Nick Nelson in conversation with CNBC
- Absolute Strategy
- Nov 25, 2024
- 1 min read
Updated: Dec 3, 2024
Banking sector ‘doing a bit better than people believe,’ strategist says.
Nick Nelson, Head of Research at Absolute Strategy, discusses the outlook in the European banking sector including potential mergers.
ASR feels Investors may be too cautious on Banks. Central Banks are cutting rates, which is seen as a threat to Banks’ Net Interest Margins.
But Banks are doing a good job of protecting their profitability. Global Banks are seeing more earnings upgrades than the broader market. In Q3, Financials were one of the key drivers for earnings growth, both in the US and Europe.
Additionally, we believe we are most likely past the peak of high yield default and chapter 11 bankruptcies in the US.
In Europe, we are likely to see further Banks consolidation in-market, and at some point, cross-border too.
In our Global Equity Strategy, Banks are our favoured sector and our Major Overweight.
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Regarding high yield defaults in the Stickman US, what indicators suggest that the peak is behind us, and how confident is ASR in this outlook?