Worries about Deutsche Bank (DB) have been simmering for a while, but they are hitting hard now on reports that hedge funds are cutting exposure to the banks and are reducing collateral on trades. It brings back memories of 2008-09 when these sorts of moves quickly spiraled out of control. There are still plenty of reassurances out there that this is not another Lehman or Bear Stearns, but you have to wonder how much things have really changed after seven years of financial engineering by the central banks.
I mentioned yesterday my inclination to "clear the decks" and move to more cash. The OPEC rally made my timing look a bit bad, but this market has been acting like it expected some drama to hit soon. So often those sorts of scares are scoffed at and quickly forgotten, but the reaction of this market is an indication that confidence levels are not very high.
I'm looking for the opportunity to buy some dips and have already added some TPI Composites (TPIC) . There are a number of biotechnology names on my shopping list, but I want to see if this DB news develops any further.
If this market closes near the lows of the day, there is going to be some major concern about the overnight action.
A lot of caution here is cheap insurance.