Monday, March 22, 2010

FINANCIALS OverView of todays Market Headlines $GS $MS


·         FINANCIALS: The group slightly underperforms as insurers continue Thursday/Friday weakness and capital market sensitive names react poorly as the Dodd bill comes to the forefront. Banks are the best performing sub-sector, but are only trading in-line with the market following 7 bank failures over the weekend. With only the JPM Insurance Conference ongoing, company-specific news is light. The focus of the market, and the financials, remains on the macro puzzle, including health care, financial regulation and the upcoming EU Summit. Flows are subdued this morning. Vanillas continue to be very quiet, while HFs are the most active players. Despite a medium-term bullish view, the short-term bias continues to be directionally lower as accounts are concerned about an overbought tape.

·         BrokersMS and GS both trade off ~0.8-1% on worries about soft capital markets activity in Q1 (Goldman trimmed ests on a bunch of brokers today b/c of sluggish activity)

·         Asset managers – group acts OK; AMG, AB, EV, BEN, TROW are all higher on the day.

·         Life insurers are weak – LNC, MFC, MET, PNX, AFL, PFG, PRU are all off on the day (dwn ~0.7-1.4%).  A bunch of companies are speaking at the JPMorgan Insurance Conf today in NYC. 

·         AIG – the stock dips ~4% after former CEO Hank Greenberg sells the bulk of his stake in the company (in Barron’s and the WSJ). 

·         Banks – the group is making mild gains on the day; this space continues to see buy interest among investors (up ~20%+ YTD).  C is outperforming in the money centers on back of the Rochdale upgrade (shrs are up >3%).  Among the regional banks, BXS, FITB, PNC, RF, TCB, USB all making small gains on the day.  STI, MI, PBCT are lagging in regionals. 

·         Student lending – SLM was weak today after student lending reform passed this weekend along w/HC, although the stock is off its worst levels. 

·         REITs – the sp500 REIT index is up ~0.3% on the day; Moody’s latest CRE price index today revealed that prices were up 1% in the month of Jan.  "Commercial property prices have increased in each of the past three months," said Moody's Managing Director Nick Levidy. "However, a few months of price gains does not necessarily indicate a sustainable trend, particularly in these difficult times. Higher transaction volumes are needed to enhance the price discovery process, and after a brief uptick in volume in December due to end-of-year sales, volume came back down in January."

·         Best Performing SP500 financials: C, AXP, HBAN, FITB, COF, MCO, HST, MCO

·         Weakest performing: AIG, FHN, CBG, XL, AFL, SLM, NDAQ, STI, PRU, LNC

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