The first shot in the global war on cash was just fired, by none other than the ECB, which moments ago Handelsblatt reported...
ECB wants to stop issuing 500 Euro bills - our exclusive https://t.co/LLe2qyhBjK
— Daniel Schäfer (@schaeferdaniel) February 15, 2016
After starting out strongly this morning, with DB stock trading just shy of $17/share, European banks have seen some weakness in the past hour following a report from Reuters, in which sources were cited as saying that there is "firm support for a deposit rate cut within the European Central Bank's Governing Council." While a year ago this would have sent European stocks soaring, this is no longer the case as explained by none other than Deutsche Bank last weekend:
Having been at the forefront of the recent collapse in core European bank stock prices, Deutsche Bank has - as we first reported last weekend - been 'crying uncle' but not in a way most would expect: instead of begging for more central bank easing, DB told the ECB (and BOJ) to stop easing as negative rates and more excess liquidity, are crushing it. This is why central banks are trapped, because they are damned if they don't ease any more with the global economy on the edge of recession, and damned if they ease further, pushing bank default risk even higher.
While algos patiently await the only thing that matters for US stocks today which is Janet Yellen's testimony before Congress. expected to be released at 8:30 am (and previewed here), the rest of the world this morning is a hot mess of schizophrenic highs and lows.
Submitted by Pater Tenebrarum via Acting-Man.com,
A Curious Collapse