'The biggest contrarian trade': Should investors continue to shun banks?

Let us be clear: banks remain a big contrarian trade for European investors, even more so than autos.

The banking sector is the worst-performing industry in 2018 and, in the words of Citi strategist Jonathan Stubbs, banks are "at the bottom of 297 global sectors over the past ten years. Banks in Europe remain the world's biggest contrarian trade".  Looking at valuation metrics compared to the market (P/E ratio or P/B ratio), the banks are at, or close to, 30-year lows. At current levels, banks would appear to be pricing in a global downturn and are being given no credit for the significant improvements they have made since the Global Financial Crisis.  For example, Société Générale...