Wednesday, February 10, 2010

Afternoon Update on Financials

· Financials: Group is the only one in the green as financials are leading the market
higher on the back of Greece bailout speculation. Credit is not only holding
yesterday's squeeze tighter, but in most places continuing to tighten. While volumes
for the overall tape are lighter, volumes in financials has more breadth as banks
outperform, a competitor hosts a credit conference in Florida, and insurance
earnings and rumors fuel active trading in the group. Vanillas have turned better to
buy now for the second straight day, while HFs have appear to have tilted slightly
more towards that direction following a more balanced approach over the past two
weeks. More directional bets are being made by HFs today versus the past two
weeks, which makes me feel that they may be getting more comfortable with the
market. In banks, we're seeing deep value money continue to go into larger regional
banks following recent weakness. In insurance, stocks are muchb better to buy for
both the mutual funds and the HFs (mostly covering). Exchanges continue to be in
focus with deep value money continuing to be better buyers of the group on

· Electronic brokers – AMTD and SCHW both very strong (up 2-4% each; AMTD is
outperforming). MS and GS both climb 1%.
· Asset managers – LM outperforming, up 5%, following the release of its Jan AUM;
AMG rallying 9% following this morning’s acquisition.
· Exchanges – NYX extends its rally from yesterday – up another 2% (rally came post
earnings). ICE falls 3% after earnings this morning.
· insurance – life names are mostly in the green today. MET and PNX are mild
underperformers. PRU climbs 1% ahead of its earnings tonight.
· Banks – green across the board today. regionals and money centers both seeing
buy interest. CMA, FITB, MTB, TCB among the outperformers in regionals.
· Best Performing SP500 financials (from Bloomberg): LM, AIG, SCHW, NYX, FII,

· Weakest performing sp500 financials (from Bloomberg): ICE, MCO, AIV, SLM,

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