Thursday, September 23, 2010

Financials - It was a Broke Back Mountain Moment for some Brokers

Brokers – the group was under pressure for most of the session; more sell-side number cuts (BoA/Merrill and Rochdale today and Deutsche Bank yesterday) and the disappointing JEF earnings continue to weigh.  JEF falls nother 2%+.  GS finishes off nearly 2%.  MS was a mild outperformer.  PJC is one of the few brokers that outperformed (stock ended up nearly 1%).

  • Asset managers – the group sank in trading today; AMG, AB, BLK, EV, BEN, JNS, TROW, LM, all finish off 1-2% while IVZ drops ~3-4%.
  • Credit cards – the group acted OK today; MA and V both eke out gains.  DFS rallies >1% (the stock hits multi-month highs and has had a very strong week since reporting earnings).

Catalysts to Watch

Taxes – Sen Baucus is working on a Dem version of a tax bill to challenge the existing one from Republican McConnell; Baucus will allow the Obama “Make Work Pay” cuts lapse; he would make the Bush rates permanent for “middle class” earners while reinstating the estate tax.  The Bush rates for upper-income earners will not see any extension.  The Baucus bill could be unveiled as early as today and he is hoping to use some compromise on the Estate Tax issue to get a few Republican votes.  Sen Majority Leader Reid says he is working to have a vote on Bush taxes pre 11/2 although most think the issue will be tossed into the post election lame duck session.  WSJ/Politico

Wednesday, September 22, 2010

Do Banks have an Enough Shovels to Fill the Capital Hole After Basel 3

trading book capital changes impact of increased regulation impact of earnings

Vince Cable, the Business Secretary, claims that bankers are more a threat to the UK than trade unions

UK bankers continue to come under attack – Vince Cable, the Business Secretary, claims that bankers are more a threat to the UK than trade unions.  Cable will also allege that the corporate world is "murky", that the capitalist system is tainted and "kills competition", and that markets are "often irrational or rigged". He is preparing to intervene to stop bankers receiving bonuses he regards as unjustified.  "If there are unacceptable bonuses, the Government has an obligation to intervene. [There must be] a deterrent to banks which are preparing to undertake unacceptable bonuses."…Cable also threatens to impose fresh levies on bank profits   London Telegraph.