The International Monetary Fund (IMF) seems to be at odds with some fund managers over its assessment for prospects for the financial sector.
Some fund managers have recently argued that financials look attractive buys as they are relatively cheap at present. A sceptic might suggest some marketing spin is at play. It is a truism that if prices have fallen then, other things being equal, valuations will look more attractive than they did previously.
But it is legitimate to make a call that pessimism in relation to financials is overdone. From this perspective they should bounce back as long as the economy continues to recover.
In contrast, the IMF is more guarded in its latest edition of its twice-yearly Global Financial Stability Report. The IMF does suggest that the threat of a systemic breakdown has subsidised with its estimate for actual and potential writedowns for bad assets falling from $4 trillion (£2.5 trillion) to $3.4 trillion over the past six months. However, the report also estimates that the banks still have a potential $1.5 billion of writedowns of assets ahead having already recognised $1.3 trillion in the first half of 2009.
The IMF also points to several systemic problems likely to affect banks over the coming period. These include weak property markets, losses in corporate markets and unemployment hitting consumer loan portfolios. There is also, as fund managers are well aware, the vexed question of public support for the banking sector.
Of course fund managers and the IMF have different perspectives. Managers are concerned with making good investment returns for their clients while the IMF is preoccupied with ensuring global financial stability.
Getting to the truth involves critically examining both perspectives.