What a ludicrous country.
Its economy is a combination of a publicly supported housing bubble and commodity prices leveraged to an economy with a bursting housing bubble.
Yet nobody cares. Just buy banks and then buy ’em again:
As is so often the case with bubbles, rather than rationality returning to the core, the periphery rises to meet the madness.
CBA is approaching 24x NTM with virtually no growth prospects. Even grossed up, I can get a better yield in a CBA term deposit with zero risk:
Aussie banks are now the most expensive in the world by miles, simply by unvirtue of the economy having no technology, and therefore no growth prospects:
These are lunatic valuations.
What will burst the bubble? It’s a race between the building Chinese growth scare and RBA rate cuts, which is really the same thing.
There’s no heroism in making this call. It’s obvious.
Sell Aussie banks with both hands.
