I never understood investors enthusiasm about banks in this cycle:
With real rates destined to be negative for at least several years, and alarming creeping wages,
how can banks possibly provide compelling returns?
Again, their product – loans will never be priced to reflect the real economic cost of money, while their workers would expect 7-15% salary rises.
Look at the chart of the Bank index vs. the real 10Y yields – they have deviated way too much…
In fact, expectations of banks stocks deny the historical pattern of the need to have positive real rates. I.e. there is a mismatch between inflation, nominal rates, and bank stocks.

•