal words "you're fired" in 2019.

December's proposed rate hike could send equity markets off a cliff in Q1 2019, according to Saxo's outrageous predictions, giving Trump the opportunity to bring in the dovish Minnesota Fed President Neel Kashkari instead.

<h1> 4. Prime Minister Jeremy Corbyn sends the pound to parity with the dollar </h1>

One of Saxo's outrageous predictions is that 2019 sees Labour sweep to a large general election win and sets off on a "mid-20th century-style socialist scorched earth campaign to even out the UK’s gross inequalities."

Rising inflation, fleeing wealthy non-domiciled individuals, and lower business investment sees sterling plunge to parity against the dollar, for the first time ever.

<h1> 5. A corporate credit crunch pushes Netflix into trouble </h1>

Hector Vivas/Latin Content/Getty Images

GE's debt struggles in 2018 have been <a href="https://www.businessinsider.com/ge-stock-price-and-bonds-fall-2018-11?r=UK&amp;IR=T?utm_source=intl&amp;utm_medium=ingest" id="231e32d6-cb2e-3e7e-a2ac-a8961e9e9164"> well documented </a> with Saxo predicting more companies could enter the vortex of a corporate credit crunch with Netflix one of those affected.

Investors start to fret about Netflix's excess leverage with a net debt to EBIDTA after CAPEX ratio of 3.4 and over $10bn in debt on the balance sheet causing the company's funding costs to double.

The impact of the unfavorable conditions hits Netflix's ability to invest in new content just as Disney launches its own rival streaming service.

<h1> 6. Australia's central bank launches QE to solve the housing bust </h1>

Saxo says Australia could fall into recession for the first time in 27 years after a plunge in property prices destroys household wealth and consumer spending. The bust also contributes to a sharp decline in residential investment, which in turn hits the country's banks.

Saxo suggests that Australia's banks would be unable to independently service this exposure leading to a bailout from the Reserve Bank of Australia, and the introduction of quantitative easing.

Not content with financial turmoil in just Australia, Saxo also suggests Europe's largest economy could slip into recession in 2019, with weaker car sales dragging the country into trouble.

Saxo points out that by 2040 55% of all new car sales will be electric vehicles and that Germany, a global automotive leader, is well behind the trend. A recession as early as Q3 next year could be on the cards if sluggish car sales continue, according to Saxo.

<h1> 8. A solar flare creates chaos and inflicts $2 trillion of damage </h1>

Like something out of a flimsy Hollywood script a massive solar flare could wreck Western Hemisphere satellite technology in 2019 and cause around $2 trillion in damage, according to Saxo.

A new solar cycle kicks in during 2019 and excess radiation could have devastating effects if the sun decides to rain chaos on its intergalactic neighbor.

<h1> 9. A Global Transportation Tax is enacted as climate panic spreads </h1>

Another insanely hot summer in Europe could make the aviation and shipping industries the targets of a new tax on transportation to limit the damage of climate change in 2019.

Saxo points out that the industries currently have substantial tax benefits which could see them hit by a new Global Transportation Tax (GTT).

In Saxo's prediction, the tax is eventually backed by China and reluctantly the US, sending aviation and other transportation stocks lower despite higher ticket prices and maritime freight prices.

<h1> 10. IMF and World Bank announce intent to stop measuring GDP, focus instead on productivity </h1>

In an interesting development which could have far reaching consequences Saxo suggests that the IMF and World Bank could turn their back on GDP in 2019, and instead use productivity as a growth measure.

"They [IMF and World Bank] argue that GDP has failed to capture the real impact of low-cost, technology-based services and has been unable to account for environmental issues, as attested by the gruesome effects from pollution on human health and the environment in India and elsewhere around the world."

If a country is looking to improve people’s happiness and health, it needs to produce more per worker than it did in the past, according to Saxo, making it a potentially more interesting measure of the world.

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Apple buys Tesla and a solar flare wipes trillions from the economy: 10 outrageous predictions for 2019

OPEC+ has agreed to cut production by 1.2 million barrels, reducing tensions around crude oil prices after two days of fractious discussion in Vienna. Brent Crude was up 4.8% as of 2.40 p.m in London (9.30 EST) on the news.

Oil prices had previously been volatile on news that Saudi Arabia would try to manage the extent of the cuts so as not to shock markets and put further strain on its relationship with the <a id="12ef10c8-6dcf-3313-a1fa-1f1ded79b73e" href="https://www.businessinsider.com/oil-price-opec-tries-balance-supply-trump-demands-2018-12?utm_source=intl&amp;utm_medium=ingest"> US </a> following the death of Jamal Khashoggi.

