Financials Update at the Close $GS $XLF

· The financials were some of the best performing stocks in the whole market this week, although nearly all the gains came on Fri following the completion of financial regulatory form. Early Fri morning (5:30amET), the House/Senate reconciliation conference committees reached a compromise agreement on the last big outstanding issue (Lincoln’s derivatives amendment) and passed the bill (w/o any Republican support). The measure will now head to the full Senate and House for a vote next week (the process is expected to start Tues) w/Obama on track to sign the legislation by Jul 4 (meeting his months-long deadline). The finished product will impose new restrictions and costs on the industry, although the final bill was not as bad as some feared (esp. on “Volcker” and “Lincoln”); the initial St takeaway on the legislation can be summed up by the following Bloomberg headline (“banks dodged a bullet as Congress dilutes US trading rules in overhaul”). While investors are relieved for now, a lot of the buying occurring Fri was either short-covering or quicker trader-types “renting” exposure via the XLF; not a lot of people were rushing to make purchases in “single stocks”. Some are looking back to the health care