Equities

Special Report

Since 2014, market expectations of the Fed funds rate has been the primary driver of banks stock performance. Investors' heightened focus about the positive role of interest rate hikes on bank profitability has some merit because when interest rates are near the zero lower bound, net interest margins are unduly suppressed. However, a breakout in bank stocks requires much more than a hawkish Fed outlook: without a significant pick-up in top-line growth, there is no impetus for bank stocks to sustain rallies.

Stocks are flirting with new highs, courtesy of a gradualist Fed and the reduced threat of incremental near-term U.S. dollar strength.

Special Report

A playable pair trade opportunity has emerged on the back of shifting capital spending patterns: long communications equipment/short machinery.

Consumer products stocks are likely to move to an even larger valuation premium before the cyclical outperformance phase ends.