Brent prices tumbled more than 30% since an October high of $87, but now sit at $62.94. Talks had been fractious after Russia and Saudi Arabia disagreed about the extent of cuts with President Vladimir Putin previously stating that lower prices were <a id="498c5f9a-10c5-386d-a066-88ea2b289046" href="https://www.businessinsider.com/oil-is-taking-a-hit-after-us-inventories-gain-while-putin-says-prices-are-absolutely-fine-2018-11?r=UK&amp;IR=T?utm_source=intl&amp;utm_medium=ingest"> "absolutely fine." </a>

Similarly, US President Donald Trump had signaled that he wanted oil prices to stay lower despite US inventories currently standing at high levels. The US now exports more oil than it imports following the shale <a id="40efb792-6299-3709-a312-7e2bf96802c6" href="https://www.reuters.com/article/us-usa-oil-eia/in-major-shift-us-now-exports-more-oil-than-it-ships-in-idUSKBN1O51X7"> revolution </a> .

OPEC members will make up 800,000 barrels a day of the cut with Russia taking the remaining amount. Analysts had previously expected a cut of between 1.1 and 1.4 million barrels a day. OPEC has been under greater scrutiny in the last week after Qatar decided to quit the cartel - effective January 1 - after 57 years of membership.

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OPEC Saudi Arabian Energy Minister Khalid al-Falih

Oil surges after OPEC and Russia agree to production cut

Bank stocks are plunging as global equity markets continue their sell-off, driven by a flattening yield curve and trade-war tensions.

The <a href="https://www.investopedia.com/terms/k/kbw-bank-index.asp" id="8556607b-d867-39c1-ad37-7498a109976e"> KBW Bank Index </a> , which includes all of the biggest firms, drop into bear market territory after recording its largest two day drop since June 2016 — the month of the Brexit vote. Goldman Sachs was the best off on Thursday, and it still fell more than 1.5%.

The spreads between Treasurys of varying maturities — frequently referred to as curves — have inverted in recent days. That includes the 2- and 5-year relationship, as well as the difference between 3- and 5-year Treasurys. Often viewed as a late-cycle signal, this type of inversion has <a href="https://www.businessinsider.com/yield-curve-inversion-us-recession-signal-bond-market-red-flag-2018-12?r=UK&amp;IR=T?utm_source=intl&amp;utm_medium=ingest" id="3af076bd-90c0-3240-a320-c3e1d9682f92"> frequently preceded economic recessions </a> throughout history.

The impact on bank stocks has been stark as the flatter yield curve shrinks the spread between the rate at which banks borrow and which they lend. This hurts the firms' profitability, since they make money by charging borrowers higher rates.

Those profitability concerns were upfront and center for Citigroup on Wednesday. The firm's CFO, John Gerspach, warned the company is likely to see fourth-quarter trading revenues decline on a year-over-year basis. He also said recent market volatility has hurt the firm's fixed-income and investment banking businesses.

Citigroup's stock plummeted as much as 6% on Thursday, adding pressure to the broader banking sector, which already had its hands full with the yield curve situation.

Other lenders have been hit hard by market volatility this year, and their stocks are also falling sharply.

On Tuesday, JPMorgan CEO Jamie Dimon said he expected trading results to be flat compared with last year. The bank's stock fell 3.6% on Wednesday.

The S&amp;P 500 has seen losses for other banks including a 4.2% drop for Morgan Stanley and a 4.1% loss for Bank of America, while Wells Fargo is trading 3% lower.

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Bank stocks fall the most in 18 months, tumbling into a bear market (C)

Apple's stock woes look set to continue after the iPhone maker's suppliers tumbled on fears about "market saturation" and future demand.

The Cupertino, California-based company's shares were down slightly in premarket after falling 4.4% on Tuesday — underperforming a particularly brutal 3.8% drop in the Nasdaq — and is also down in premarket New York trading. Apple is missing out on a minor relief rally amongst other so-called FAANG (Facebook, Apple, Amazon, Netflix, and Google) stocks.

Apple stock was hurt in part on Tuesday by a downgrade by HSBC, after it cited an overwhelming dependence on a single product.

"What has made the success of Apple, a concentrated portfolio of highly desirable (and pricey) products, is now facing the reality of market saturation," said HSBC.

In Asia, shares of its suppliers fell:

<ul><li> Pegatron, in Taiwan, fell 1.7% </li><li> Chinese acoustics technology supplier AAC Technologies lost 3.7% </li><li> Taiwan's Flexium Interconnect was down 3.9% </li><li> Taiwan's Largan Precision declined 3.7% </li></ul>

In the US, Lumentum Holdings, an optical products manufacturer, fell 5.5% after it cut its outlook last month.

