We believe that only by challenging the consensus view can we achieve above average performance.
Recent earnings from the banking sector have contributed significantly to the move back into equities. In fact, it was positive talk from Vikram Pandit regarding Citigroup’s performance in the first quarter that “lit the flame” under the recent rally. One must recognize that it is relatively easy for the industry to profit from all the money being made available by the US Treasury and the Federal Reserve. The banking sector is only part of the problem however. The general economy is at a stand still, with the worlds exporting economies waiting patiently for the American consumer to start buying their goods once again, The US consumer, however, still has a significant debt load with multiple credit cards and probably a mortgage that is currently in negative equity. There is a saying in the US that I remember from my childhood – “Shop ‘til you drop!!”
We are not impressed, and remain skeptical.
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