3 Things That Could Move Financial Stocks Today
NEW YORK (
) -- The Labor Department will release its monthly Employment Situation Report on Friday. Economists expect 150,000 new jobs for last month, with companies adding 170,000, according to estimates from
Thomson Reuters.
The unemployment rate is likely to remain at 8.5%. A better-than-expected jobs report could lift bank stocks, as they are highly sensitive to the economy.
The financial sector also appears to be among the industries in retrenchment mode. According to outplacement firm Challenger Gray and Christmas, Wall Street announced 7611 job cuts. Since September, the sector has seen 31,767 job losses.
Bank of America
(BAC) - Get Report
announced last year that it will lay off 30,000 jobs as part of a massive expense reduction plan.
Citigroup
(C) - Get Report
is right-sizing its businesses by reducing its headcount by about 5,000 jobs.
Morgan Stanley
(MS) - Get Report
said it would lay off 1,600 employees by the first quarter of 2012.
Meanwhile, small wall street firms are shutting shop including Ticonderoga Securities and Kaufman Brothers, adding to the layoff pool.
U.S. Treasury Secretary Tim Geithner said on Thursday that the
Financial Stability Oversight Council
will release its plans to wind down
Fannie Mae
(FNMA)
and
Freddie Mac
(FMCC)
and overhaul the housing finance system, while reducing the government's role in the housing market.
"We will also make sure that a new system fosters affordable rental options -- close to good schools and good jobs; that it has stronger, clearer consumer protections; and that it creates a level playing field for all institutions participating in the housing finance system," Geithner said.
He also said that Fannie and Freddie remain open to examining the case for reducing principal on mortgages. He said that while the Treasury could not compel the Federal Housing Finance Agency to do principal reductions, they can help them understand why it was in the taxpayers' interest to do so.
The FHFA said recently that it would cost $100 billion to reduce the principal on the 3 million homes they guarantee that are currently underwater. Earlier this week, the Treasury said it would for the first time pay the GSEs incentives to reduce the principal on mortgages. The FHFA has said it would factor the incentives in its analysis.
The FSOC will also name the non-bank financial companies deemed systemically risky in 2012. That puts the spotlight on firms such as
GE Capital
(GE) - Get Report
, which has not yet been named a SIFI (systemically important financial institution). Firms designated as systemically important will attract higher capital requirements and regulatory scrutiny. Bank of America, JPMorgan Chase, Wells Fargo, Citigroup,
Goldman Sachs
(GS) - Get Report
,
Morgan Stanley
(MS) - Get Report
,
State Street
(STT) - Get Report
and
Bank of New York Mellon
(BK) - Get Report
are the U.S. banks on the "too-big-to-fail" list.
Finance ministers of the Germany, Luxembourg, the Netherlands and Finland will meet Friday in Berlin in order to discuss the developing eurozone crisis. The meeting -- among the remaining European countries that still have an AAA bond rating -- will focus on the debt crisis and what healthier economies can do to save the suffering financial system.
A broader rescue plan for Greek creditors needs to be completed in "days" in order for the country to avoid default and may include a loss of more than 70 percent for bondholders which includes many of Europe's largest banks, according to a report from
Bloomberg
. Any deal would also need to include a larger bailout for Greece, which faces a 14.5 billion-euro bond payment on March 20.
--Written by Shanthi Bharatwaj in New York
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