Cirrus Logic closed down 1.9% down — having fallen as much as 5.8% days after it cut its December revenue outlook due to recent weakness in the smartphone <a id="0978bbd3-44bc-3b98-aa19-42c4613da6a7" href="https://www.businesswire.com/news/home/20181203005862/en/Cirrus-Logic-Updates-Quarter-Fiscal-2019-Outlook"> market </a> .Apple <a id="51a39e19-bd90-3049-acd9-0211ace92212" href="https://www.bloomberg.com/news/articles/2018-12-03/cirrus-joins-growing-list-of-apple-suppliers-cutting-sales-view"> accounts </a> for about 82% of Cirrus' sales.

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Similarly, Qorvo, a North Carolina semiconductor company, dropped 5.3% on concerns about Apple, which recently lost its status as the world's most valuable business.

Another Apple supplier, Broadcom, which reports earnings on Thursday, fell 4.1%. The company, which designs semiconductors, is believed to make around $10 on each iPhone sold, <a id="dac937e0-647b-3050-a86d-c0f1cf2bf1a8" href="https://www.cnbc.com/2018/06/05/broadcom-will-generate-10-in-revenue-from-every-new-iphone-jp-morgan-estimates.html"> according </a> to JPMorgan, cited by CNBC.

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Apple is set to miss out on the Nasdaq's relief rally after iPhone 'saturation' fears hammer suppliers

European equities took a hit Wednesday, following Asian stocks lower as economy and US-China trade-war jitters gripped financial markets.

In the US, the Nasdaq and S&amp;P 500 each tumbled more than 3.2% amid growing doubts that a trade deal could be thrashed out between the US and China. A wonky indicator called the <a id="773f7c13-4e42-3694-af52-7c4632490a4a" href="https://www.businessinsider.com/yield-curve-inversion-us-recession-signal-bond-market-red-flag-2018-12?utm_source=intl&amp;utm_medium=ingest"> "yield curve" also flattened </a> , signaled a weaker outlook for economic growth and fears about a recession.

President Donald Trump on Tuesday threatened to place "major tariffs" on Chinese goods entering the US, demolishing an uplift in market sentiment after last week's G20 summit in Argentina.

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The Shanghai Composite index closed down 0.6% Wednesday. European shares followed, with the Euro Stoxx 50, Germany's DAX and France's CAC all down 1%. Fears remain that a US-China trade deal will not be struck in the 90-day negotiating window agreed by the two sides.

Some analysts suggested that Monday's gains were overdone, given Trump's previously barbed comments.

A minor relief rally in US index futures may be masking continued market uncertainty amid the longest bull market since the depths of the financial crisis.

"There is a strong chance now that the buy the dip mentality has flipped into a sell the rally approach," said Neil Wilson, chief markets analyst for markets.com.

Oil investor sentiment tracked that of equities. Brent crude is down 1.6% as of 8.45 a.m in London (3.45 a.m EST) as renewed uncertainty about the substance of potential supply freezes or cuts from Saudi Arabia lingered on markets ahead of OPEC's summit in Vienna on Thursday.

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Global stocks plunge lower after Trump trade war jitters sparks US bloodbath

A darkening tone has taken over bond markets, and it could spell trouble for the US economy.

On Monday, 2- and 5-year <a id="88315204-74ef-3d16-a253-ff768aa3c857" href="https://markets.businessinsider.com/bonds?utm_source=intl&amp;utm_medium=ingest"> Treasury yields </a> inverted, meaning the shorter dated 2-year money became more expensive than the later maturing 5-year. The same happened with 3- and 5-year spreads for the first time in 11 years. Concerns about global growth slowing and higher interest rates, coupled with simmering trade-war tensions, are thought to be behind the inversions.

"Inversion of that curve is the real recession red flag," said Neil Wilson, Chief Market Analyst at Markets.com.

Generally, short-term bonds carry lower yields because the investment is considered less risky, whereas longer dated funds should have higher yields to reflect that an investor's money is at more risk as you commit for more time.

However, investors are increasingly concerned by a flattening of the spread between 2-and 10-year Treasuries, a more fundamental benchmark of market health. The 10-year Treasury note yield fell about 6 basis points to 2.498% Tuesday, its lowest since September 13, while the spread between 2-and 10-year notes dropped to 0.14%, the flattest level since June 2007, setting the tone for a possible inversion of spreads in the future.

Between 1988 and 2008, inversions of the 2s and 10s were followed by recessions about 24 months later, <a id="b8d1c109-2345-3e92-a91e-eb95b72b647e" href="https://www.cnbc.com/2018/12/03/the-thing-the-bond-market-most-feared-is-beginning-to-happen.html"> according </a> to Wells Fargo, cited by CNBC.

