FOR MONDAY: (10/3) Seemingly confirming the rumor, Agence France Press reports that Deutsche Bank is nearing a $5.4 billion settlement with the US Justice Department. This has catalyzed another leg higher in Deutsche Bank stock and lifted the whole market as it would appear that unconfirmed sources have ‘fixed’ the world’s most systemically dangerous bank (despite the fact that short-dated counterparty risk is soaring). Giving DB some breathing room is the fact that Monday is a banking holiday in Germany and that will leave traders in limbo.

The first of the month is often an up day for the stock market and cycles are positive so the market likely to accelerate and throw the bears under the bus. Given how rumors and problems so often erupt with these matters and given that cycles are messy next week for financials, we doubt we will get a clear-cut resolution. Moreover, we then have to deal with choppy trading ahead of the Oct. 7 employment. No rest for the wicked. Hard to make recommendations here on Friday and the first day of the new month tends to be a big-range volatile day anyway so have to see what unfolds.

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