Bank stocks have bashed the “johnny-come-lately” hedge fund barbarians that stormed the gates last week. The catalyst has been fact triumphing over the hedge funds’ book-spruiking fiction.
…Despite fear-mongering around the “capex cliff” and an “income recession”, Australia’s real economic growth has been almost double that of G7 countries over the last year.
From the AFR comes an unholy alliance between Chris Joy and The Kouk:
“The pervasive mining-led pessimism was massively over-blown with short-sellers like Bronte Capital and dovish analysts focusing exclusively on the negatives, which is why they have been caught with their pants down,” says Stephen Koukoulas, managing director of Market Economics. Koukoulas forecasts that the next move in interest rates is up.
As hedge funds scrambled to “cover” their short sales by buying back the underlying shares, the major banks’ stocks surged as much as 4 per cent to 5 per cent on Wednesday.
Likewise, credit default swap (CDS) spreads – which exploded last week in GFC-style moves on the back of the hedgies’ impressive media campaign – have now tightened to the point where they have reversed out half of the original widening.
One cannot blame the gents for making hay, the moment has been a long time coming.
Advertisement