The yield curve inverted between the 2- and 10-year yield before the recessions of 1981, 1991, 2000 and 2008. It has <a id="021973d5-eb1b-368a-a113-2ffcd934d6c2" href="https://uk.finance.yahoo.com/news/treasury-yield-curve-just-inverted-sounding-alarm-recession-194921816.html"> preceded </a> all nine US recessions since 1955, with a lag time ranging from six months to two years.

An inversion implies that investors are selling short-dated bonds faster than their long-dated counterparts because bond prices fall as yields rise. It's a sign that investors are unmoved by a potential slowdown in the Federal Reserve's rate hiking program. Investors are still expecting the Fed to raise rates by 0.25% in December, despite interpretations that <a id="b1109d54-ebd9-342e-aa56-eece6dcb3a2c" href="http://uk.businessinsider.com/federal-reserve-system-powell-says-rates-just-below-neutral-level-2018-11?utm_source=intl&amp;utm_medium=ingest"> comments </a> from Chairman Jerome Powell signal a more dovish stance.

Recessionary pressures could be exacerbated if fears surrounding the US-China trade war are resumed following a 90-day truce, agreed at the G20 in Argentina last week.

“This solidifies not only my flattening bias but I think it will lead many players in the market who [expected the yield curve to steepen] to capitulate on that,” Ian Lyngen, head of united rates strategy at BMO Capital Markets, <a id="9a193c23-5580-3e58-a513-0d38dcf8a292" href="https://www.cnbc.com/2018/12/03/the-thing-the-bond-market-most-feared-is-beginning-to-happen.html"> told </a> CNBC.

Lyngen said the inversion of 3- and 5-year yields has increased the likelihood that an inversion of the 2- and 10-year yield will happen in late 2018 or early 2019.

Whether that means a recession is likely in the next few years depends on a number of factors, but it's a stark sign of things to come from a usually emphatic bellweather.

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The bond market just flashed a major 'red flag' — and it could be signaling a US recession

Qatar, OPEC's 11th-largest oil member by production, shocked market watchers on Monday with the announcement it would quit OPEC, adding additional bite to proceedings ahead of a meeting scheduled for Thursday in Vienna.

While Qatar has attributed the decision, effective January 1, to its plans to increase natural-gas production, it's clear that its diplomatic spat with Saudi Arabia isn't abating.

The cartel's largest member, Saudi Arabia, along with three other countries, has cut trade and transport ties with Qatar for the past 18 months, accusing Qatar of supporting terrorism and the Saudis' largest regional rival, Iran. Qatar has said the boycott is damaging for its national sovereignty and has denied the claims.

After a 30% drop since October, crude prices had a respite with 5% surge Monday following positive news that Russia and Saudi Arabia had agreed to cut production and that the US and China had reached a <a href="https://www.businessinsider.com/trump-china-trade-war-global-stock-markets-surge-on-tentative-deal-2018-12?IR=T?utm_source=intl&amp;utm_medium=ingest" id="0be2c9f9-9b45-3b01-ab0c-1c2bd14a47ca"> 90-day trade-war truce </a> . Brent crude was trading at $61.62, up 3.6% as of 9:30 a.m. in London (4:30 a.m. EST), while West Texas Intermediate was up 4.1% at $53.06.

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“For me to put efforts and resources and time in an organization that we are a very small player in and I don't have a say in what happens ... practically it does not work, so for us it's better to focus on our big growth potential," Qatar's energy minister, Saad al-Kaabi, told a news conference Monday, as <a href="https://www.reuters.com/article/us-qatar-opec/qatar-to-withdraw-from-opec-as-of-jan-2019-minister-idUSKBN1O20DT" id="25622dc3-942c-39b5-a7d3-4b407adc7631"> reported </a> by Reuters.

Qatar was the first country to join OPEC's five founding members 57 years ago. It is, through Qatargas, the world's largest producer of liquefied natural gas. The tiny Gulf state exports over 77 million tonnes of liquefied natural gas annually, good for about 30% of <a href="https://www.energydigital.com/top10/top-10-largest-exporters-liquid-natural-gas" id="e9643af1-d909-38d5-a320-2d72cf71ba09"> global </a> market share.

"Qatar's decision to exit OPEC over political disagreements with allies could sour some of the bullish sentiment, though Qatar is one of the smaller Gulf oil producers," said Mike van Dulken and Artjom Hatsaturjants of Accendo Markets.

