Global Bank Equity Specialist, Creative Portfolios

Paul Hollingworth

Global Bank Equity Specialist

Creative Portfolios

Thematic (Sector/Industry)

United states Financials / Thematic (Sector/Industry)

It is commonplace these days to hear commentators talk about the US as an investment destination as "the least dirty laundry" in the neighbourhood. By this, analysts mean that valuations are reasonable -plenty of GARP (growth at a reasonable price)- within a perceived safe jurisdiction. Having said that, there is political risk, surrounding the President and with the lurch to the left of the opposition.Regarding the Banking Sector, "the least dirty laundry", despite its insinuations, certainly applies when comparing a de-risked system to other parts of the world. In fact, across jurisdictions, the US is the geography where we see the greatest fundamental momentum and progression. The positive trends in the US, as measured by our PH Score™, a value-quality gauge, stand out versus other jurisdictions.And valuations are not elevated. Neither are technical indicators as bank shares yo-yo to the whims of the yield curve. This is due to the uncertainty as to the path of US interest rates which nobody can convincingly call just yet given conflictive signals.Despite the benign trends and fundamental momentum at US banks, there are concerns under the bonnet or under the hood. This relates to consumer leverage, not to mention student loans, which the Fed recently stated is in "better shape" but is crystallised by the trend in credit card charge-offs. We will take a look at plastic trends. In addition, it is important to add that more non-banks are active in leveraged loans these days while there are concerns, recognised by the Fed, of the risk of a slew of downgrades in the BBB space.

It is commonplace these days to hear commentators talk about the US as an investment destination as "the least dirty laundry" in the neighbourhood. By this, analysts mean that valuations are reasonable -plenty of GARP (growth at a reasonable price)- within a perceived safe jurisdiction. Having said that, there is political risk, surrounding the President and with the lurch to the left of the opposition.Regarding the Banking Sector, "the least dirty laundry", despite its insinuations, certainly applies when comparing a de-risked system to other parts of the world. In fact, across jurisdictions, the US is the geography where we see the greatest fundamental momentum and progression. The positive trends in the US, as measured by our PH Score™, a value-quality gauge, stand out versus other jurisdictions.And valuations are not elevated. Neither are technical indicators as bank shares yo-yo to the whims of the yield curve. This is due to the uncertainty as to the path of US interest rates which nobody can convincingly call just yet given conflictive signals.Despite the benign trends and fundamental momentum at US banks, there are concerns under the bonnet or under the hood. This relates to consumer leverage, not to mention student loans, which the Fed recently stated is in "better shape" but is crystallised by the trend in credit card charge-offs. We will take a look at plastic trends. In addition, it is important to add that more non-banks are active in leveraged loans these days while there are concerns, recognised by the Fed, of the risk of a slew of downgrades in the BBB space.

US Banks: The "Least Dirty Laundry" In the Neighbourhood Though Check Under the Hood