Thursday, February 25, 2010

Financial Sector News Updates 02.25.10


·         Financials: The group is trading in-line with the market, led lower by banks (BKX -2.5%) following disappointing European economic data, continued Greece concerns and disappointing US jobs and housing data. Low beta-sectors are the top performers thus far (non-life insurance, exchanges) and the highest beta sectors take the bulk of the beating (banks and life insurers). Volumes are diminishing as the day wears on, while flows remain constant. Despite the selloff, we remain better to buy in the sector. We're finding vanilla support of the sector, in the brokers, credit cards and regional banks. We still aren't seeing many shorts being applied in the sector. Plays continue to be directional despite the recent jump in volatility. Eyes continue to be on macro factors, including Europe, regulation and Bernanke.

·         MI/financial guarantor stocks continue to come for sale – following a brief pop earlier this week after RDN earnings, the group has been for sale (that trade higher earlier this week was largely a short squeeze).  The next major event to watch is RBS earnings coming up Mon.  AIG shrs are flat and outperforming ahead of its earnings out Fri morning. 

·         Banks – the group is for sale across the board today; regionals and the money centers.  KET, FITB, MTB, RF, STI, USB, ZION all off 3%+ (FITB was downgraded today; Keefe Bruyette is hosting a regional bank conf today although as of yet there doesn’t seem to be any major headlines on the tape). 

·         V, MA – the stocks are under some pressure amid worries about legislative action being taken on the interchange fee front; however, there is an article on Bloomberg citing Rep Frank as saying that interchange legislation isn’t on his agenda this year (note that V will be speaking @ 12:40pmET today at the Goldman conf). 

·         Best Performing SP500 financials: CME (was upgraded at Deutsche Bank), AON, AIG (AIG earnings coming out Fri morning)

·         Weakest performing sp500 financials: FITB, KEY, RF, STI, ZION, MTB, JNS, USB, LM, DFS. 

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