Do we chase banks for yield today? My simple answer is a boring no, but there is a lot of thought behind this conclusion, not just a coin toss

Nicholas Forsyth

Market Matters

Do we chase banks for yield today? My simple answer is a boring no, but there is a lot of thought behind this conclusion, not just a coin toss. Firstly, I will consider the sector / market as a whole through the eyes of Commonwealth Bank (CBA), the sector outperformer, up 10.9% over the last 12 months. Some of the below factors caught my eye this morning and others have been in my sights for many weeks: • The average daily move last week in the S&P500 was over 1.3%, compared to an average of 0.53% in 2014 - volatility = opportunity! • The volatility is increasing as the US bull market enters its 7th year up around 200%; a 10-15% pullback would not dent this performance - see chart 3. • European banks fell to 10-month lows on Friday and Canadian banks to a 7-month low. • CBA $86.04 is up 10.9% over the last 12 months, but the 7-month low is $73.57 and 12-month low $72.14. • The interest rate of Australian 10 year Bonds are at their lowest level ever!! See report below: (VIEW LINK)


Nicholas Forsyth
Director
Market Matters

Market Matters is an online investment and share trading advisory service designed for those that want to take their wealth further. We specialise in advice for active share market investors, including those new to the markets or those with a Self...

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