Stocks continue to pull back in the face of turmoil in Europe. The Dow closed the day off 57 points to 17,674 on heavy volume.
Retail sales in the US continue to creep higher. The Commerce Department reported a 0.5% bump in retail sales for the month of May which was higher than the 0.3% expected by the gurus. Auto sales were strong as was e-commerce sales led by Amazon. E-commerce was up over a point in May and is 12% higher than a year ago versus a 5.8% drop for department store sales. Building supply chains like Home depot also reported lower sales. Feed lots posted higher sales thanks to robust sales of baby chickens. It seems Rhode Island Reds were on the urban farmers must have list.
Bank of America’s most recent global fund survey revealed that cash levels in portfolios are at 5.7% which is a level consistent with the economy being in a recession. Equity allocations are at a 4 year low and commodity allocations (gold) are at a 12 month high. B of A (or is it A of B?) thinks the high cash levels will provide a downside cushion for markets plus upside fuel once the Brexit issue is settled. The survey found that two thirds of portfolio managers think Britain will stay in the EU. Overall the survey shows that investors are in a fairly defensive position right now.
The Greystone “Deutsche Bank indicator” or DBI continues to signal trouble for the European Union and the Brexit vote. Shares of DB hit an all-time low today as institutional selling continues. Shares had been holding above support but today traded below the $15 level and closed at $14.74 per share. Way back in 2007 when DB was writing home loans like hot cakes in the US the stock got as high as $158 per share. Deutsche Bank wrote many loans in the Bend, OR area and took a bath on them during the housing collapse. Now they are holding questionable paper from Greece, Italy and other troubled countries.