EU to hit Microsoft, again

Every few years, the European Union takes another bite out of Microsoft's (MSFT) business in the region. All of the actions are based on antitrust laws, and most have to do with the bundling of the company's Internet Explorer with the Windows operating system. The belief among EU antitrust officials is that this shuts other browsers like Firefox out of the market.

The EU does not appear to be happy with Microsoft's efforts to date to cooperate on the browser issue so it is getting ready for another round of sanctions. According to The Wall Street Journal. "Rather than forcing Microsoft to strip its Internet Explorer from Windows, people close to the case say, the EU is now ready to try the opposite measure: Forcing a bunch of browsers into Windows, thus diluting Microsoft's advantage."

The punishment does not make much sense given the inroads that Firefox and Google's (GOOG) Chrome product are already making. Microsoft is losing browser market share every year.

The EU ought to let the free markets take their own course. Whatever advantage IE had at one time, it is being eaten away by the natural course of competition.

VIX

VIX volatility index moves below 30 for the first time since 9/19/08 - according to CNBC, historically the S&P has gained an average of 3% and 6% respectively over the 3 and 6 months that follow a crossover below 30.
- the peak in late Oct was at 89.53.

Stress Test Results

American Express Company (AXP) $30.4 Billion Market Cap
NO NEW CAPITAL NEEDED…. $10.1 billion in tier-1 capital and total estimates losses in a more adverse scenario are $11.2 billion. Total Risk Weighted Assets were $104.4 billion.

Bank of America Corporation (BAC) $86.5 Billion Market Cap
SCAP BUFFER, or capital need to be raised, is $33.9 billion. B of A could have $173.2 billion in Tier-1 capital and could have $136.6 billion in total losses in a more adverse scenario. Total Risk Weighted Assets were $1.6338 trillion.

BB&T Corporation (BBT) $14.2 Billion Market Cap
NO NEW CAPITAL NEEDED. Tier-1 capital was listed as $13.4 billion and its total estimate losses in a more adverse scenario are $8.7 billion. Total Risk Weighted Assets were $109.8 billion.

Bank of New York Mellon Corporation (BK) $34 Billion Market Cap
NO NEW CAPITAL NEEDED. Its tier-1 capital was listed as $15.4 billion and its total estimate losses in a more adverse scenario are $5.4 billion. Total Risk Weighted Assets were $115.8 billion.

Capital One Financial Corp. (COF) $10.3 Billion Market Cap
NO NEW CAPITAL NEEDED… Tier 1 Capital was $16.8 billion and the total estimate losses in a more adverse scenario are $13.4 billion. Total Risk Weighted Assets were $131.8 billion.

Citigroup, Inc. (C) $21.3 Billion Market Cap
Its SCAP BUFFER, or capital needed to be raised, is $5.5 billion. Tier 1 capital was $118.8 billion and total estimate losses in a more adverse scenario are $104.7 billion. Total Risk Weighted Assets were $996.2 billion.

Fifth Third Bancorp (FITB) $3.08 Billion Market Cap
SCAP BUFFER, or capital need to be raised, is $1.1 billion. That is smaller than many thought. Tier-1 capital was $11.9 billion and its total estimate losses in a more adverse scenario are $9.1 billion. Total Risk Weighted Assets were $112.6 billion.

GMAC LLC (private)
SCAP BUFFER, or amount needed to be raised, is $11.5 billion. Its Tier 1 capital was $17.4 billion and total estimate losses in a more adverse scenario are $9.2 billion. Total Risk Weighted Assets were $172.7 billion.

Goldman Sachs Group Inc. (GS) $63.6 Billion Market Cap
NO CAPITAL NEEDED…. Tier-1 capital was $55.9 billion and total estimate losses in a more adverse scenario are $17.8 billion. Total Risk Weighted Assets were $444.8 billion.

JPMorgan Chase & Co. (JPM) $132.4 Billion Market Cap
NO CAPITAL NEEDED… Tier 1 capital $136.2 billion and total estimate losses in a more adverse scenario are $97.4 billion. Total Risk Weighted Assets were $1.3375 billion.

KeyCorp (KEY) $3.8 Billion Market Cap
SCAP BUFFER, or capital needed to be raised, is $1.8 billion. Tier 1 capital was $11.6 billion and total estimate losses in a more adverse scenario are $6.7 billion. Total Risk Weighted Assets were $106.7 billion.

MetLife Inc. (MET) $25.9 Billion Market Cap
NO CAPITAL NEEDED… Tier 1 Capital was $30.1 billion and the total estimate losses in a more adverse scenario are $9.6 billion. Total Risk Weighted Assets were $326.4 billion.

Morgan Stanley (MS) $29.1 Billion Market Cap
SCAP BUFFER, or capital needed to be raised, is $1.8 billion. Tier 1 capital was listed as $47.2 billion and the total estimate losses in a more adverse scenario are $19.7 billion. Total Risk Weighted Assets were $310.6 billion. After the close, Morgan Stanley said it will offer $2 billion in common stock and will sell $3 billion worth of non-FDIC guaranteed debt. That non-FDIC is key, because this allows the company to pay back the TARP if those rules have not changed.

