- For global financial stocks, Citi sees things getting worse before they get better.
- Analyst Tony Larkin says to "fade any rally" and expect a "bear market/macro trough before potentially turning more constructive."
- Notes five key headwinds for the sector -- earnings risks, flattening yield curve, slowing GDP growth/falling PMIs, widening credit spreads, and increased volatility.
- Prefers U.S. financials and European non-life, pointing to Lincoln National (LNC +4%), Prudential US (PRU +3.2%), Ameriprise (AMP +3.9%), Bank of Montreal (BMO +1.6%), and Fifth Third (FITB +2.4%).
- Financial Select Sector SPDR ETF (XLF +2.3%), SPDR S&P Regional Banking ETF (KRE +2.8%).