Equity boom must wait until after financials sector recovery

Equity markets will not flourish until the financials sector has recovered from the sub-prime crisis...

Equity markets will not flourish until the financials sector has recovered from the sub-prime crisis and repaired its balance sheet, according to JPMorgan Asset Management's global strategist Tom Elliott. Key to this will be the US Federal Reserve cutting short-term interest rates. Elliott said: "This will allow banks to make a profit in their traditional way by borrowing cheap at the short end and lending long at higher rates." He identified other ways financial institutions could help this process: cutting dividends, which the market is already pricing in; selling on assets, althoug...