Central banks greased Brexit with $1T ‘liquidity’

So the numbers are out for Brexit. It will go a long way to explain why markets bounced so sharply after plunging on Friday and Monday.

The Bank of England provided its banks with more than $345B on Friday and Monday. The ECB put $399B to work for its large member banks including Deutsche Bank and the troubled Italian banking system.

The Fed’s numbers are not public yet but figure there was an additional few hundred billion in “liquidity” into the market, bring the total to almost a trillion dollars.

So there’s the foundation for the run up in equities on Tuesday and Wednesday. It was not investors flooding back after realizing Brexit was not the end of the world.

No the run up in stocks was all this additional “liquidity” looking for the best treatment.

While the stocks have moved higher this “liquidity” will dry up probably by the middle of the trading day Thursday as realization that Brexit has more questions than answers for the UK and EU.


Deutsche Bank failed its US stress test for the second year in a row.

As I wrote in my Banker Suicide story, the seeds for the troubled bank were sown in 2013 with the bank colluding and committing fraud in the marketplace. The banks leadership always took the easy way to create trading profits through manipulating markets and pricing instead of putting in the footwork of analytical research.

Each week the bank is dinged by regulators for a few million here in fines, which has totaled over a hundred billion dollars over the last year or so.

The bank will probably be the institution that lights the fuse for the next banking crisis explosion in the near future, in my humble opinion.

 

Advertisements

One thought on “Central banks greased Brexit with $1T ‘liquidity’

  1. Pingback: Ay, my precious (metal) | GRAY'S ECONOMY

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s