The US hedge-fund manager, Steve Eisman who is nowadays famous thanks to the dramatic and biographical comedy movie “The Big Short,” which was brought to the big screen in 2015 and exposed the causes of the financial crisis since 2007 through 2010, affirmed it is about to start a golden era for banks with respect to the stock market.
Nevertheless of the fact that at that time their bets were against the risky mortgage products that had been designed by some of the best banks in the world, and having practically declared that they would be a double-edged sword for the financial system, today Seizes a much less pessimistic position with respect to the banking sector. Eisman also said that in the next years there will be a good opportunity to start the investments.
It’s because of the triumph of Trump the golden year is coming?
Steve Eisman owes its predecessor to the recent victory of US president-elect, Donald Trump, with whom he says a difficulty will occur in some of the financial regulations; despite opponents of his plan insist on the new regulations could hinder the profitability of large lenders.
Eisman said Monday for CNBC in New York that over the next two years there will be more leverage, and that it will be a golden age to invest in financial stocks. Regarding their statements, it is almost impossible to question them because of the rise in some of the investment banking and securities groups, as is the case of Goldman Sachs, whose shares increased 31% after the result of the presidential election In favor of Trump. Also, some of the most important market indices such as the S & P 500 and the Nasdaq Composite COMP have also recorded better rebounds.
The sectors with “overweight”
Despite Eisman’s predictions, Charles Schwab Corporation’s chief strategist and investor, Liz Ann Sonders, spoke about CNBC that there are eight years of “underperformance” for bank stocks during their market, this means he is sure that there is still a fabric to cut in the financial sector, emphasizing that currently only two sectors that are “overweight” or that stand out with good looks to buy and invest, which are the finances and the technology.
However, the stock valuations of the banks remain modest in spite of their increase, reason why it is not necessary to sing victory yet. Its price-earnings relation evidences that finances are inexpensive compared to the stock market in general.
The financial forecast for 2017
Although the promises Donald Trump could largely benefit the banking sector, it would be necessary to see if he will be able to extend those earnings over the upcoming year. We could still face the situation that Trump could not meet his plan to reduce corporate taxes and reduce the burden on large lenders
Plus, it has been informed that there may be loan losses, especially in those for cars, due to the rapid increase in interest rates.