Sector Summary: S&P Financial Index 195.54, -1.81%; Financials Continue to Stumble; 190-195 Support Area to be Tested Financials continue to lead the markets lower as they bare the brunt of the attack. Sovereign debt concerns and potential haircuts on assets remain a key headwind for the group. In addition growing signs of a global slow down are the latest worry facing an industry that has already seen its earnings power decline in the face of regulation. There was some clarity provided this morning as French banking giant BNP Paribas (BNPQY) posted their Q2 results as well as haircuts for their Greek debt holdings (See below). The haircuts were in line with the 21% expected and the banks results were actually better than expected but it has hardly been enough to stem the negative tide. The S&P 500 Financial Index has now fallen back to the 195 level, its worst level since November of 2010. This 190-195 area was a critical support are for the group back in August-November of 2010. This of course was a critical time in the U.S. when the expectations for QE 2 began to mount. One year later we find ourselves in a similar position.

News of Note:

1) BNP Paribas (BNPQY) reports Q2 revenues of EUR 10.981 billion, down 1.7% y/y. Net Income was EUR 2.128 billion, up 1.1% y/y. Cost of Risk for the Greece assistance program was EUR 534 million. Tier 1 ratio stands at 11.9% compared to 10.6% in the prior year. Net asset value per share was EUR 56.7, up 7.2% y/y. Return on Equity was 13.8%. Greek assistance programme. The Greek assistance programme, to which BNP Paribas has committed, pertains to government bonds that mature before 31 December 2020. It will result in a 21% loss for the private holders of these bonds. BNP Paribas holds 2.3 billion euros in Greek government bonds that mature before 31 December 2020. Therefore, the Group set aside a provision for 21% of this amount as well as for the corresponding effect on the portfolio of insurance businesses, or a total of 534 million euros. Furthermore, certain minority interests consolidated under the equity method in the insurance sector had a negative impact to the tune of 26 million euros.

2) Barclays PLC (BCS) reports H1 profit before tax GBP2.64 billion (no est) vs. GBP3.95 billion last year. Co reports impairment charge of GBP1.828 billion, down 41% YoY. Additionally, co states performance of capital markets business in July has been impacted by current market conditions. Co also will reduce jobs by 3000 this year.

3) NYSE Euronext (NYX) reports Q2 (Jun) earnings of $0.61 per share, excluding non-recurring items, $0.01 worse than the Capital IQ Consensus Estimate of $0.62; revenues rose 1.1% year/year to $661 million vs the $653.9 million consensus. Global Derivatives ADV in the second quarter of 2011 was 9.4 million contracts, a decrease of 12% compared to the second quarter of 2010 which benefited from heightened market volatility driven by the advent of the sovereign debt crisis in Europe.

4) Radian Group (RDN) reports Q2 (Jun) earnings of $1.03 per share, may not be comparable to the Capital IQ Consensus Estimate of ($1.00). Earnings included combined gains from the change in fair value of derivatives and other financial instruments of $193.8 million. This compares to a net loss of $475.1 million, or $4.31 per diluted share, for the prior-year quarter, which included combined net losses from the change in fair value of derivatives and other financial instruments of $587.8 million. Excluding gains and losses on derivatives and other financial instruments, the financial guaranty segment was again profitable on an operating basis. Total revenues were $471 million compared to a loss of $245 million in the prior year.

5) Gleacher & Co (GLCH) reports Q2 (Jun) earnings of $0.02 per share, excluding non-recurring items, $0.01 worse than the Capital IQ Consensus Estimate of $0.03; revenues rose 12.5% year/year to $61.3 million vs the $86.2 million consensus. Revenues from principal transactions and commissions were $36.7 million in the second quarter of 2011, a decrease of $1.5 million, or 4 percent, compared to the second quarter of 2010, primarily due to decreased revenues of $4.4 million in corporate bonds and $2.5 million in mortgage and asset backed securities, which were offset by $6.0 million in revenues related to ClearPoint, a residential non-depository mortgage bank, which we acquired in January 2011.

6) Franklin Resources (BEN) reports Q3 (Jun) earnings of $2.26 per share, $0.10 better than the Capital IQ Consensus Estimate of $2.16; revenues rose 20.8% year/year to $1.85 billion vs the $1.83 billion consensus. Total assets under management were $734.2 billion at June 30, 2011, up $30.7 billion or 4% during the quarter. The increase was driven by record net new flows of $21.7 billion and $9.6 billion in market appreciation. AUM increased $163.7 billion or 29% year over year, primarily due to market appreciation of $112.8 billion and net new flows of $52.7 billion.