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July 10, 2020, 9:20 a.m. EDT

Why one strategist is wondering whether the trade of a lifetime is on its last legs

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By Steve Goldstein, MarketWatch

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The market

After a 361-point drop for the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -1.92%  on Thursday, stock futures /zigman2/quotes/209948968/delayed ES00 -0.37%   /zigman2/quotes/210407078/delayed YM00 -0.25%  inched into positive territory.

The yield on the 10-year Treasury /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y -1.33%  continued to fall after reaching the lowest level since April 24. Gold futures /zigman2/quotes/210034565/delayed GC00 -0.33%  rose.

The Shanghai Composite /zigman2/quotes/210598127/delayed CN:SHCOMP -1.72%  closed 2% lower on Friday, though the index still rose 9% this week.

The chart

The way banks are supposed to work, is that depositors put their savings into the institutions and then the money is lent out elsewhere. This chart shows that while bank deposits have climbed by $2.2 trillion since the end of February, loans have only rose by a half-trillion dollars. No surprise, then, that bank stocks are trading in line with interest rates. “If and when Fed/ECB/BoJ can ever raise interest rates global banks will become the instant leadership,” says Bank of America strategist Michael Hartnett.

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US : Dow Jones Global
-525.05 -1.92%
Volume: 463.20M
Sept. 23, 2020 5:08p
US : U.S.: CME
$ 3,219.25
-11.95 -0.37%
Volume: 309,994
Sept. 24, 2020 7:16a
$ 26,618.00
-67.00 -0.25%
Volume: 58,471
Sept. 24, 2020 7:16a
add Add to watchlist BX:TMUBMUSD10Y
BX : Tullett Prebon
-0.0090 -1.33%
Volume: 0.00
Sept. 24, 2020 8:25a
US : U.S.: Nymex
$ 1,862.30
-6.10 -0.33%
Volume: 135,124
Sept. 24, 2020 8:16a
CN : China: Shanghai
-56.53 -1.72%
Volume: 20.67B
Sept. 24, 2020 3:01p

Steve Goldstein is MarketWatch markets editor for Europe. Follow him on Twitter: @MKTWgoldstein.

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