It’s Time To Buy Japanese Banks

“My lesson from Soros is to start every meeting at my boutique by convincing everyone that we are a bunch of idiots who know nothing and are mistake-prone, but happen to be endowed with the rare privilege of knowing it.” ~ Nassim Taleb

In this week’s Dirty Dozen [CHART PACK] we go through the latest BofA Fund Manager Survey, find that investor sentiment is “unambiguously bullish”, look at the fiscal impulse and the breakdown of a potential infrastructure package, then dive into yields, yield curves, NIM, and end with a bull pitch for a Japanese bank, plus more…

Let’s dive in.

***click charts to enlarge***

1. “Investor sentiment is unambiguously bullish…” seems to be the main takeaway from the latest BofA Global Fund Manager Survey. Other highlights below

2. I grouped together my favorite charts from the report. Investors are beginning to crowd onto one side of the boat. That side being the bullish reflationary, short rates and USD, long commodities and value side.

3. There are good reasons to be bullish here. We have a clear paradigm shift at the Fed and a new approach to fiscal from our Game Masters. But, we could be nearing the point where the market has discounted all the good news and some… JPM writes “The whatever-it-takes mindset that lifted markets in 2020 now risks becoming the too-much-of-a-good thing that creates recurring drawdowns in 2021-22 via rethinks on inflation and Fed policy.”

4. The risk is that ample fiscal and a booming recovery get the Fed to back away from its pro-cyclical policy stance and the bond market responds with violent rate increases, a la 2013 taper tantrum.

I don’t see that as likely but the market may need more convincing. Either Way, we do need more spending on infrastructure so hopefully “infrastructure week” bears some fruit this time (charts via MS).

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Disclaimer: All statements are solely opinions and are for educational purposes only.

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