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Mr Mani
Traders love such factors. Right?
The "fear factor" is always counterbalanced by the "greed factor" at the slightest whim...
They want big cut.
Not T cut, or special cut.
Market Overview
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Add symbols to My PortfolioWhy the pessimism?
Take a look at this 6-month Dow Chart here and you'll see it's more likely to be a correction of the recent consecutive gains.
So, it's really still too early to jump the gun...
Just as expected. Hoping the market to prove me wrong, but what a big disappointment. *Sign*
So Santa is not coming to town this X'mas.
| Pinnacle Elite |
Posted: 10-Dec-2007 23:56 |
 x 0  x 0 * Alert Admin |
With the improved job and housing data, it is tempting for Fed to cut just 0.25%. However, the current market movement seem to be pricing in 0.5% cut. IF tomorrow night is really just a 0.25% cut, it may be another big sell down. |
Market Overview
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LONDON (MarketWatch) -- Swiss banking giant UBS warned Monday that it will write down the value of its subprime mortgage holdings by a further $10 billion, leading to a loss in the fourth quarter and potentially wiping out all its profits for the year.
In a bid to soothe the bad news, the bank also announced plans for a capital injection of 13 billion Swiss francs ($11.5 billion) from the government of Singapore and an unnamed investor in the Middle East. The plans would give Singapore a roughly 9% stake, making it the Swiss group's biggest shareholder.
Data: Companies, since Q3 * Est.
| Bankers' write-downs |
| UBS | $13.7 bln |
| Citigroup | *$13.7 bln |
| Merrill Lynch | $8.4 bln |
| Morgan Stanley | $4.6 bln |
| HSBC | $3.4 bln |
| Bank of America | *$3.3 bln |
| Deutsche Bank | $3.1 bln |
| Barclays | $2.7 bln |
| Royal Bank of Scotland | $2.6 bln |
| Bear Stearns | $1.9 bln |
| Credit Suisse | $1.9 bln |
| JP Morgan Chase | $1.6 bln |
| Goldman Sachs | $1.5 bln |
| Wachovia Bank | $1.1 bln |
| Lehman Bros. | $0.7 bln |
| Total: | $64.2 bln |
"Conditions in the U.S. mortgage and housing markets have continued to deteriorate, and we have updated our loss assumptions to the levels implied by the current distressed market for mortgage securities," said CEO Marcel Rohner in a statement.
"In the last several months, continued speculation about the ultimate value of our subprime holdings -- which remains unknowable -- has been distracting," Rohner added.
"In our judgment these write-downs will create maximum clarity on this issue and will have the effect of substantially eliminating speculation."
With the latest announcements, UBS has recorded $13.7 billion in write-downs, more than any European bank. The group took a write-down of around $3.4 billion in early October, but warned later in the month that it may have to take more charges if the U.S. housing market deteriorated further.
UBS had expected to return to profit in the fourth quarter after reporting an 830 million-franc loss in the third quarter.
But on Monday the group said it now expects a loss in the fourth quarter and added it's "possible" that it'll record a loss for the whole of 2007.
"The write-downs and capital raising represent a dramatic u-turn from guidance given by Chief Financial Officer Marco Suter just three weeks ago," said Keefe, Bruyette & Woods analyst Matthew Clark.
Suter had guided investors not to expect big write-downs in the fourth quarter, though Clark noted market conditions have deteriorated since then.
"Given that the capital-raising outweighs the write-down, this appears to be an attempt to draw a line under UBS's subprime woes," he added.
On Wall Street, shares in UBS (UBS:
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UBS 51.66, +1.18, +2.3%) lost as much as 3.4% before swinging higher. At last check, the stock was up 2.2% at $51.59 as investors saw the cash injection as a vote of confidence in the group's core business. Also see Europe Markets.
UBS Ag
Last: 51.66+1.18+2.34%
4:03pm 12/10/2007
Delayed quote data
4:03pm 12/10/2007
Delayed quote data
Sponsored by:
The additional write-downs were partially priced into the shares, which had fallen around 8% since the start of November as credit markets deteriorated again.
Bear Stearns analyst Christopher Wheeler said the announcement helped to move the focus away from UBS' subprime holdings and onto its earnings potential.
In a note to clients, Wheeler added that the move would lead to a reduced reliance on investment banking and greater focus on wealth management. UBS has been under fire for its poor investment banking performance for some time and the shift "must be positive and could help the stock move up in the medium term," Wheeler said.
Rohner confirmed that the investment banking arm will focus more on supporting the asset and wealth management units.
"In future, we will make certain that our investment banking operations grow by concentrating on serving the needs of institutional and corporate clients," he said in the statement.
Capital injection
UBS' surprise announcement came a day ahead of a planned investor meeting. The group said the cash injection is intended to ensure it maintains a very strong capital base.
Companies in this story.