Tuesday, October 4, 2016

Deutsche Bank MAY be let off with a punitive fine

We should have understood that the pressures being put upon the Deutsche Bank by the American government in its demand for a fine of $14 billion would be ameliorated in some manner. Perhaps we should have understood that the demand for that fine was solely and completely one of political expedience as the Obama Administration wanted to appear to be rather obviously anti-Wall Street and rather more obviously set upon teaching capitalism a lesson, but would also be amenable to some lessening of the fines in question so that a substantive sum of money could be secured from a foreign, global bank prior to the November election. 

Yes, perhaps we should have known that the whole US government attack upon The Deutsche Bank was political in nature and that it would be resolved not from an economic perspective but from a political one instead. But amidst the chaos of Friday morning and amidst the collapsing stock markets evident at the time, and amidst the shocking weakness of the EUR on all fronts… relative to the dollar; relative to the Swiss franc; relative to gold et al…perhaps we should have decided then that the streets were running with figurative blood and that the time had come to turn bullish of shares… perhaps. But we are not that wise; nor are we that courageous that we shall step out into heavy traffic and dodge the dangerous cars and trucks of ill fortune that seemed so intent at the time to kill us at a moment’s notice.

If the US government is intent now to let the Deutsche Bank off with a relatively small fine… and $5 billion or so seems like a rather archly punitive fine of the first order, but that’s another question for another time… then perhaps the “Zimbabwe-isation” of the global capital markets remains firmly intact. This process of global monetisation on the part of the major central banks is still firmly intact and is not going to go away anytime soon and it is this process that does trump all else. 

If the great Marty Zweig taught us all decades ago never to fight the Fed, then we are to learn today never to fight the collective force of the central banks in aggregate either, but should instead see this as a wind at the stock market’s collective back.