Outlook

Sector:FINANCIALS For U.S. regional banks, I expect earnings growth rates will slow to 6.6% in the fourth quarter of 2006 from 7.4% in the third quarter, because of the inverted yield curve. The fourth quarteris going to be difficult for the regional banks and thrifts due to the yield environment. I believe that loan growth will offset net interest margin pressure, as competition for loans remained fierce.This caused many thrifts and banks to moderate loan growth while waiting for more favorable funding conditions. Those with investment banking activities should fare the best.To expect property-casualty insurers to post significantly improved fourth-quarter operating earnings (9% to 12% in many cases) in the absence of any significant catastrophe claims, favorable contributions from investmentincome, and the positive effect of share buybacks.

I'm looking to reduce XLF holding in my ASFIN Fund.