Part 3/11:
One key observation is that while the financials have underperformed relative to the overall market in 2018, they have still outpaced the broader market since the election of 2016, witnessing a 42% increase compared to the S&P’s 35%. The initial positive catalysts included reductions in regulations, the promise of tax reforms, and the anticipated benefits from rising interest rates, all of which drove the considerable gains observed previously.
However, as these changes have now largely been implemented, the sector appears to be in a state of stagnation, with interest rates not translating into the expected margins for banks, leaving the sector in a bit of a lull.