Thursday, February 11, 2010

Financials 02.11.10 12:37pm

· Financials: Group is one of the worst performers in the S&P500 after massive
outperformance yesterday on positive Greece headlines and continued credit
tighteneing. Insurance names are underperforming after a mixed bag of earnings
from seven names. Banks are slightly underperforming following renewed fears from
a TARP Watchdog says CRE loans could wreck the economy. Continued Greece
headlines and their impact on credit will drive the group into the weekend with
earnings all but finished. Volumes and flows continue to be on the quieter side.
Concentration remains on the insurance names as earnings season nears an end.

Bias remains slightly to the buyside for both long-onlys and HFs. HFs have turned
from doing mostly pairs trading to making more bullish directional plays over the past
three trading day. In banks, we're seeing deep value players come in to buy the large
cap regionals. In insurance, we're mainly involved for HFs on the life insurance side,
seeing them better to buy on weakness in the group (especially the quality names).
Non-life insurers are better for sale from vanillas. HFs are buyers on the weakness
for the first time in a couple weeks.

· Electronic brokers – TRAD falls 4% after earnings disappoint although co shows a
large uptick in Jan activity over Dec.

· Asset managers –
OZM trades up >2% after earnings come in ahead of
expectations. Rest of the group is mixed-to-dwn. GBL is up 4% following the
upgrade out of Goldman.

· Life insurance – busy night of earnings. PRU falls >1% after headline EPS missed
(although underlying trends were fine). PL and PNX are both up ~2-4% after
earnings while TMK falls slightly. The Canadians are weaker after earnings (MFC
and SLF are off ~1-3% post results).

· Non-life insurance – earnings-related situations stand out. PRE moves up >1%
while RE falls 4% (on earnings).

· AIG – the stock up another 2% today – the stock continues to climb amid speculation
about life insurer sale (per Bloomberg).

· Banks – mixed trading today. Within the regionals, CMA, CYN, FITB, RF, HCBK,
and PBCT are all higher while BBT, BXS, KEY, MTB, STI, USB, ZION are down.

· Best Performing SP500 financials (from Bloomberg): ICE, ALL, CBG, CME, AIG,

· Weakest performing sp500 financials (from Bloomberg): PLD, LM, AIZ, STI,

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