Thursday, December 5, 2013

Some morning reading

Here's some stuff for Thursday morning

Bespoke - red start to December. I like these guys and would like to subscribe to them again, because of commentary like this:
Investors have been selling the sectors that are up the most in 2013 over the last three days. Below is a scatter chart comparing month-to-date (December) and year-to-date performance numbers for the ten S&P 500 sectors. As you can clearly see, there is a trend of underperformance so far in December for 2013's best performing sectors, while 2013's laggards have held up relatively well to start the month. Typical profit-taking within a long-term uptrend so far. Let's see how long this continues.

Pragmatic Capitalism - what can we learn from previous +25% years? Answer - nothing. This year is not the same as some other year. Moving right along....

Reformed Borker (Bork Bork Bork!) - forward PE per sector. He notes that banks are the most hated of the US sectors right now:
The banks are expected to be growing their earnings by 11.5% in 2014 according to the consensus, that’s faster than the S&P 500′s expected earnings growth rate of 10.8% and a better pace than what’s expected for five other sectors (Industrials, tech, Staples, Healthcare and Utilities). In addition, many of the large bank stocks haven’t even come close to recovering in share price from 2008 (the XLF is still down 45%) while they have done a ton of work repairing their balance sheets and digging deep for operational efficiencies.

In addition, the banks will be the beneficiary of a steepening yield curve if and when rates creep up in the coming year. They make a ton of money as that process happens, margins expand meaningfully.

And yet – we’re rewarding that set-up with the lowest multiple in the markets, lower than what we’re giving the utilities for god’s sake.

That’s quite a disconnect.
This is surprising to me, since regional banks (KRE) are up 100% over the last 2 years, while XLF is close behind. This compares to 60% over the same time for SPY. Is Josh calling for banks to continue outperforming the broad market?

iBankCoin - Japan chart is weak. He thinks Japan might break down from a toppy wedge, using Toyota as a forward predictor. I'd tend to assume instead that Toyota is doing a false breakdown, since they're an exporter who'll profit from a weak yen and worldwide car sales are expected to explode upward. Then again, maybe the Japan trade was too popular and it needs to fall back for a while.

No comments:

Post a Comment