Courtesy of Pam Martens
For years now, Wall Street On Parade has been pointing out to our readers that the Wall Street mega banks remain dangerously interconnected, despite the fact that those interconnections stopped banks from lending to one another in 2008; resulted in the largest government bailout of Wall Street in U.S. history; and ended up taking down the U.S. housing market and global economy.
Whenever there is a major selloff in the broader stock market, the Wall Street mega banks typically bleed far more than the major stock indices. Yesterday, however, something curious and potentially noteworthy happened. The Dow Jones Industrial Average lost 473.3 points or 1.79 percent and the following Wall Street banks traded in line with that decline: JPMorgan Chase actually lost a little less than the Dow with a decline of 1.63 percent. Bank of America and Goldman Sachs were in line with the broader market, registering declines of 1.81 and 1.84 percent, respectively. Morgan Stanley moved a little away from the herd with a loss of 2.10 percent.
But here’s where things got really interesting. Deutsche Bank, which has trouble coming from all directions (from money laundering investigations to Congressional subpoenas to curious loans to the President of the United States) lost 3.58 percent yesterday, leaving its share price just 20 pennies above its all time low. The stock closed at $7.82 – a decline of 93 percent from where its shares were trading in 2007. The bank’s proposed merger with Commerzbank fell through on April 25, leaving Deutsche Bank with ever dimming prospects.
The curious part is this: Citigroup traded yesterday like a clone of Deutsche Bank. Its shares lost 3.20 percent, far beyond the losses of its peers on Wall Street.
That’s a notable difference from how the Wall Street herd traded in 2016 versus Deutsche Bank. Here’s our report from September 27, 2016:
“Yesterday, Germany’s largest financial institution, Deutsche Bank, lost 7.06 percent by the close of trading on the New York Stock Exchange. That plunge in one of the most globally-interconnected banks dragged down the shares of every major Wall Street bank yesterday: Bank of America lost 2.77 percent; Morgan Stanley declined by 2.76 percent; Citigroup lost 2.67 percent; Goldman Sachs shed 2.21 percent; and JPMorgan Chase closed down 2.19 percent.”
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