Your Tuesday Market Blip 3/12/19

Your Tuesday Market Blip 3/12/19

More mixed action in the markets was the order of the day as the Dow was lower by 96 points at 25,554 while the NASDAQ was up 33 points at 7,591. Trading volume was lower for the Dow and higher for the NASDAQ signaling that institutional investors are holding the Dow while buying the NASDAQ. Both IBD and BTS indicators are bullish.

Countries around the world are closing airspace to the Boeing 737 Max 8 until “what ails it” is found and fixed. France, Ireland, Germany and Brexitland (aka Britain) have moved to ground the popular airplane while a team from the US has landed in Ethiopia for the investigation. Shares of Boeing are down further as the situation unfolds and the selloff is spreading to shares of companies that supply Boeing like Hexcel and Spirit Aerosystems. Some US politicians are also urging the FAA to consider grounding 737 Max 8 jets until more information is available.

The German Finance minister confirmed rumors that merger talks between Deutsche Bank and Commerzbank are underway. These are the two largest banks in Germany, and both are struggling as the German economy limps along and Brexit lingers large in a never-ending cycle of debate with politicians in the UK playing “kick the can down the road”. Market guru Chris Wyllie at Connor Broadley Wealth Management said a merger would be like “two drunks propping each other up at the bar on a Friday night” and that the deal could actually create a higher level of systemic risk in the European banking system. Deutsche Bank, with massive exposure to derivatives, has financed loads of trade deals between Germany and China and also sits in a key financial position because it owns equity positions in many top German companies and sits on the boards of these companies to boot. Shares have fallen from a post 2008 high of $80 per share to recently trading under $9 or as they say in the US Army “niner”.

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