Morning Report Monday 12 January 2015
My simple answer is a boring no, but there is a lot of thought behind this conclusion, not just a coin toss. Firstly, I will consider the sector / market as a whole through the eyes of Commonwealth Bank (CBA), the sector outperformer, up 10.9% over the last 12 months. Some of the below factors caught my eye this morning and others have been in my sights for many weeks:
• The average daily move last week in the S&P500 was over 1.3%, compared to an average of 0.53% in 2014 – volatility = opportunity!• The volatility is increasing as the US bull market enters its 7th year up around 200%; a 10-15% pullback would not dent this performance – see chart 3.• European banks fell to 10-month lows on Friday and Canadian banks to a 7-month low.• CBA $86.04 is up 10.9% over the last 12 months, but the 7-month low is $73.57 and 12-month low $72.14.• The interest rate of Australian 10 year Bonds are at their lowest level ever!!
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