Monday, May 17, 2010

FINANCIALS News Brief....Investment Banks, Asset Managers Credit Card Trust Data

·         FINANCIALS: Group is an underperformer as banks (mostly the largest cap names) continued to get hit on regulatory concerns. Markets continue to focus on government regulatory actions and interventions, as they are driving market sentiment and direction. Volumes and flows are both lighter than recent trends, as trades are seeming to be put on more of a macro level than on a single stock basis. Vanillas appear to continue to have sizable stock for sale in asset manager and brokers. HFs are using weakness to cover some short positions, but are still adding to short positions even at these recently depressed levels. No real buyers are being seen anywhere in the space. While valuations are becoming more and more attractive, more clarity will be needed for some on potential earnings power post-regulation before some investors can feel confortable buying in the space.
·         Investment banks – seeing weakness in this group as people focus increasingly on the ramifications coming from the Dodd bill; GS, MS both weak, as are the money center banks that have large IB units.  Outperforming are AMTD and SCHW. 
·         Banks – in addition to the IBs/money centers, the regionals are heavy today also.  BBT, FITB, KEY, ZION, ISB, STI, etc, all lower.  FMER is off 5% after the FDIC deal and capital raise this morning (worry that FDIC deals becoming less attractive for banks).  Also – TSFG falls ~55% after the “takeunder” by TD this morning.
·         Asset managers – GLG up 48% and the big story of the day (OZM up in sympathy).  Other names mostly for sale – AMG, AB, JNS, TROW, LM, etc, all lower.  EV is one of the few names outperforming. 
·         Best Performing sp500 financials: SCHW, PBCT, MI, CB, HCBK, CINF, PGR, MMC
·         Weakest performing sp500 financials: AIG, GNW, CBG, IVZ, JNS, C, ZION, ETFC, AIV, LNC
Credit Card Master Trust – master trust showing improvement on both charge-off and delinquency front; overall though no real surprises and coming in approx inline w/expectations; more concerning for investors is the headlines out of Washington (like the amendment passed last Thurs night).  On the trading front, the stocks are coming back for sale today. 
·         AXP – delinquencies came in 3.1% (vs. 3.3% in Mar); NCOs came in 6.7% vs. 7.5% in Mar. 
·         BAC – delinquencies fell to 6.73% from 7.07% in Mar; NCOs came in 12.71% vs. 12.54% in Mar. 
·         COF - NCOs fall from 10.87% to 9.68%; 30-day delinquencies fall from 5.3% to 5.07%. 
·         DFS – NCOs came in 8.42% vs. 8.51% in Mar; delinquencies came in 5.2% vs. 5.39% in Mar. 

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