Diversified Financial Services

Consumer products stocks are likely to move to an even larger valuation premium before the cyclical outperformance phase ends.

Expectations of a prolonged period of abundant liquidity and rising confidence that recession is not imminent have created the conditions for a potential blow-off phase. This week we are fine-tuning our portfolio for peak performance.

The previous Insight showed that the capital markets group required a reversal in currently bearish relative forward earnings momentum in order to break out of its funk. Trading profits are volatile, and markets typically only reward the group with a higher multiple when capital formation is on…

Several large capital markets firms have produced better-than-expected profits in the latest quarter, driven largely by a flurry of fixed income trading following the Brexit vote, subsequently triggering a short covering rally in related shares. Is the bear market in capital markets stocks…

The financials sector led the recent pullback in the broad market. Rather than view this as a buying opportunity, it is symptomatic of the relentless plunge in global bond yields and an increasing scarcity of financial sector pricing power. For instance, the asset management & custody bank (…

The sinking global credit impulse warns that reflation has not overwhelmed deflationary forces. Financials will continue to suffer, while utilities and retail drug stores will benefit.

Risk assets will take their cues more from the dollar than the Fed if the euro rises above its 16-month range against the dollar. Retain exposure to energy equities and gold.

Investors have embraced renewed Fed hawkishness as a vote of economic confidence and confirmation of analysts' rosy earnings forecasts, but the bounce in financials looks unsustainable, outside of REITs. Hang on to gold shares.

The previous Insight showed that the financial sector remained on its heels as a consequence of ongoing global deflationary backlash. This backdrop is particularly difficult for asset managers & custody banks (AMCB). This index is a high beta play on economic and financial market confidence…

The previous Insight showed that capital formation has hit a brick wall as a consequence of ebbing risk tolerance. That is robbing the corporate sector of much needed growth capital, and will reinforce the need for retrenchment. As a result, the outlook for capital market profitability is…