Nomura Securities on U.S. Brokers and Universal Banks: Shades of Dis-May

Nomura Securities on U.S. Brokers and Universal Banks: Capital markets stocks generally underperformed in May

Analyst, Glenn Schorr, said, "Capital markets stocks headed lower in May given continued European sovereign concerns, mixed U.S. employment/GDP data, still sluggish capital markets activity and a heightened “risk-off” mentality (risk-assets declined and the 10-year Treasury yield fell 29bp). While investment banking volumes improved from a slow April, Facebook (NYSE: FB) accounted for the bulk of the improvement and absolute levels remain soft (equity underwriting volumes were down 24% vs. May 2011). In trading, volatility and volumes were mixed across FICC and equities and so far 2Q12 feels like we are headed toward a 2H2011 type of backdrop: lack of a risk bid plus sluggish activity given sizable macro uncertainty. For the month (as of May 30th), the brokers (-21%), universal banks (-17%), trust banks (-11%), asset managers (-11%), and online brokers (-12%) largely underperformed the markets (S&P 500 -6%, MSCI-EAFE -12%)."

Overall, Schorr still favors Citi (NYSE: C), JPMorgan (NYSE: JPM), and Goldman Sachs (NYSE: GS). For Asset Managers, he likes Invesco (NYSE: IVZ) and BlackRock (NYSE: BLK)

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