Al-Kaabi said Qatar Petroleum planned to raise its production capability to 6.5 million barrels barrels of oil equivalent a day from 4.8 million in the next decade.

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Emir of Qatar Sheikh Tamim bin Hamad al-Thani (C) talks with U.N. Secretary General Antonio Guterres at the Munich Security Conference in Munich, Germany, February 16, 2018. REUTERS/Michaela Rehle

Qatar set to leave OPEC in January as Middle East spat worsens

Deutsche Bank's difficult week continued as prosecutors raided the lender's offices in Frankfurt for a second day, a sign the probe about its role in a global money laundering scandal is widening.

The shares fell to a record low. Again. They were down about 3% on Friday, taking its year-to-date plunge to a whopping 50 percent. The market capitalization of the once-mighty bank is about $19 billion, not a significant amount more than the bank <a id="cc336f2b-f2cb-3fe0-a607-77ad4b32aa9b" href="https://www.corp-research.org/deutsche-bank"> has had to pay in fines since the financial crisis </a> .

The bank has been dogged by high levels of executive turnover and legal fines, and is on the back foot again after successive CEOs have pledged to turn the bank around. CEO Christian Sewing was appointed in April with the intention of improving performance at the lender.

It's been a rough few weeks for Deutsche Bank. The bank's head of the Americas, Tom Patrick, is thought to be <a id="20fca28c-9b7a-3fc3-aea7-9ec8ee837448" href="https://nypost.com/2018/11/28/head-of-deutsche-banks-us-operations-expected-to-exit/"> leaving </a> the bank as part of a major reshuffle at the beleaguered lender. He is the third person to hold the role in the past 18 months. And the FT <a id="3cf9f1e7-2ea0-33bc-a47b-04445d6b7041" href="https://www.ft.com/content/993c1d78-f320-11e8-ae55-df4bf40f9d0d"> reported </a> that questions have swirled around the performance of the investment division head Garth Ritchie after revenues at that division plunged.

Adding to the bank's growing list of problems: last week Deutsche Bank's <a id="a825c27c-e292-3bc6-a517-edf6b5ec7d8a" href="http://uk.businessinsider.com/its-been-a-week-to-forget-for-deutsche-bank-2018-11?utm_source=intl&amp;utm_medium=ingest"> role in Danske Bank’s money laundering scandal </a> came to light. The shares tumbled again afterCitigroup CEO Michael Corbat dismissed talk of a merger between the two lenders.

That was all before Thursday, when about 170 police officers and other officials seized documents during searches through six different properties, including one employee’s home.

An odd twist in the saga comes from the Wall Street Journal, which <a id="3e93f8ef-2341-355f-ad96-60e2bb0807fe" href="https://www.wsj.com/articles/deutsche-bank-weighs-shake-up-among-senior-executives-1543351515?mod=article_inline"> reported </a> that Federal Reserve's vice chairman for supervision, Randal Quarles, turned up for a lunch with CEO Christian Sewing and regulatory chief Sylvie Matherat during the raid.

The lunch was prescheduled and the two events were unrelated, a Fed spokesperson told the WSJ. (But it's worth noting that Matherat is responsible for a department which deals with the detection and prevention of financial crime by clients of the bank.) Matherat's office was allegedly raided as part of the investigation as well, the WSJ reported.

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Deutsche Bank's troubles aren't going away. The stock is sinking after a second day of raids.

While Theresa May tries to get her Brexit deal over the line, banks have already packed their bags and started moving to Frankfurt. It's more bad news for the City of London.

Frankfurt Main Finance, a lobby group, has <a id="d5bf589e-20f5-3e85-ac82-c25243c02b31" href="https://frankfurt-main-finance.com/en/fmf-welcomes-brexit-agreement-relocation-of-e750-to-800-billion-in-assets-to-frankfurt-expected/"> claimed </a> that between €750 billion to €800 billion ($911 billion) in financial assets will move to Europe's largest economy by the time Britain leaves the European Union on March 29, 2019. It's yet another indication of the fundamental shift taking place in the UK's financial-services industry, which makes up 6.5% of the economy, as Brexit-related changes strip the country of jobs and assets.

US bank giants Goldman Sachs, JPMorgan, Morgan Stanley, and Citigroup have opted to move billions in assets to Frankfurt. Swiss lender UBS has opted for Frankfurt as its new EU base. Similarly, Lloyds, Standard Chartered, Credit Suisse, and Nomura are among the other lenders that might expand or move to Frankfurt as a result of Brexit.

"We stand by the potential of up to 10,000 jobs moving to Frankfurt which we estimated on day 1 after the Brexit referendum," said Hubertus Väth, Managing Director of Frankfurt Main Finance.