PNC Financial Services Group (PNC) $21.1 Billion Market Cap
SCAP BUFFER, or capital need to be raised, is $0.6 billion. Tier 1 capital was listed as $24.1 billion and total estimate losses in a more adverse scenario are $18.8 billion. Total Risk Weighted Assets were $250.9 billion.

Regions Financial Corporation (RF) $3.6 Billion Market Cap
SCAP BUFFER, or capital needed to be raised, is $2.5 billion. Tier 1 capital was $12.1 billion and its total estimate losses in a more adverse scenario are $9.2 billion. Total Risk Weighted Assets were $116.3 billion.

State Street Corp. (STT) $16.43 Billion Market Cap
NO CAPITAL NEEDED. Tier 1 Capital was $14.1 billion and its total estimate losses in a more adverse scenario are $8.2 billion. Total Risk Weighted Assets were $69.6 billion.

SunTrust Banks, Inc. (STI) $6.61 Billion Market Cap
SCAP BUFFER, or Capital needed to be raised $2.2 billion; Tier 1 capital was $17.6 billion and its total estimate losses in a more adverse scenario are $11.8 billion. Total Risk Weighted Assets were $162 billion.

US Bancorp (USB) $34.4 Billion Market Cap
NO CAPITAL NEEDED. Tier 1 capital was $24.4 billion and total estimate losses in a more adverse scenario are $15.7 billion. Total Risk Weighted Assets were $230.6 billion.

Wells Fargo & Company (WFC) $105.5 Billion Market Cap
SCAP BUFFER, or capital needed to be raised, is $13.7 billion. Tier 1 capital was $86.4 billion and its total estimate losses in a more adverse scenario are $86.1 billion. After the close, Wells Fargo filed to raise $6 billion via stock sale. Total Risk Weighted Assets were $1.0823 trillion.

SEC chief says new short-selling rules a priority

WASHINGTON (AP) — The head of the Securities and Exchange Commission said Tuesday she is making the issue of new rules restricting short-selling a priority as the agency hears from an array of interests about ways to limit trades that bet against a stock.

Investors and lawmakers have been clamoring for the SEC to put new brakes on trading moves they say worsened the market's downturn.

"I have made it a priority to evaluate the issue of short-selling regulation, and ensure that any future policies in this area are the result of a deliberate and thoughtful process," SEC Chairman Mary Schapiro said at the start of a public "round-table" meeting organized by the agency.

Schapiro has said the SEC must evaluate the costs and benefits of new restrictions.

Representatives of companies including General Electric Co., Credit Suisse, JPMorgan Chase & Co., Charles Schwab Corp. and Fidelity Investments, as well as the New York Stock Exchange, the Nasdaq Stock Market and several universities are participating in the forum.

One option the SEC has advanced is restoring a Depression-era rule that prohibits short sellers from making their trades until a stock ticks at least one penny above its previous trading price. The goal of the so-called uptick rule is to prevent selling sprees that feed upon themselves — actions that battered the stocks of banks and other companies over the last year.

Another approach would ban short-selling for the rest of the trading session in a stock that declines by 10 percent or more.

Schapiro and the other four SEC commissioners voted unanimously last month to put forward five alternative short-selling plans. They could settle on one and formally approve it sometime after the 60-day public comment period that began in early April.

Short-selling involves borrowing a company's shares, selling them, then buying them back when the stock falls and returning them to the lender. The short seller pockets the difference in price.

Many financial and some other company stocks were targeted by short sellers in the market turmoil that began in mid-2008. GE was among 870 U.S. companies, mostly financial institutions, whose stock was subject to an unprecedented ban against all short-selling put in effect by the SEC last fall. The ban remained in place for several weeks until Congress enacted the $700 billion financial bailout plan.

Short-selling is legal and widely used on Wall Street. But as the market has plunged, investors and lawmakers have pressed the SEC to reinstate the uptick rule. They say its absence since mid-2007 fanned market volatility, prompting bands of hedge funds and other investors to target weak companies with an avalanche of short-selling.

Although many in the public blame short-selling for enflaming market volatility over the past 18 months, Schapiro has noted there is no "specific empirical evidence" that the absence of the uptick rule fueled it. Schapiro has acknowledged the SEC's difficult task in striking a balance between stemming market abuses to bolster investors' confidence and stifling the legitimate benefits of short-selling.

Proponents of short-selling say it can make markets more efficient, bring in more capital and raise warning signs about weak or badly managed companies. Professional short sellers and some analysts also have warned that restricting short-selling could distort edgy markets.

But companies and regulators maintain that the practice widened the scope of the financial crisis and contributed to the collapse in value last fall of many bank stocks and the demise of Lehman Brothers.

Another option floated by the SEC, is a "circuit breaker" for stock prices. That approach, in three variations, either bans short-selling outright for the rest of the trading session in a stock that declines 10 percent or more, or restricts short-selling of the stock for the rest of the session based on its previous sale price or highest bid.

The fifth alternative, known as an upbid rule, would allow short sellers to come in only at a price above the highest current bid for the stock.