Here's a glimpse of what's been on my mind over the past week or so as the mega-banks filed into earnings season.
The more I kick around the tires, the more I feel that the financials are coming into a zone where at the very least would serve as a contrarian hedge and at best a primary trade thesis.
As evident in the chart below - the financial sector has been trading with strengthening correlation (inverse to note/correlating to yields) with the government bond market. Over the past three months they have been in lock-step as expressed in their (weekly) correlation coefficient of .92 (a coefficient of 1.0 signifies a direct relationship).