UK Chancellor Philip Hammond recently released <a id="0e1ccc93-c505-31c6-abbd-135c775c25d1" href="https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/759762/28_November_EU_Exit_-_Long-term_economic_analysis.pdf"> official assessments </a> showing that the UK economy will be hit under all likely Brexit <a id="46f23b88-fbad-34b6-a674-7295db771f35" href="http://uk.businessinsider.com/the-uk-government-admits-brexit-will-inevitably-leave-britain-poorer-2018-11?utm_source=intl&amp;utm_medium=ingest"> outcomes </a> .

Other banks have opted for Paris and Dublin as their EU hubs in light of Brexit.

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Brent Crude dropped back below $60 a barrel and is currently trading at $58.14, down 1.6%, after data showed US inventories continued to <a id="0dd2f335-d71f-3525-a51f-99afd9d92807" href="http://ir.eia.gov/wpsr/wpsrsummary.pdf"> grow </a> , while Russia indicated it has limited interest in cutting supply. Russian President Vladimir Putin said current prices are “ <a id="e5396e41-08ba-35a1-ae39-6107ea750e33" href="https://www.bloomberg.com/news/articles/2018-11-28/putin-says-60-oil-absolutely-fine-praises-saudi-crown-prince"> absolutely fine </a> ” ahead of an important OPEC meeting December 6. WTI, down 1.1%, traded below $50 for the first time in over a year.

Falling oil prices could prompt world leaders to agree on production policy at G-20 summit, <a id="c53a95ba-5138-3a08-a71d-7fa384a84ee0" href="https://www.cnbc.com/2018/11/28/oil-prices-g-20-summit-could-see-world-leaders-agree-on-policy-ahead-of-opec-meeting.html"> analysts told CNBC. </a> The plunge in prices has added pressure on the OPEC alliance to execute another round of supply cuts.

Elsewhere in markets, Federal Reserve Chairman Jerome Powell's comments on interest rates gave a lift to US stocks on Wednesday and to European equity indexes on Thursday. He said rates are "just below" a neutral level, taken by investors as a sign that the rate hike <a id="93cb5ca4-b15d-37e5-a4b4-9973c2e1970d" href="http://uk.businessinsider.com/federal-reserve-system-powell-says-rates-just-below-neutral-level-2018-11?utm_source=intl&amp;utm_medium=ingest"> agenda </a> was nearing its end.

Asian stocks broadly rose on the news despite investor jitters ahead of an important G20 summit Friday. Japan's Nikkei finished up 0.4%, following US gains on Wednesday, though the Shanghai Composite Index was an outlier closing down 1%. MCSI's broad Asian index, excluding Japan, rose 0.6% and is currently up <a id="64b636a4-fee6-3a2e-af9e-53bf4ed6053b" href="https://www.investing.com/indices/ac-asia-p-xjp"> 0.2% </a> .

The Euro Stoxx 600 was up 0.6% as of 10.00 a.m in London (5 a.m EST). France's CAC is up 0.7% and Germany's Dax is is trading 0.5% higher.

Powell's speech Wednesday also noted that there is "a great deal to like" about the US economy, and added that the outlook remains solid. His remarks sent the S&amp;P 500 up 2.3% while the Nasdaq rose 3% at the close Wednesday. US index futures are all trading at least 0.3% lower on Thursday.

November's losses were erased on the Dow Jones Industrial Average - which climbed 600 points Wednesday - with investors expectant that Powell's comments suggested a slowing or stopping of the Fed's interest rate hikes.

A Federal Reserve report out earlier Wednesday showed some American businesses have the most debt in two decades. Still, officials "see no major asset class where valuations appear far in excess of standard benchmarks," Powell said in his speech.

US two-year treasury yields slipped to 2.813%.

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Six Deutsche Bank branches were searched Thursday in an alleged money laundering probe linked to the 2016 Panama Papers data leak. The company's shares dropped.

In total, 170 prosecutors, policemen and tax inspectors took part in the raid, according to a statement from the Frankfurt prosecutor’s <a href="https://www.ft.com/content/fff8c5e6-f3b8-11e8-ae55-df4bf40f9d0d" id="8745e75d-b0da-30fb-ae50-1b6bece67fd9"> office </a> . Two bank employees, aged 50 and 46, were targeted as suspects in the case, according to the statement. Deutsche Bank shares fell as much as 3% on the news and are down 2.6% as of 11.20 a.m in Frankfurt (5.20 a.m EST).

