Bigger than the Superbowl? Deutsche Bank, oil and the U.S. presidential debate

In this week’s video update:

  • The first U.S. presidential debate drew more viewers than any Superbowl, but we believe market fundamentals are likely to matter more to markets right now
  • What the latest OPEC announcement signals for oil prices and oil producers around the world
  • The potential government rescue of Deutsche Bank and what that could mean for other European banks

On this week’s update, Director, Investment Practice Bindu Sutaria meets with Chief Investment Strategist Erik Ristuben to discuss the week’s market events and what is ahead for global markets.

Ristuben starts by noting that this week’s first U.S. presidential debate drew more viewers than any past Superbowl. But, as noted in a blog post earlier this week, he still believes that market fundamentals matter more for now, though the policy implications of either candidate remain unclear. Of course, the election could have an impact, but based on historical performance, it is unlikely.

Then Ristuben turns to the recently announced OPEC 2% cut in oil production (approximately 700,000 barrels a day), which helped drive West Texas Intermediate (WTI) Crude prices up about 7% since the announcement. In part, this may have happened because OPEC has realized that they are no longer the only incremental provider of oil. Thanks in large part to fracking technology, the U.S. and Canada are able to quickly increase production when needed now, as proven recently. The cut in OPEC production will help bring oil prices up.

Lastly, Ristuben turns to the current discussions and debates of Deutsche Bank. Would the potential government rescue of this bank signal similar packages for other banks in Europe? He notes that with the European Central Bank’s move to a negative interest rate, all European banks are suffering a loss in income, putting the banks under pressure. The market has been watching this situation for eight years and will need to continue to do so for the next few years.

Learn more about Russell Investments’ expectations for global markets in our next Global Market Outlook next quarterly update, being released in early October.

Join us next week for more on Deutsche Bank, European economic numbers, the latest U.S. payroll data and manufacturing survey results.