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Two Things Lifting Banks

Banks and higher rates. Financials leading the markets today on the simple principal that a steeper yield curve is a help to banks. Indeed it is: a steeper yield curve means higher net interest margins (the difference between what you can lend at and how much you have to pay your depositors). There's another factor helping banks: they are dramatically underowned and underloved by institutions. The dollar strength has created some rotation out of commodities and into banks.

Another beneficiary of higher rates: insurers, particularly life insurers, because they are big holders of Treasurys and get to buy at higher yields.

One worry, traders tell me: don't have Treasurys get crushed too fast, because banks are still large holders of Treasurys...they need some time to rotate out to higher yielding instruments.

The China IPO madness continues: 4 more China IPOs coming this week. The amazing success of Youku.com and E-Commerce China Dangdang in today's trading has traders buzzing (the crowds were massive at the open on the NYSE floor).

  • Full Story: Youku, Dangdang Shares Soar in US Debut

There's more coming...buzz is not quite as strong on the others, but the reception of YUKU and DANG has been so phenomenal that these may get a pop as well.

1) Bona Film Group (BONA), a distributor of domestic films (pricing tonight), 11.75 million at $7-$9.

2) SemiLEDs Corporation (LEDS), manufactures LED chips and components for general lighting (tonight), 5.25 million at $14.50-$16.50.

3) Sky-mobi Limited (MOBI), China's largest mobile application store (backed by Sequoia) (Thursday), 7.25 million at $8-$10.

4) Lentuo International (LAS), the largest private automobile retailer in Beijing (Thursday), 7.5 million at $11.50-$13.50.

An automobile dealer? That owns 6 automobile dealerships? In Beijing? I'm not saying the China IPO market is getting frothy, but....

If all these go through, bankers will have priced 38 Chinese IPOs (and counting) in the U.S. capital markets, according to IPOScoop. That makes it the largest year ever for Chinese IPOs — the previous was 31 in 2007.

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