Stocks were slightly lower today with the Dow falling 27 points to 25,338. Trading volume was light. World leaders are winging their way to Buenos Aires for tomorrow’s G20 summit.
Dan the Man and the boys over at BTS reported that when volatility returned to the markets over the Thanksgiving Day period, support levels for high yield bonds held firm even in the face of a massive drop in oil prices coupled with the pullback in stocks. BTS noted that support levels in the high yield sector, which is highly correlated to the equity markets, could be the result of strong corporate balance sheets, a very low default rate and the low possibility of a recession occurring over a medium-term time horizon. BTS says these data points are a positive signal for the markets although no guarantees are implied as things can change.
In the words of Detlef Schrempf……. Achtung baby! Last night the offices of Deutsche Bank were raided by gubment officials. The raid was related to the 2016 Panama Papers scandal and possible money laundering. I wonder if they used Bosch washing machines. Shares of Deutsche Bank fell about 4% on the news and are now lower than a Grand Canyon lizard. The gurus are worried that the fall of Deutsche Bank, which is interconnected with German industrial giants and the central bank, could be a reflection of poor debt quality and derivative issues across the eurozone. Meanwhile, large US banks are using this weakness to rapidly gain market share in Europe. Citigroup, JP Morgan, Bank of America etc. are using their rock-solid balance sheets to increase their trading, lending and banking activity in the very heart of the European economic zone. By way of comparison, Deutsche Bank and Citigroup each generate about $50 billion in revenue, yet Citi has equity value of $158 billion while DB has equity value of only $19 billion. Bank of America has short term liquidity in excess of $500 billion and JP Morgan has Jamie Dimon as CEO not to be confused with Neil Diamond or Matt Damon.
Cyber Monday set a record as the largest online shopping day of all time in the U.S., with shoppers spending a whopping $7.9 billion on merchandise. That’s a near 20% increase compared to last year’s $6.6 billion in sales. This data is in a new report released by Adobe Analytics, which tracks 80 of the top 100 internet retailers in the U.S., including Walmart and Amazon.