“Dieses Jahr wird Bayern München die Meisterschaft verpassen”—“Pustekuchen! Das wird nicht passieren” (“This year, Bayern Munich will miss the championship”—“Blowcake! That’s not gonna happen”). That’s a typical use case for this wonderful word which is roughly comparable to equally cryptic English interjections such as “Fiddlesticks!”, “Hogwash,” or “Codswallop!”
Like many other German idioms, the term probably originated in Yiddish. According to a popular theory, it goes back to the saying “Ja cochem, aber nicht lamdon,” which means something like “cunning indeed, but not a scholar.” At some point, “cochem” became “Kuchen”—and eventually, someone came up with the idea of combining the word with Puste, which means something like “puff” or “breath”—but in this case rather refers to “hot air.” This is how Pustekuchen was born over the years.
From then on, Germans used the term to express that they had great doubts about what their conversation partner has just said. So it’s safe to assume that many overly optimistic Borussia Dortmund fans have literally had some cakes blown in their faces.