Commonwealth Bank bubble continues to burst

The Commonwealth Bank bubble is continuing to burst today, hitting new intraday lows today:

The chart is quickly forming a bearish descending triangle as well, so if we see a decisive break of the high $97 support area then deeper downside opens up.

And with good reason. The valuation remains extreme, completely out of whack with both its own history and with its competitive set:

Not to mention CBA’s darkening outlook as lockdowns trigger NPL risk and slowed mortgage issuance, with macroprudential tightening looming shortly afterwards.

The smashing of the global yield curve is also killing banks worldwide as earnings hopes fall away, though the US is holding up better than Europe, which is usually the case (we tend to follow the latter).

The only justification for the extreme valuation of CBA was its move into the BNPL sector with Klarna but that sector is also getting crushed now on the news that Apple is going to compete with it:

The CBA bubble made no sense before. Not it looks quivering and vulnerable.

Houses and Holes
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