Toronto Dominion Bank, better knows as TD is Canada’s largest retail bank. Last week allegations arouse that bank tellers sold products and added fees to customer accounts that were against the law because they were under pressure from ever aggressive sales targets. Aptly coined as TD’s Wells Fargo moment by John Aiken of Barclays, this post will serve as a comparison between the two scandals and for possible opportunities for those who live for the excitement of catching falling knives.
The ongoing portfolio readjustment continues following a surprise Trump victory, one of the casualties of the latest market turbulence has been the yellow metal, falling over $100 US from a high of $1338.3 to the $1220 range. Periods of volatility like these provide an excellent opportunity to add position in anything that has exposure to precious metals, as the reasons for owning gold have increased significantly.
During the early 2016 market sell off, few expected the sharp rebound that occurred shortly after, with high yield bonds rising close to 15%. With the election of Donald Trump heralding higher yields and lower crude prices, a lack of clear policy blueprints from both DJT and OPEC are leading to a junk bond sell off.
As detailed in a Bloomberg article last week, a regulatory overhaul due to take effect October 14th, targeting money-fund industry has lead to a sharp increase in LIBOR as banks raise the cost of funding. The summer trading period was marked by surprisingly low volatility in the markets and strong cross asset correlation; this could be the explanation.