Sometimes you just have to laugh at the equity market. The true village idiot of investing.
As global equity lurches towards pricing recession, with banks leading the charge, Aussie banks are decoupling because, you know, it is different this time!
Aussie banks typically follow European and on that front being an energy exporter versus an importer is going to help. But is it going to matter this much during a global recession?
None of the banks are near typical end-of-cycle shock multiples (except perhaps ANZ):
Yet their funding risk is rapidly approaching said shock:
I can accept that Australia will do OK in a global recession given the low AUD and energy flows to the budget, as limited by corruption as they are.
But we are not going to dodge it and the banks will be forced to make provisions as house prices fall along with the jobs market in due course.
On the verge of a global economic shock, with a property market already collapsing, a rerating of the most expensive banks in the world by far is not rational!
