Catalysts to Watch
· Greece timetable: talks are expected to wrap up this weekend between the EU, IMF, and Greece. There could be a formal announcement as soon as Fri night or on Sun (that have been a ton of headlines quoting different officials, but it seems like something official will be unveiled this weekend). The German parliament could start debate on the issue as soon as Mon, w/an approval hopefully coming by the end of the week. A summit of EU leaders is tentatively scheduled for May 10 at which time a vote would be held and the money disbursed. Greece has a bond payment due on May 19.
FINANCIALS: The group is heavy, and is the worst performer in the SPX as Barclay's earnings disappoint and GS trades off sharply on a WSJ article regarding possible criminal investigations. A technical breakdown through 1200 caused concern early, but buyers came in to defend the market at 1194. Volumes and flows both feel light here on a light news day following a volatile week. Aggressive selling pressure appears to be over, and buyers hoping for a larger correction than we saw mid-week appear now forced to do so at higher levels, providing some support to the tape. Month-end window dressing may be providing some support to the tape as well. Order flow is better to buy today on weakness. We are seeing both long only and HF money go into names across the sector (but mainly banks and asset mgrs). Seeing scattered small profit taking by HFs. The direction of this group will continue to be determined by four main factors: Sovereign Debt, GS, Financial Regulation and Earnings.
· Brokers – the group is lower on back of the Barclays disappointment and the GS news, although prices hang in OK. While GS off 8% and has broken through $150, MS is down ~1.5% and JEF is actually up ~2-3% on the day. SCHW is in the green while AMTD is off fractionally. RJF, LAZ, TWPG, and COWN are all in the green.
· Asset managers – this space had a big rally on Thurs and seeing some small profit taking today. That said, most just a lack of buyers vs. real aggressive selling. LM bucks the trend and climbs ~2%
· Exchanges – NDAQ is off 3% after earnings came in disappointing this morning. The rest of the group is hanging in fine though – NYX up small (they report next week) while CME and ICE are both higher.
· Life insurance – MET is the highlight of the day, climbing 3% no the day post numbers. On the downside, HIG is off ~1.5% after its report. Rest of the group is off small (PRU, PL, HIG, PFG, LNC).
· Banks – the larger money centers that have big IBs are in the red today (BAC, C, etc) b/c of the Barclays miss and the Goldman worries. WFC becoming almost a safer-haven in super-cap US banks as its viewed as being more insulated from the events occurring in Washington. Regional banks all higher today – the group is being bought due to credit improvement and b/c it is viewed as being less exposed to Washington. CYN leading in the regionals – the stock is up 9% on the day post earnings.
· Insurance brokers – AON falls 3% after its earnings disappoint.
· Puerto Rico Banks – the group rallies as WH gets halted, sparking speculation that the FDIC could make an announcement soon on consolidation (potentially as early as tonight). BPOP is up 7% on the day.
· REITs – the group is for sale today on back of a couple disappointing earnings releases – AIV is off 4% and SPG is dwn 2%.
· Best Performing SP500 financials: MET, RF, FITB, HBAN, LM, CME, PNC, AIZ, ZION, KEY
· Weakest performing sp500 financials: GS, GNW, AIV, AIG, AON, BXP, NDAQ, KIM, ETFC.
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