Why the chartmaster is switching from the insurers to the big banks

So what are the details here? Yeah, so just looking within the financial sector, you have one area that’s steep and uncorrected. It’s a fairly low beta area and it’s largely tied to rates. But insurance stocks have gone through the roof, you can see here on the screen. So this is a, an index that has travelers in Allstate and Progressive and CHUB and Aflac and AIG, big names, but far, far above trend by contradistinction. Look at the BKX index of course, which we know has been in a downtrend and you’ll see that on the next chart. And it’s starting to bottom. It’s been bottoming for about 6 months. So what if we juxtapose those two one to another third chart? This is a comparative chart over five years. They track quite closely and of course, they’ve diverged over the past 9-10 months. At this point, our thinking is that you reduce exposure to insurers and you increase exposures to banks in general. So one way to do that is look at a ratio chart. We’ll do three in a row. So this is one thing divided by another. It gives you a relative strength light. It’s insurance divided by BKX. And what you see here is it’s starting to roll over, right. This is a little bit of an issue and so our thinking is again, you want to be underweight insurance. Let’s look at next iteration. Not only is the 150 day turning, but you have a head and shoulders final iteration. You’re breaking trend. The general thesis here is within the financial sector start to go underweight insurers and overweight banks. Steve, do you like banks here? Yeah, I do. And when and when you it’s surprising when you look at the charts because because you kind of forget about the banks they seem boring and in the background obviously regionals have had their issues but the bit large money centre banks have really been outperforming. And when you start to see rates peak and rates start to come in, it actually favors it’s a tailwind to banks because they’re going to have a a a ton more loans a lot more equity loans putting putting out. So I it probably benefits both insurance companies and banks. But the way Carter mapped it out as far as the the relationship between the two, your bigger bang for your buck is probably going to be the financial. So I agree, Karen. Well, I like the big banks, right? And I do think so. I mean they’re on one of the underpinnings of insurance is rates. They have this float, the higher rates, I think that the banks have more flexibility that the lower rates hit the float more heavily, banks can sort of navigate that better. So I like JP Morgan, my favorite.