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Ahead of Wall Street

Friday, September 30, 2016

Oil prices still matter. Americans may be disgruntled about the level of work they currently have, but at least they’re working. Election 2016 is no slam-dunk for Hillary Clinton. These are the things we’ve learned during calendar Q3, which ends today.

Personal Income and Spending was at 0.2%, exactly as expected in August. Consumer spending was unched in the month. Wages were up an additional 0.1% from the notable +0.5% in July, The Savings Rate rose a notch from 5.6% to 5.7%. All of this is more or less in-line with expectations.

Deutsche Bank (DB - Analyst Report) is making headlines again, hitting record lows around $10.50 per share in the pre-market after a group of hedge funds have reduced exposure to the German bank major. In fact, if there is a “too big to fail” bank in Germany, it would be Deutsche Bank.

The U.S. Justice Department has levied a $14 billion fine on Deutsche Bank, which is now in question that the bank can pay. The fine relates back to the mortgage crisis in the U.S. that caused the Great Recession 8 years ago, and has led speculators to relate the fortunes of DB to those of Lehman Brothers, the U.S. investing institution that went belly-up one month prior to the bottom falling out of the U.S. economy.

Germany has felt the stress of bearing the burdens of the Eurozone, and especially the euro monetary unit. That Deutsche Bank has now been hit with these major fines, questions are rife that the nearly 150-year-old institution may not survive this latest episode.

But if Wells Fargo (WFC - Analyst Report) can survive its fraud scandal, DB should be able to weather this storm. Because Germany stands at the apex of Eurozone cohesiveness, that’s what all this worry is about.

That said, after a 1% sell-off in American indices yesterday, we’re seeing modest positives in the S&P 500 (+3), the Dow (+30) and the Nasdaq (+2). So what have we learned in Q3? Apparently not a ton.

Mark Vickery
Senior Editor