Report From Europe: Banks Find a Bid After Basel Watered Down

Jul. 27, 2010 11:23 AM ETSPY, DIA, QQQ2 Comments
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The Mole

Another solid session for US markets as they closed up circa 1% buoyed by June new home sales which surged 23.6% mom, more than fully offsetting downward revisions for May to hit 330k, beating the Street consensus forecast by 20k and marking one of the few constructive US releases in the last month. The housing numbers dominated the news, easily eclipsing a weak Dallas Fed manufacturing index. Elsewhere the market continues to digest the latest slew of better than expected US corporate earnings. 78% of the 175 S&P500 companies that have reported so far, fully 78% have beaten expectations on earnings though a more modest 67% have beaten revenues which seems to be the yardstick investors are using this quarter. Cost driven earnings surprises just aren’t cutting the mustard anymore. FedEx (FDX) joined UPS (UPS), the largest package delivery company, in lifting its earnings forecasts Monday. Both are considered harbingers for the economy. Other notable movers were homebuilders Pulte Group (PHM) and Lennar Corp. (LEN), which jumped more than 3.2%, while in the news Genzyme (GENZ) rallied 7.8% to the highest price since February 2009 amid speculation the drug maker will become the target of a bidding war.

In London today bank stocks are bid on the back of a significant watering down of the original Basel 111 regulatory proposals (see below) and better than excepted numbers from Deutsche Bank (DB) and UBS (UBS). Barclays (BCS) jumped 6.6%, Lloyds (LYG) is better by 5.1% and Royal Bank of Scotland (RBS) is 3.5% to the good this morning.

Elsewhere AstraZeneca (AZN) has put on 3% today after U.S. regulatory staff said they will approve Brilinta if the drug maker undertakes a study on its effectiveness. The new study, recommended yesterday by a US FDA panel, will seek to establish the drug’s long term benefit. The drug

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The Mole (pseudonym) is a man in the know. I don't trade for a living, but instead work for a well-known Irish institution, heading a desk that regularly trades over €100 million a day. I aim to provide top quality, up-to-date and relevant market news and data, so that traders can make more informed decisions. Visit The Mole's blog (

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