The Fed cuts interest rates. Deeply oversold markets rally in Pavlovian fashion. The ECB cuts rates. An ocean of cash on the sideline rushes to large cap, liquid stocks with inexpensive valuations and low relative earnings risks. The bullish case for financials becomes quite compelling.
Relative valuations are low.
Interest rates are falling worldwide. Note that the high yield bond new issue and corporate debt market has finally reopened. Markets humble the best laid plans of mice and men but it sure does feel as if a powerful bull run in financial stocks is on the horizon. The opinions expressed by the writer are his own and not endorsed by Press Release Network.