Table of contents
Executive summary................................................................................................................................................ 4
Introduction.....................................................................................................................................................................4
Market volatility has driven recent sector performance ...................................................................................................5
Sector strategy conclusions............................................................................................................................................6
Banking sector................................................................................................................................................................8
Fasten your seat belts.......................................................................................................................................... 11
Introduction...................................................................................................................................................................11
The ‘Great Moderation’ or great illusion? ......................................................................................................................11
Luck or good judgement? .............................................................................................................................................15
The fall of communism and ‘the Greenspan put’ ...........................................................................................................19
Global imbalances point to further volatility ...................................................................................................................23
And there’s more ..........................................................................................................................................................25
Which way is the causality?..........................................................................................................................................28
So what does the future hold?......................................................................................................................................32
What does it mean for the financial sectors?..................................................................................................... 34
The importance of balance sheets and inflation ............................................................................................................34
General financials sector ..............................................................................................................................................34
The insurance sector ....................................................................................................................................................38
Bank sector...................................................................................................................................................................44