Despite all the usual consensus happy talk, selling pressure has been dominating Canadian bank shares since last June, when the price of oil began to tank in earnest. Here is a one year portrait of the finance sector ETF (XFN).
With oil breaking below $50 in January, Canadian economic indicators (that typically lag the price of WTI by 3 months, see Citi chart below) are likely to disappoint over at least the next couple of quarters. (Hint: Not yet priced into lofty Canadian stock prices, least of all the banks.)
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