According to prosecutors, Deutsche Bank is suspected of aiding some 900 customers in setting up offshore companies in tax havens. It's alleged some €311 million ($354 million) is believed to have been laundered, <a href="https://www.dw.com/en/german-police-raid-deutsche-bank-over-suspected-money-laundering/a-46499349" id="e84c8a7d-b42e-3ce4-a13b-72781ecb5777"> citing </a> information from the so-called "Panama Papers."

"We confirm that the police are currently conducting an investigation at a number of our offices in Germany," the bank said in a statement. "The investigation relates to the Panama Papers. We will be issuing further details in due course. We are cooperating fully with the authorities."

It's been a tough few weeks for Deutsche after <a href="https://www.reuters.com/article/us-deutsche-bank-restructuring-moves/deutsche-bank-americas-head-expected-to-leave-sources-idUSKCN1NX0TY" id="e387b4fb-f412-3dae-a37d-068c47269769"> reports </a> that its head of the Americas, Tom Patrick, would leave the bank by year end alongside a raft of other senior management changes. The bank's stock fell last week after Citigroup's CEO Michael Corbat <a href="https://www.businessinsider.com/its-been-a-week-to-forget-for-deutsche-bank-2018-11?utm_source=intl&amp;utm_medium=ingest" id="e83d8c8c-4348-3456-a23b-50cf3a2a24e7"> dismissed merger talk </a> between the two lenders.

Deutsche was also <a href="http://uk.businessinsider.com/r-us-investigators-approach-deutsche-bank-bofa-jpm-in-danske-probe-bloomberg-2018-11?utm_source=intl&amp;utm_medium=ingest" id="6b4678fe-437f-3bb2-a7c2-171ed8b5f415"> embroiled in the Danske Bank scandal </a> , adding to a growing list of concerns for the Frankfurt-based lender.

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Deutsche Bank's headquarters are being raided by police as part of a Panama Papers probe (DB)

The UK Chancellor Philip Hammond today released <a href="https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/759762/28_November_EU_Exit_-_Long-term_economic_analysis.pdf" id="0e1ccc93-c505-31c6-abbd-135c775c25d1"> official assessments </a> showing that he UK economy will be hit under all likely Brexit <a href="http://uk.businessinsider.com/the-uk-government-admits-brexit-will-inevitably-leave-britain-poorer-2018-11?utm_source=intl&amp;utm_medium=ingest" id="46f23b88-fbad-34b6-a674-7295db771f35"> outcomes </a> .

But, the damage to the economy from Brexit is already afoot — so much so that the act of leaving the EU itself is, at this point, increasingly irrelevant.

Leaders of companies with UK operations haven't been taking any chances. The mere whiff of uncertainty surrounding a soft, hard, no-deal or any other Brexit has been enough to send them packing. These moves won't be undone, even if Brexit were somehow cancelled.

The impact on the City of London could be especially damaging — financial services, heavily concentrated in the capital, account for 6.5% of the UK's GDP.

"I don't believe Brexit can be a trigger for a financial crisis or a banking crisis," Sergio Ermotti, CEO of Swiss investment firm UBS, <a href="https://www.bloomberg.com/news/articles/2018-09-17/ubs-picks-frankfurt-hub-as-ermotti-prepares-for-no-deal-brexit?srnd=premium-europe" id="5520feaa-00ba-35ac-ac1d-38535cecedc4"> told Bloomberg </a> back in September. "But it could undermine investments, and trigger maybe a slowdown in the economy. That's clear."

Here's a roundup of the financial exodus so far:

