The Madometer is putting out a contrarian bank sell signal:
…Remember that most of the arguments against holding the banks weren’t necessarily attached to any intrinsic worries over earnings. In fact the key case against them was that that the yield play had simply gone too far — that the banks were just too expensive.
…in an ultra-low rate world, investors looking for income are prepared to pay a premium for blue-chip stocks that pay a stable dividend that have a demonstrated history of growing that dividend with strong underlying earnings. That’s Aussie banks. Indeed, according to IRESS, the banks have only ever cut their dividends once. That was during the GFC. So unless you’re expecting another GFC, there’s nothing much to be concerned about.
