Tuesday, 5 July 2016

DB - the systemic risk to the world

Whilst the US market started the week on a moderately weak note, there was much more significant weakness in Deutsche Bank (DB), which settled lower by -3.6% @ $13.41, the lowest close... ever. DB remains a clear systemic threat to the EU... and the world.

Systemic horror

DB, daily

DB, monthly, 20yr, linear scale


Watching 'Star Wars - the Force Awakens', the Starkiller base attack on (presumably Coruscant, and its surrounding moons), remains a profoundly disturbing scene.

The mainstream are themselves starting to awaken to the fact that DB is being priced by Mr Market as 'in serious trouble'.

Q. Will DB implode?

Mathematically.. its a given. Of course, it could be delayed (indefinately) if the ECB print trillions, and cover any/all losses.

NIRP is causing relentless problems, as DB themselves are vehemently screaming against. Ironically, financial historians will likely blame the ECB itself for the destruction of DB - and other large EU institutions. 

DB as Lehman Brothers ?

Many are trying to extrapolate the DB price chart to Lehman. In theory.. it would suggest meltdown to zero, at some point between Aug-October.

Without getting lost in such bearish hysteria about the 'end of the financial world', DB is a huge problem. At some point DB will topple over.. whether that is months away... or a few more years... impossible to say.

*I've no position in DB, with ZERO intention to trade DB.

Something I am keeping in mind though, long BAC or even long C.... at the time of a DB implosion. Neither BAC or C look in trouble... and would be valid targets in a market crash.

As for 'everything else'.

We'll just have to see how the EU, and wider world capital markets react to a (seemingly probable) DB implosion. One thing is for sure, it'll be even more disturbing than watching 5 hyper-light energy beams obliterate a fictional planetary system.