This mispricing is one for the ages. As Australia heads for inflation blowoff on the back of shocking political mismanagement around energy, forcing the RBA to hike rates higher than the underlying economic structure can cope with, house prices are crashing with much worse ahead.
In the firing line of this is Aussie banks who will be forced to write down assets, write up loan losses, cut profits and dividends in the year ahead.
Yet, the big five are trading like none of this is coming. All are far above previous cyclical lows for multiples with CBA outrageous:
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For example, CBA is NTM of 18.3x when its previous cyclical lows are half of that.
This is also fantastically inconsistent with global bank pricing:
This despite Australia having the worst underlying macro imbalance for banks in household debt and the swiftest sensitivity to interest rate tightening.
Either the RBA is about to stop hiking or Australian bank share prices are gunna crash.