Daily Commentary

MarketMinder’s View: Since this article mentions some specific investments, we remind readers MarketMinder doesn’t make individual security recommendations. They are incidental to the broader theme we wish to discuss. Though November may have been rocky, especially for some high-flying stocks, “operating earnings at S&P 500 companies should hit an all-time high of $618 billion for the third quarter of 2025, estimates Howard Silverblatt of S&P Dow Jones Indices. That’s up a remarkable 14% over the second quarter, itself a record. And profit margins, he estimates, will set another record, exceeding 13.6%.” Yes, these data are backward-looking, but they do confirm Corporate America was on solid ground last quarter—and it is always worth keeping the fundamentals in mind when short-term negative volatility flares.

MarketMinder’s View: Eurozone officials are currently embroiled in a review of EU banking regulations surrounding capital requirements, aiming to simplify a morass they say makes their institutions less competitive globally with American, British and other banks outside their jurisdiction. One key issue under debate: How conflicting rules complicate capital requirements, to the point that even if an institution is judged to hold excess high-quality capital, it may not be able to boost dividends, lend more aggressively, etc., because that capital is also tabbed for another, conflicting capital requirement. Germany’s central bank, the Bundesbank, is pitching a controversial “fix” to this: Simplifying all capital rules into two sleeves, one for “going concerns” and one for “gone concerns”—to be used in winding down failed institutions. The issue? “The first bunch would only include capital that is easiest to absorb losses with, consisting largely of shareholders equity and retained earnings. The second bunch would include [Additional Tier 1] AT1 bonds along with other forms of subordinated debt such as Tier 2 instruments, which can have maturity dates. That has raised concerns that banks which rely on AT1 debt could face capital shortfalls to meet their so-called going concern requirements. But even countries where banks don’t use a lot of AT1 debt are pushing back, because the German proposal could end up forcing them to raise it to meet the requirements of the second pillar.” This would effectively change the definition of AT1 debt under regulatory rules, which has been a contentious point for many years in the bloc, highlighted when UBS’s acquisition of Credit Suisse in 2023 wiped AT1 bondholders before stockholders. This re-regulation is far from a done deal and may never happen. But it is worth monitoring the debate to see if an effort to boost eurozone competitiveness carries unintended consequences.

MarketMinder’s View: Bitcoin is rallying somewhat mid-morning Tuesday, but it isn’t offsetting Monday’s drop to bring the cryptocurrency down -32% from early October all-time highs. This piece pins the blame for that drop largely on the Bank of Japan, which seems to be hinting at a potential short-term policy rate hike soon. That, the piece argues, threatens traders who borrowed cheaply in Japan and plowed the money into bitcoin … and US stocks. It argues bitcoin’s November drop—which temporarily coincided with stocks—foreshadows broader trouble for US stocks. But any look at bitcoin’s history shows it isn’t some kind of “risk asset harbinger” or canary in the coal mine for equity market trouble ahead. Bitcoin is a speculation, pure and simple, in which people try to game one another’s feelings. It has no fundamentals like earnings, sales or dividends—no adaptability and no link to human creativity. Is the Bank of Japan’s potential tightening to blame for its weakness? Maybe, but we doubt it. For one, the carry trade is usually used in bond trading, given it is about borrowing cheaply and earning a higher yield elsewhere—so bond yield gaps matter most, especially because crypto has no yield (despite the conflation of that term with return in this piece). And, when you consider a rate hike in Japan would be from 0.5% currently, the policy gap rate would still be fairly significant post-hike, as America’s fed-funds target range is presently 3.75% - 4.00%. Even on longer-term bonds, the gap is wide: 10-year Japanese government bonds yield 1.86% while US are just over 4.00%. (All figures from FactSet.) This seems like searching for meaning in bouncy bitcoin, then twisting that quest into a tortured narrative to stocks.