What a week it has been here in the U.K. The turmoil at Deutsche Bank was set to remain the topic du jour. But Prime Minister May's promise to trigger Article 50, and the remarkable party conference in Birmingham, took centre stage. Another Bashing Betty session ensued, which reached its zenith overnight Thursday as GBPUSD was pushed to 1.14 on some platforms before recovering to about 1.22-to-1.24. A fat finger, corporate hedges hitting "stops", or a systemic lack of liquidity; take your pick in terms of rationalisation. I think the whole thing is absolutely ridiculous, given that this is a G4 currency. The rhetoric by the new Tory doyens was startling, and as I type this, the back-pedalling has already started. In any case, I have a podcast about the whole thing, which you can listen to in this post. Elsewhere, the carnage in sterling is a nuisance to me. I am a GBP earner, and my portfolio is held in GBP. In short, foreign assets now look dreadfully expensive unless you start trawling for the turds of the turds.
Read MoreIt is a public holiday in Germany on Monday and that is probably a good thing. But that won't prevent the hot takes on Deutsche Bank from piling up faster than Donald Trump's tax liabilities. I have a lot of friends on the buy side as well as strategists at major sell side shops, and the debate between us has been lively in recent days. But we are no closer to a solution and neither, it appears, is the market given the ridiculous price action on Friday. The grapevine has it that the DOJ will lowball the fine, which should allow DB to stagger along in accordance with its original 2020 plan. But the results on October 27th will be a key event in either case. A bad downside surprise could bring coupon payments on the COCOs in danger, at least as far as I understand. I concede, though, that I have no strong take on whether this is indeed likely to happen.
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