by Pam Martens and Russ Martens, Wall St On Parade:
Yesterday, Wall Street mega bank, JPMorgan Chase, was the biggest percentage decliner in the Dow Jones Industrial Average, losing 2.79 percent. Goldman Sachs, another Dow stock, was third in line after Caterpillar, losing 2.56 percent. But that performance was absolutely mild compared to how other global bank stocks that aren’t in the Dow performed.
Morgan Stanley lost 3.55 percent; Citigroup shed 3.30 percent; while Deutsche Bank, a German bank heavily interconnected with Wall Street banks, that trades on the New York Stock Exchange, touched $13.34 intraday – its lowest share price in more than 30 years. Deutsche Bank closed the day at $13.40, down 3.67 percent. A U.S. unit of Deutsche Bank, which is designated a global systemically important bank (G-SIB), recently failed its stress test according to the Federal Reserve.
Wall Street’s global banks have now resumed a selloff that was setting off risk alarms in February. Back then, banks were tanking as crude oil sold off and worries of banks’ bad debts in the oil sector weighed on investor confidence. Lately, banks are tanking along with the pound, the U.K. currency, which is also setting 30-year lows against the U.S. dollar.
What has become a continuing concern among asset managers after the Brexit vote is how U.K. banks and businesses are going to be able to pay back the almost $1 trillion they owe to U.S. banks for loans, derivatives, and guarantees. As the pound continues to tumble against the U.S.