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Deutsche Bank News Hits Stock Market....

Stock-Markets / Stock Markets 2016 Sep 27, 2016 - 12:30 PM GMT

By: Jack_Steiman


Angela Merkel, the leader of the financial world in Germany, told Deutsche Bank that they're on their own should things spiral out of control for them. The bank has been having trouble and when someone has trouble the world expects the usual reply, which is have no worries, we'll do whatever it takes to protect you. This time Merkel said you're on you're own.

The market overseas didn't like this news, thus, some decent selling took place abroad. Here at home Deutsche Bank AG (DB) took a very nasty hit along with the rest of the banks. That said, the market found the usual amount of necessary rotation, which protected the market from getting killed. Same old. There's never enough selling to get the market truly free falling. Big money just isn't selling due to the lack of higher rates elsewhere to hide their money. This takes me back to wondering what is out there that act as kryptonite to fed Yellen. Is there anything out there?

There may not be. Years back, news like this against the bank of this magnitude would have taken the whole market down in a cascade of selling. No mercy type selling. Now it's a big yawn. Some selling, but still rotation. The bullied bull still has more power than the real world. You have to imagine that someday this house of cards all comes crumbling down but for now it just doesn't matter what comes out on the dark side. The market takes a hit but clearly survives without much trouble. This action by Merkel is the very first time I can remember that a central bank leader, or country leader, refused to offer help should it become necessary. The very fact that she said what she said also likely means that things are really bad, but, again, the market just doesn't care right now. Bottom line, the market fell on some really interesting, different, and not so good news, but it didn't fall in the manner one would expect with such a change on policy that has been in place for many years prior.

The market really hasn't done much for two years. It gives head fakes both ways, mostly bullish head fakes, but doesn't seem to be able to take the next leap up. I gather the market is having trouble with the disconnect from truth. With earnings now showing six straight quarters of declines and with valuations off the charts, it's not easy to justify one explosion after another. The fed is holding things up but her power seems to be waning. It may temporary as her next trick could come out an any time, but her power over Disneyland seems to be losing momentum. The Euro zone already seems fed up with Mr. Draghi, and his constant "we'll do anything necessary" talk. It shows too much desperation. Maybe the market will show some strength or weakness worth talking about after this evenings Presidential debate. The market likes the status quo, and since Trump has already spoken about removing fed Yellen should he be elected, maybe the market will sell hard if it appears he wins the debate.

However, if Ms. Clinton wins the market may celebrate. I'm trying to find a catalyst as to why this going nowhere market will finally go somewhere. I do believe that if Mr. trump wins this evening the market won't like it. We shall find out soon enough. Bottom line is the market has bored us overall for two-plus years, and, sadly, is showing no signs of letting up. The greatest disconnect in market history continues onward.



Jack Steiman is author of ( ). Former columnist for, Jack is renowned for calling major shifts in the market, including the market bottom in mid-2002 and the market top in October 2007.

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© 2016

Mr. Steiman's commentaries and index analysis represent his own opinions and should not be relied upon for purposes of effecting securities transactions or other investing strategies, nor should they be construed as an offer or solicitation of an offer to sell or buy any security. You should not interpret Mr. Steiman's opinions as constituting investment advice. Trades mentioned on the site are hypothetical, not actual, positions.

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