Paul Moore, Chief Investment Officer of PM Capital, says domestic banks have likely seen the structural peak in valuations and a gradual readjustment is likely to occur in the coming years. “The economic cycle in Australia right now is pretty stagnant and so their earnings profile is going to struggle a bit. Typically what happens when you go to a peak valuation is that something happens, you get a bit of an adjustment followed by a slow normalization back to a more realistic valuations.” Moore believes that the earnings outlook for offshore banks makes them a preferred exposure over the next few years, however, he says dividends will likely limit the downside for domestic banks. In the full interview Moore shares his views on the prospect of raising U.S. interest rates and the scenario that he believes could lead to the Fed getting behind the curve. Watch the full interview: