So shares of UBS moved up after the Swiss banking giant announcedginormous write-downs related to bad debt exposure and admitted it has another $15 billion in subprime exposure. Deutsche Bank raced in with its own write-downs, driving up its shares as well.
We called around to ask people why write-downs equal better share prices, and we were told that people feel that the write-down was large enough that many investors believe they now have written down everything they will need to. "The worst is behind us," they say. Really? That's a line we've been hearing since last fall, but apparently it still works.
Oddly enough, the second place answer is that the write-downs were smaller than expected so people who were massively short the stocks are now covering. This explanation totally undermines "the worst is behind us" rationale but never mind. We're done with trying to figure out why write-downs mean bid ups.
Posted by guest , Apr 01, 2008 9:49AM
Subprime? You are really stuck in the past.
This is no more complex than buy the rumor sell the news (or in this case, short the rumor cover the news). When in doubt, John, the old saws still work.
Posted by guest , Apr 01, 2008 9:49AM
forget about news driving stock prices. UBS will rally up to it's 50 DMA, and then fall back again.
Posted by ab , Apr 01, 2008 9:56AM
Good thing you can always count on the technical analysis guys to sort out the confusion. Now the major writedown/stock rise connection is crystal clear.
Posted by guest , Apr 01, 2008 9:58AM
technicals are stupid
Posted by guest , Apr 01, 2008 9:59AM
knowns are better than unknowns, definitely a short cover...
Posted by guest , Apr 01, 2008 10:21AM
"Technicals" are just fundamentals you haven't heard about yet.
Posted by guest , Apr 01, 2008 10:23AM
I freely admit to being full of shit. But no more full of shit than the rest of you.
- technical analyst guy.
Posted by guest , Apr 01, 2008 10:28AM
A big shout out to all the "intellectual capital" out there who shorted GS yesterday in the aftermarket and caused me to lose a lot of peaceful sleep. Hope all is going OK for you this morning!!
Posted by guest , Apr 01, 2008 10:28AM
ok boys... back to the desks... we can yell these comments a cross the room at each other...
Now tell me how the fuck we are going to make some money in the clusterfuck they call a market...
Posted by guest , Apr 01, 2008 10:36AM
UBS: A Swiss Joke=Not Funny
UBS is a Swiss Joke...just not funny at all. From the outset of the subprime disaster the internal buzz was that UBS was taking a write-down but that, in conservative UBS form, it was ultra-conservative and the last. That UBS would look much better than all the other banks because they would only have one write-down. Now how many have we had?
The problem is that UBS is still controlled by a bunch of arrogant and moronic Swiss who think they are a whole lot smarter than they actually are. They might know banking (like checking and savings) but that is a far cry from Investment Banking.
Cue the layoff music. I'd put the number at 3000. So here's to all the German Swiss running the bank...you are a bunch of humorless, arrogant, mindless gits.
Posted by guest , Apr 01, 2008 10:37AM
@10:28
You sound like Tim Sykes
Posted by onetwo , Apr 01, 2008 10:47AM
@10:37 - Timmaaaaayyyy only trades worthless penny stocks, so him venturing out to the $16X of GS would be quite the stretch...but who knows...it did sound like him.
--
I'm still wondering how many more "write-downs" my ARSs held at UBS are going to take? Their inability to value their own securities does not give me much faith in their ability to value mine.
Borke! Borke! Borke!
Posted by guest , Apr 01, 2008 10:53AM
"Borke! Borke! Borke!"
The fact that you can't tell Swiss from Swedish chefs could be part of your problem.
Posted by guest , Apr 01, 2008 10:59AM
I thought Bork was either 1) an Icelandic singer 2) that guy who couldnt get on the supreme court during the Reagan admin.
Posted by guest , Apr 01, 2008 11:00AM
1-2,
Classic post at your site...
~Stupid Equity Guy
who's shorts are getting burnt in the kitchen... and its not a pretty smell
Posted by Anonymous , Apr 01, 2008 11:09AM
I'm convinced it's all a big april fools joke....
Posted by guest , Apr 01, 2008 11:38AM
If I made a comment about Doug and his idea of a joke right now... Homeland Security would have issues with my comments I am sure...
Lets just say that this was not how I expected to wake up this morning...
I wish it was a joke, however starting off with a hole this big for the Month/Q is not my idea of a joke...
Posted by guest , Apr 01, 2008 11:42AM
wtf though, why is their general counsel now in charge of the whole firm? yeah. just the guy to clean up a big financial mess.
ugh.
Posted by miami , Apr 01, 2008 11:53AM
Traditional first of the month [and Q!] buying spree, sheesh, doesn't anybody here know how to play this game?
It's like watching nursery schoolers trying to deconstruct Eco.
Squeeze the Shorts is always the follow-up game anyway.
I expected better from you, Carney. Sniff.
[and if 50% think worst is over - buy, and half were expecting bigger writedowns - short-covering, then both can do the same action for different reasons, even if one or both turn out to be wrong. Term structure of expectations v market segmentation and all that.]
Posted by guest , Apr 01, 2008 12:26PM
10:36 - Speaking as one of them, it won't be that large.
Posted by guest , Apr 01, 2008 12:41PM
Maybe one of the greater minds on the board can explain to me the sound financial logic of LEH borrowing billions at 2.5% from the magical money tree of the Fed discount window only to turn around and payout 7.5% on the conv. prefs?
hocus-poke-us
Posted by guest , Apr 01, 2008 12:47PM
@12:41 ... you are not familiar with the concept of "capital" ?
Posted by Finnegan , Apr 01, 2008 1:34PM
Little person question here
If the QQQQ's have generally not gone above 45 for the past few months, and in light of 11:53am's comments about 1st Q/1st of month/short covering reasons for rise, would it make sense as an immediate short term trade to get some puts?
Or will we possibly see moves higher for reasons not apparent where the Nasdaq moves out of its trading range?
Posted by guest , Apr 01, 2008 2:41PM
@1:34 - does this look like TheStreet.com to you?
Posted by guest , Apr 01, 2008 2:57PM
@12:26 Any word on what the exit packages were like? Also, what's the timeframe or has this round of cutbacks already been completed?
Posted by guest , Apr 01, 2008 3:05PM
This whole rally is fake. It started out as an April Fools hoax by Doug Kass Doug Kass, of Seabreeze Partners Short LP which caused a massive short covering rally.