Friday, June 25, 2010

Financials 3:21pm update $XLF


· FINANCIALS: Sector is the top performer in the SPX and is markedly outperforming the market as banks and financial services companies react positively to the resolutions reached by the reconsiliation committee. Insurance is underperforming as money flows into banks. Volumes are much healthier than recent averages and is concentraded in e-mini's and XLFs, making the trade seem more of a macro rotation. However, flows are also much healthier. While we're seeing money flow into the money center names, we're seeing both HF and vanilla money flow out of the regionals and brokers on strength. Catalysts for the group going forward will continue to be financial regulation, despite the fact that a draft was finalized last night. Next week's vote and subsequent earnings revisions and ratings changes by sell-side analysts into Q2 earnings will be a driver for the sector.

· Brokers – the group sees a nice rally, due in large part to Volcker and Lincoln language getting softened a bit; GS and MS both up 1.7%.  The SMID cap names are more mixed, w/SF, GHL, LAZ in the red while JEF, PJC rally. 

· Asset managers – strength in the space today (BLK, JNS, TROW, LM, IVZ all higher) as they come away from fin reg reform relatively unscathed. 

· Exchanges – NDAQ, CME, and ICE are all up 2%+ - seen as beneficiaries of regulatory reform. 

· Banks – strength across the board in the group; within money centers, C is outperforming (up 3%).  In the regionals, CMA, MI, STI, USB, and MTB are some of the best performing companies (each up 2%). 

· Credit cards – mixed action; DFS is up 1.6% (extending its rally from Thurs, which came on earnings); AXP is up while COF is off.  In the networks, MA is off 0.8% while V makes some gains. 

· Mortgage stocks continue to rally as they are viewed as a beneficiary of the higher MBS prices – NLY, ANH, MFA, CIM, RWT. 

· Best performing sp500 financials: MCO, MI, STI, PLD, C, AIV, KIM, CME, SPG

· Weakest performing: AIG, GNW, ETFC, COF, SLM, MMC

No comments:

Post a Comment