Sectors

The odds of a “Minsky Moment” for the Chinese banking sector are low. They, however, will continue facing cyclical and structural headwinds, including a dismal asset quality and profit outlook. Bank stocks remain a value trap. Absolute-return investors should sell rebounds in Chinese bank stocks.

We rank the US spread sectors in terms of risk versus reward.

Reported earnings for Q4-2023 were rather underwhelming and prone to issues that we have identified over the past few months: Growth is concentrated in just a few sectors and companies, while the profitability of a broad swath of the equity market is under pressure from disinflation and sticky wages. Consumers are still spending, but less enthusiastically than before, while a switch from spending on services to spending on goods is in its very early innings. Downgrade Consumer Staples to neutral.

Signs that we are entering the last phase of a bubble are building up. Can European equities benefit from a new tech mania?

Our Valentine’s Day report is about two love stories: the infatuation with US tech and China’s infatuation with housing. We describe how these love stories will end, and why Europe could be the winner.