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Posted on

April 9, 2026

Written by

Huw Roberts

1.Banks underpricing risks

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Higher energy, fiscal drag and tighter conditions could herald risks for H2 — a bad mix for loan growth, credit and ultimately earnings.

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Lending standards are tightening, delinquencies are picking up and credit risk is creeping higher. Yet KBE vs SPY is ~1σ rich on Qi, with a strong history of mean reversion when FVG gets stretched. See the chart below.

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Bottom-line, stagflation + credit risk look underpriced in banks. The top two upside drivers on Qi’s valuation model for the sector is lower inflation expectations and tighter HY credit spreads.

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