US midday: Banks down slightly as settlements weigh

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LONDON (ShareCast) - - Consumer electronics stocks lead gains
- Obama names new Cabinet
- Banks down after settling with government/Fannie

Dow Jones Industrials: -0.58%
Nasdaq Comp.: -0.44%
S&P 500: -0.58%

The main US market averages are now being called to open lower by approximately 0.2 per cent on average. That ahead of the start of the first quarter earnings season, tomorrow, after aluminium maker Alcoa (NYSE: AA - news) publishes its latest quarterly results.

Banks are dropping slightly despite the Basel Banking Supervision Committee having eased its calendar - and the terms - for the implementation of lender's new liquidity requirements. This on news that a group of institutions has reached a multi-billion dollar settlement with Federal authorities. In parallel, Bank of America (Other OTC: BACYL - news) has settled with Fannie Mae over most of the issues they had pending.

Economists cut their forecasts for Treasury yields in 2013 to the least since Bloomberg began compiling the predictions, last July. Ten-year yields will be 2.14% by Dec. 31st, according to a survey of banks and securities companies as of January 4th.

Consumer electronics lead gains, Bank of America settles with Fannie

Bank of America will pay Fannie Mae $3.6bn to resolve home-loan repurchase claims. The latter, which for all intents and purposes enjoys the US government's backing, had been claiming that the lender had knowingly mis-represented the risks surrounding the mortgage instruments which it had marketed to it.



Equity Residential (NYSE: EQR - news) has agreed to sell real estate properties to a joint venture of Goldman Sachs Group and Greystar Real Estate Partners for $1.5bn.

Bank of America will pay Fannie Mae $3.6bn to resolve home-loan repurchase claims. The latter, which for all intents and purposes enjoys the US government's backing, had been claiming that the lender had knowingly mis-represented the risks surrounding the mortgage instruments which it had marketed to it.

The lender will also pay $6.75bn to repurchase residential mortgages sold to Fannie Mae. The question which will naturally arise is whether the fact that a deal is being reached now reflects greater confidence on the part of Bank of America over the outlook for those same instruments.

Federal regulators on Monday reached an $8.5bn settlement with 10 financial institutions over foreclosure abuses. Amongst the banks included are Bank of America, Citigroup (NYSE: C - news) , Wells Fargo (Other OTC: WFCNO - news) and J.P. Morgan Chase.

Yahoo (NasdaqGS: YHOO - news) ! is trading down by 2.4% after Sanford C. Bernstein downgraded the shares.

Analysts at Morgan Stanley (Xetra: 885836 - news) have upgraded their view on Amazon.com (NasdaqGS: AMZN - news) to 'overweight' from 'equalweight' before.

Roche has taken its bid for rival Illumina (NasdaqGS: ILMN - news) off the table, the company's Chief Executive Officer has told the Swiss press.

Barclays (LSE: BARC.L - news) has lowered its target price on shares of Apple (NasdaqGS: AAPL - news) to $740 from $800 before.

From a sector stand-point the worst performers are now to be seen in following sectors: Renewable energies (-2.41%), Personal products (-1.94%) and Food retailers (-1.77%). Consumer electronics are best performing.

Not to be lost sight of, the Las Vegas Consumer Electronics Show (CES) is slated to begin tomorrow.

Acting as a backdrop, over the weekend US Senate majority leader Mitch Mc.Connell indicated that Republicans are not willing to raise taxes any further. This initial stance may just be a part of the negotiation process expected to take place over the next month approximately.

Also worth mentioning, as far as market 'technicals' are concerned are: after rising by 20% Chinese equities have entered a 'bull market' and levels of volatility have hit relative new lows in the US (the VIX fell below 14 last Friday).

Other asset classes flat
10 year US Treasury yields are now flat at 1.90%

Front month West Texas crude futures are now rising by 0.12% to the 93.19 dollar per barrel mark on the NYMEX.



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