With financial regulatory reform now law, Brian Kelly of Kanundrum Capital thinks credit agencies should see an increase in revenues.
"If the credit agencies can charge more because they have more liability," he says. "Then certainly their revenues will be better."
But FinReg changed the way the ratings agencies operate, says Jon Najarian of optionMONSTER.com, referring to how they can be legally liable in their research and ratings if they're used in public offerings. For that reason, he can't understand why Warren Buffett continues to hold Moody's .
"He's taken it in the backside on it," says Najarian of the New York City-based credit services provider. "I think he continues to take it because now that the FinRegs are in and they can't use the ratings the way they did, there's really no big reason for these guys to exist."
Kelly maintains that with increased liability due to FinReg, revenues should climb. That's one reason he's waiting for an earnings report Friday morning from McGraw-Hill, which operates ratings agency Standard & Poor's. He's also interested in the New York City-based company's take on changes to asset-backed securities due to the new financial regulations.
Earnings Reports to Watch
After the closing bell Thursday, a cluster of prominent companies are scheduled to report quarterly earnings, including Microsoft , American Express , Capital One Financial , Mosaic and Amazon.com.
Earlier this week, Amazon raised eyebrows when it released a statement ahead of earnings, which said it's now selling more electronic books for its Kindle device than hardcover books.
"It seems odd to me that they would make that comment ahead of earnings," says Guy Adami of Drakon Capital. "It makes me think that maybe they're setting up for a bit of a disappointment."
