Crispin Odey, a U.K. hedge fund manager who made a spot-on call last year by shorting banks, believes that financials are now showing some real strength, which could signal pronounced improvement, The Wall Street Journal reports.

In his latest note, Odey writes: “In a little over a month, much has changed. Stock markets have shot up, led by the financials and the base materials sectors.”

This echoes the recent sentiment of Fidelity U.K. portfolio manager Anthony Bolton, who is president of Fidelity International.

Bolton is also enthusiastic about bank stocks, which he sees as beaten down but poised to be the first sector out of the crisis since it led us the way in.

“They are among the cheapest stocks [and] the most under-owned stocks, and I think for those reasons they will do well,” Bolton said.
“Financials that took us into the crisis will actually be the stocks that will lead us out of the crisis.”

“This is the very early stages of a new bull market, rather than a lot of other people who are thinking it’s a bear market rally,” Bolton said. “Economic data is starting to get less bad.” In addition, valuations are cheap and billions of dollars are on the sidelines, with U.S. money market funds rising by roughly $1 trillion in 2008.

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