In "Goldman Sachs: The "Smart" Money?!" I called attention to the fact that the banks team at one of Wall Street's best known firms has not exactly been on target with its calls on the sector (e.g., they were negative when the stocks were trading at their lows).
However, one firm that has been ahead of the curve as far as financial sector realities are concerned is Institutional Risk Analytics (IRA), which specializes in providing "customized risk management solutions and advisory services to global enterprises."
As it happens, Yahoo! Finance's Tech Ticker yesterday featured an interview with a principal of IRA, entitled "The "Real" Economy Is Dying: Q4 "Going to Be a Bloodbath," Whalen Says," in which he expressed views that were in marked contrast to those of the gang that couldn't rate straight.
Stocks rallied to start the week thanks to a better-than-expected ISM services sector report and a Goldman Sachs upgrade of big banks, including Wells Fargo (NYSE:WFC), Comerica (NYSE:CMA) and Capital One (NYSE:COF).
But all is not right in either the economy or the banking sector, according to Christopher Whalen, managing director at Institutional Risk Analytics. In fact, Whalen says most observers are drawing the wrong economic conclusions from the stock market's robust rally.
"Why is liquidity going into the financial sector? It's because the real economy is dying [and] everyone is fleeing into the stocks and bonds because they're liquid at the moment," Whalen says. "That's not a good sign."