<ul><li> US bank giants Goldman Sachs, JPMorgan, Morgan Stanley, and Citigroup have moved250 billion euros ($283 billion) of balance-sheet assets to Frankfurt because of <a href="https://www.bloomberg.com/news/articles/2018-11-09/u-s-banks-said-to-plan-tenfold-increase-of-assets-in-frankfurt">Brexit</a> . </li><li> Bank of America <a href="https://www.bloomberg.com/news/articles/2018-11-08/bofa-has-spent-400-million-preparing-for-hard-brexit-ceo-says">is spending</a> $400 million to move staff and operations in anticipation of Brexit, and is <a href="http://uk.businessinsider.com/bank-of-america-leaflet-paris-bankers-brexit-2018-10?utm_source=intl&amp;utm_medium=ingest">trying to persuade</a> London staff to move to Paris. </li><li> <a href="https://www.irishtimes.com/business/financial-services/barclays-seeking-to-move-250bn-business-to-republic-ahead-of-brexit-1.3680943">Barclays</a> is seeking to transfer €250 billion ($280.8 billion) of business to Dublin and is set to <a href="https://www.thetimes.co.uk/article/barclays-set-to-become-ireland-s-largest-bank-rn5k95csr">become Ireland's biggest bank</a> . </li><li> France's BNP Paribas, Credit Agricole, and Societe Generale have opted to transfer <a href="https://www.bloomberg.com/news/articles/2018-11-07/with-brexit-closing-in-french-banks-staff-moves-getting-real">500 staff out of London to Paris.</a> </li><li> UBS has chosen German financial center Frankfurt for its new <a href="http://uk.businessinsider.com/ubs-chooses-frankfurt-for-post-brexit-eu-base-ceo-ermotti-says-2018-9?utm_source=intl&amp;utm_medium=ingest">EU headquarters.</a> </li><li> Swiss peer <a href="https://www.usinenouvelle.com/article/madrid-francfort-luxembourg-hubs-post-brexit-de-credit-suisse.N727784">Credit Suisse</a> is moving 250 jobs to Germany, Madrid, and Luxembourg among other EU 27 countries as well as $200 million from its market division to Germany. </li><li> Germany's Deutsche Bank is also considering shifting large volumes of assets to Frankfurt as part of its <a href="https://www.bloomberg.com/news/articles/2018-09-17/deutsche-bank-plans-to-operate-in-u-k-via-branch-after-brexit">Brexit plan.</a> </li><li> HSBC , Europe's biggest bank,has shifted ownership of many of its European subsidiaries from its London-based entity to its <a href="https://www.reuters.com/article/us-britain-eu-hsbc/hsbc-shifts-european-branches-to-french-unit-control-ahead-of-brexit-idUSKBN1KT1FX">French unit.</a> </li><li> Australia's largest bank by assets, Commonwealth Bank of Australia , has set in motion plans to base around 50 staff in <a href="http://uk.businessinsider.com/australian-banks-leave-london-as-no-deal-brexit-looms-2018-10?utm_source=intl&amp;utm_medium=ingest">Amsterdam</a> , and has applied for a banking licence in the country. </li><li> Other Australian lenders Macquarie, Westpac, and ANZ are also in talks to move operations to Dublin and continental Europe. </li><li> Europe’s biggest repo trading venue, called BrokerTec ,is being moved to <a href="https://t.co/5Bazyd7EMS">Amsterdam from London</a> , meaning a $240 billion a day repo business is leaving the UK. </li><li> More than <a href="https://uk.news.yahoo.com/100-british-funds-seeking-post-brexit-licenses-dublin-122907256.html?guccounter=1">100 UK-basedasset managers</a> and funds have applied to the Irish central bank for authorization in Ireland. </li></ul>

The impact of these changes will see less tax revenue for the government, <a href="http://uk.businessinsider.com/jpmorgan-citi-and-barclays-london-brexit-banking-job-losses-2018-9?utm_source=intl&amp;utm_medium=ingest" id="e3510fad-440e-3758-a44a-9a13e44885a6"> fewer jobs </a> , and a dent in dealmaking, taking a shine off the City's lustre.

And that's just financial services.

Schaeffler, a car parts company, is closing two UK factories because of <a href="https://www.theguardian.com/business/2018/nov/06/new-blow-for-uk-car-industry-as-european-parts-factories-close-michelin-schaeffler" id="20c4c9f5-8dcc-3be7-acb4-a5baffd7b724"> Brexit, </a> leading to570 fewer jobs.Among others: There's a <a href="https://t.co/S7IgpggYwj" id="414d32e5-fe95-3b7d-ae17-4e5918cf2a31"> "Brexit-busting" ferry </a> that sidesteps UK trade routes, drug companies are <a href="https://www.theguardian.com/politics/2018/sep/06/government-talks-drug-companies-medicines-stockpiling-brexit" id="b39ba1ce-4d78-3910-ab86-bfd69ee0e6dd"> stockpiling medicine, </a> and investors in the <a href="https://t.co/S7IgpggYwj" id="cfa64975-5916-3652-a00c-f32b5ccbb2be"> once-vibrant UK tech scene </a> are drying up. (A great Twitter thread by a self-described <a href="https://www.bbc.co.uk/news/politics/eu_referendum/results" id="42cb5900-d1e5-37bc-acf3-bef6c46bfa74"> 48%-er </a> in Cambridge lists a wide array of industry impact. You can read it <a href="https://twitter.com/uk_domain_names/status/1061554026284834817" id="88484f00-4bf4-3d03-ae2d-044981abb348"> here </a> .)

NOW WATCH: <a href="https://www.businessinsider.com/what-happens-when-you-dont-get-enough-sleep-2017-12?utm_source=intl&amp;utm_medium=ingest" id="11b2a0bc-a6b2-3adb-a1e6-64ad65fcc60a"> A sleep expert explains what happens to your body and brain if you don't get enough sleep </a>

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