Monday, June 14, 2010

Financials Update ; SCHW falls ~2.6% after a tepid monthly update $XLF

· The group had a very volatile session, falling into the red this morning on back of the FT article (which stated banks had “lost the fight” over swaps legislation) but then rallying higher post the Volcker interview and Reuters article (the article talked about how Lincoln was considering softening the language somewhat to achieve more House/Senate support).  The group couldn’t sustain a meaningful ally and fell towards the flat line for much of the afternoon (there was brief spike this afternoon after the wires reported on a bunch of upgrades from M Whitney and after ABK said it had alternatives to bankruptcy).  Late in trading, Reuters reported that EU leaders will back a levy on financial institutions; the initiative is to be rolled out on Thurs, but specifics still need to be considered.  EU hopes to build momentum for the measure ahead of June 26-27 G20 leaders summit.

· Brokers – the group sinks in trading today.  SCHW falls ~2.6% after a tepid monthly update (assets showed large outflow); ETFC and AMTD are both lower in sympathy.  MS drops ~2.5% on the day and GS finishes off 1.5%. 

· Asset managers – the group opened higher but fell into the close; AMG, BEN, JNS, TROW all off ~1%. 

· Banks – the group loses ground along w/the broader tape; some green in the regionals (CMA, CYN, FITB, RF); money centers fall across the board; declines relatively contained – no bank saw a very large decline. 

· MIs/guarantors – MTG, PMI, RDN up ~3% after MTG’s monthly update release (all end off their best levels though); ABK rallies 20% after the co said it had alternatives to bankruptcy (on Bloomberg).   

· AIG – the stock jumps along w/strength in the broader MI/guarantor space (due to ABK’s comments and the MTG update) and after the Resolution/AXA deal sparks speculation that AIG will be able to monetize its assets. 

· Insurance – life guys catch a bid as capital raising is well received; MMC trades up after settling its Alaska suit (which is seen as a positive as it removes a major overhang). 

· Financials credit – closes tighter pretty much across the board; BAC, C, WFC all 10-15bp tighter; GS, MER and MS all 15bp tighter. 

· Best performing sp500 financials: AIG, HIG, MMC, PLD, KIM, CBG, CME, SPG

· Weakest performing: SCHW, MS, USB, BK, JNS, DFS, BEN, STT, PNC 

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