Tuesday, October 4, 2016

Deutsche Bank: the canary in a coal mine?

(4 October 2016) Is Deutsche Bank the canary in the coal mine? Frightened investors are pondering this question as the venerable German bank is looking more fragile these days as its share price plumbed historic new lows last week.  Deutsche Bank profits have been squeezed by the ECB's misadventure into negative interest rates as well as suffering huge losses through its misguided derivatives trading.  The recent $14 Billion fine by the US Department of Justice for fraudulent practices has only compounded matters as analysts assess the probability of Deutsche Bank collapse.   A bank failure of this magnitude could start a chain reaction not unlike the Bear Stearns bankruptcy in March 2008 or worse, Lehman Brothers in September of that year.  It was the contagion effect from the Lehman Bros. bankruptcy which led to biggest financial crisis since the Great Depression.

No matter how difficult things may get for the over-leveraged and under-capitalized Deutsche Bank, some observers are counting on a bailout from the German government to avoid any worst-case Lehman-type scenarios.  And yet, the Merkel government is apparently loathe to throw money at the problem since it has taken a hard line against similar bailouts in other EU countries such as Italy.  Therefore, there remains significant risk that Deutsche Bank share price could fall further before any last-ditch rescue could even be attempted.  It is important for non-European readers to recognize that if Deutsche Bank were to go under the financial impact would be felt globally.  It definitely has the potential to cause significant losses in stock markets around the world if it is allowed to fail.

In attempting any analysis in financial astrology, the most important dates are those of the first trade of the security.  Deutsche Bank was founded in Berlin in January of 1870 and was first publicly traded on 12 May of that year.  While I could not find a time of the first trade, there are still some telling alignments using the approximate noon chart.  Prevailing trends can be seen through a comparison of the positions of the current planets (or transits) with the position of the planets at the time of its first trade.  We can see that the both Mercury and Mars are coming under serious affliction by malefics over the next month.   These are afflicted now, but there is a danger the affliction with intensify as the aspects become closer to exact. 

Mercury, the planet of commerce, sits at 21 Taurus.  Transiting Saturn will exactly oppose it in late October and early November.  Faster-moving Venus will join the Saturn-Mercury alignment on 30 October and could bring major negative developments.  Such Saturn-Mercury aspects often coincide with times of frustration, restriction and disappointment.  Transiting Rahu will also aspect the natal Mars (16 Aries) in early November.  Rahu-Mars aspects often describe periods of tumult and uncertainty and are usually not compatible with desirable outcomes.

A secondary source of information is the Deutsche Bank first trade chart when it was listed on the New York Stock Exchange on 3 October 2001. Amazingly, we can see a similar pattern of affliction peaking in late October and early November.  Again, that Venus-Saturn conjunction at 20 degrees of sidereal Scorpio will activate key natal planets.  The natal chart has a powerful and quite negative t-square alignment of Venus (21 Leo), Saturn (21 Taurus) and Pluto (19 Scorpio).  This chart offers confirmatory evidence that Deutsche Bank will come under more serious stress in late October when the Saturn transit is closest.  The NYSE chart also hints that we could get an early warning of future problems when the Mars-Pluto conjunction conjoins the natal Mars (20 Sagittarius) on or around 17 October.

These two charts suggest that the Deutsche Bank saga is not over yet.  It seems that we could see more fallout from either the DOJ fine (no reduced settlement?) or some other source of instability in the weeks to come.  While I think it is quite unlikely that Deutsche Bank will go bankrupt this year, its precarious position could well produce some more sleepless nights for Ms. Merkel in the Bundestag.

Weekly Financial Forecast

Meanwhile, US stocks were fairly neutral across last week and into this week.  Without an imminent rate hike from the Fed, investors seem fairly satisfied with the status quo.  The Dow finished last week at 18,300 and is down marginally so far this week.  Indian stocks fared somewhat worse, however, as tensions with Pakistan in Kashmir threatened to boil over.  The Sensex lost 2% last week but has regained some of that loss thus far this week as it is again trading above 28,000.   This fairly middling result is not surprising as I noted some mixed influences in play in last week's market forecast.

This week seems similarly mixed.  Some upside seems likely as Mercury approaches its conjunction with Jupiter (exact next Tuesday the 11th).  While this two-planet alignment is probably not strong enough to push stocks significantly higher by itself, it should at least translate into some positive trading days for the rest of this week and into next week.  As I have mentioned previously, however, October as a whole looks more difficult given the Saturn alignment with Neptune and Rahu (North Lunar Node).

For more details and analysis on market trends for this week, this month and this year, please check out my weekly MVA Investor Newsletter.  The newsletter is published every Saturday and includes extended discussion of US and Indian stock markets, as well as gold, oil and major currencies.