Friday, March 5, 2010

Financials - Financial guarantors - Credit cards $MS $GS


·         FINANCIALS: Group is helping to lead the market higher following this morning's well received NFP number. Credit collapsing is helping banks and life insurers to outperform. Non-life insurers are underperforming as money is flowing toward higher beta groups this morning. Volumes are healthier than they have been so far this week, but are slowing as the day progresses. Flows are active, and have a slight sell-side bias into today's strenght. We're seeing the return of more pairs trading with the market making new highs. In banks, we're seeing profit taking by value players in the money center names, and HFs trade actively in the regionals. It appears short-covering is being the bulk of this new move higher in the regionals which places them near January resistence levels which came in the midst of Q4 earnings. In insurance, we're seeing life insurers for sale into strength from vanilla players with only some small covering from the HF community. We're seeing institutional money moving into the large cap brokers, which appear to have broken through resistance and have the demand to go higher.

·         Brokers – GS and MS both extend their rallies; GS shares in particular are up another 2% on the day.  Reduced worries around the Volcker Rules being adopted are giving a boost to the group. 

·         AIG – the stock is up 4%+ on the day following the WSJ story talking about a sale w/MET proceeding.

·         Financial guarantors – strength across the board in the group; MTG, PMI, RDN, AIG all up on the day. 

·         Credit cards – the group is higher across the board today; COF, AXP, DFS are all up on the day.  COF rallying despite the downgrade this morning (keep in mind the stock sold off on Thurs after being downgraded).  AXP and DFS both outperform, climbing more than 3% on the day. 

·         Banks – strength across the board in the group, esp. the regional banks.  BXS, FITB, MTB, RF, MI, ZION, BBT are leading the group higher (up 2%+ each).  All the big money centers are up more than 1%.  CNBC’s David Faber says we could hear more in coming weeks about Treasury selling some of its stake in Citi (the lockup expiration is on Mar 16). 


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