UBS Seeks Fresh Capital, Expects $19 Billion in Write-Downs (WSJ)
Exactly as expected, UBS says it has raised up to $15 billlion (also about 15 billion CHF thanks to currency parity) and that it expects write downs of $19 billion. That's a lot of money. Total write downs at UBS have now reached $31 billion. The company hopes to hive off all of its nasty, real estate-related assets by turning them into a separate unit, which may be spun off or sold. Perhaps the idea is that if you bundle a mountain of illiquid assets and turn them into their own company, you might be able to catch a bid for 'em. Also: The Chairman is stepping down. He's being replaced by the general counsel, who is apparently not actually named Chuck Prince.
Maybe not so nonsensical after all (Econbrowser)
How hard could home prices fall? 50 percent? Economist Menzie Chinn thinks that number sounds a tad high, but it's possible. An interesting report, walking through the numbers and the math to figure our worst-case scenarios for the housing fall. 50 percent seems a bit beyond the range of what's realistic, but it's not totally impossible. Anyway, some interesting stuff in there to read through.
Dell Weighs Alternatives to Its Link With CIT (NYT)
Dell's found itself tied up in the whole credit mess via its relationship with commercial finance firm CIT, which is having all kinds of problems of its own. Basically, CIT has been the backbone of the Dell Financial Services unit, which provides loans to finance Dell products. Anyway, no official word yet on what the company plans to do, except that it will, of course, explore some strategic alternatives. The article notes that both Microsoft and Avaya are CIT partners.
Microsoft Unlikely to Raise Yahoo Offer (WSJ)
The Journal reports that Microsoft isn't interested in raising its offer, as Yahoo would like. Who knows though what's really going on. Hard to say whether this is news news, or whether this is spin coming out of Microsoft designed to send a message. That being said, the report says there haven't been any fresh talks lately, which is newsy, since a lot of folks have been interpreting the recent quiet as meaning that the two sides were busily hatching together a plan.
Record reserve growth, record dollar reserve growth and no evidence of diversification among the countries that matter (RGE Monitor)
Foreign governments continue to sock away ginormous piles of cash and that cash is still in dollars. Despite the precipitous slide of the greenback, there really hasn't been a diversification away. Brad Setser takes a very long and detailed look at the asset compensation around the world. Definitely worth a scan if this is your bag.
Uh-Oh: Cars/Vacations/Flat Panels Not Tax Deductible (Big Picture)
Just a note: if you refi'd your house and haven't done your taxes yet, and you spent some of your refi money on stuff like flat panel TVs or cars, that part is not tax-deductable. Stupidly (in our opinion) a flat panel TV doesn't count as an improvement to the home -- yes, but what if it's a wall-mounted one? Apparently it doesn't matter. Barry thinks it's going to be a problem. We're not so sure. We can't imagine that all those people in refi-subprime land were spending their money on HDTVs.
Google and Virgin announce Mars expedition and colony
HAHAHA It's April Fools and Google came out with this hilarious press release about Richard Branson's Virgin Group and it funding a mars expedition. Can today be over yet?
Maltese Falcon for sale, asking € 115,000,000 (SuperYachtTimes)
VC Tom Perkins is selling his super high tech yacht. Check out the picture. Awesome. (via Dealbook)
Does eBay Offer Commodities? Good Question (SeekingAlpha)
There might be something interesting in here for auction wonks. Or this could be an April Fool's Day joke. We're not exactly sure. It's something about whether eBay offers up commodities for sale on its site and the ensuing legal implications of this. Sort of long and ponderous and then by the end it talks about the tools available to eBay Turbo Sellers. So we're not exactly sure what's up. How's that for a ringing endorsement, eh?
Posted by guest , Apr 01, 2008 7:06AM
where is the April Fool??
Posted by guest , Apr 01, 2008 8:26AM
Time to get a real job.......
From the AP:
Analyst sees 200,000 US banking jobs at risk from subprime crisis
Analysts at financial research firm Celent say the U.S. banking industry will lose 200,000 jobs over the next 12 to 18 months.
The head of Celent’s financial consultancy unit says the job cuts will occur as the subprime crisis hits other parts of the banking industry.
Octavio Marenzi said Tuesday that staff reductions were inevitable as the U.S. economy weakens further.
Posted by guest , Apr 01, 2008 8:32AM
Celent. Really?
Posted by guest , Apr 01, 2008 9:18AM
Hey!! Guy in Texas just informed me that Chesapeake Energy is going to merge with In-n-Out Burgers and they are going to call the new business:
"Peake-n-Out"
Posted by guest , Apr 01, 2008 9:27AM
How long did you work on that one
Posted by guest , Apr 01, 2008 9:43AM
Dell bought CIT's 30% in DFS. The problem is that CIT underwrote some of the loans? What's the problem with that? This article is a bit of a stretch.
Posted by guest , Apr 01, 2008 9:44AM
UBS writes off 19 billion, Citi and Merrill get downgraded yet they are all up big today that's your April Fools rally.
Posted by guest , Apr 01, 2008 9:51AM
UBS up 10% on the recapitalisation...
The Global Drawdown is OVER Wooo hooo!
(nah April Fool!)
We'll all get fekked badly within a week...you mark my words, the grim reaper of Wall street is visiting with us and drawing his scabby boney finger over our bonus pools...fekk him!
Posted by guest , Apr 01, 2008 10:04AM
Anybody know Chelsea Clinton's bra size?
Posted by guest , Apr 01, 2008 10:39AM
Whooooeeee! I am tired, baby!! man, you subprime folk know how to do it right!! OK, now.....which way to the so-called "ethanol trader" community??
Sincerely,
The Grim Reaper
Posted by guest , Apr 01, 2008 11:43AM
34A
Posted by guest , Apr 02, 2008 3:25AM
Chelsea Clinton is not a 34A. She has a very nice figure. She was trained as a dancer. In looks, she takes after her paternal grandmother, who was a real man's woman, salty Southern style. I would put Chelsea as a 36C, which she carries very well, because she has good muscle-skeletal control of her torso.
Posted by guest , Apr 02, 2008 5:51AM
Just want to find out what would happen to the more senior staff at UBS and at other investment banks who have a large portion of their remuneration paid in the form of stock options.
Since the share price of alomost all listed investment banks have lost at least 30% of their value from their highs in 2007. Does this mean the stock options they got in 2005, 2006, and 2007 are now deeply underwater or practically worthless?
Do the stock options get rolled over or repriced (I know this is legally sensitive)?
Thanks
Posted by guest , Apr 02, 2008 8:11AM
@3:25 feel free to link any picture that even hints she is hiding C cups in there somewhere
And 36? she aint that big around
Posted by guest , Apr 02, 2008 8:16AM
5.51
No there is no repricing, they get fucked, just like the junior analysts.
In fact its the ideal time to lay them off since stock options normally get paid automatically at todays price in the case of redundancy.
In the case of misconduct (normally) they leave without any options..but as we have seen recently managing over several billion dollars of subprime and rogue trading does not constitute misconduct...
I guess you gotta poke your secretary in the ass to get that...
Posted by guest , Apr 02, 2008 9:20AM
Thank you for your answer 8:16
From the few 'research' reports on Wall Street investment banks that I have read have only marginally revised down the forecast earnings of the banks for 2008 and 2009.
Forgive my ignorance, but haven't entire franchises such as leveraged finance, mortgage securitization, and CDO desks been decimated and revenue from these areas disappeared?? Surely these would amount to serious double-digit decline in profits.
Not to mention the very high probability of the 2006-2007 vintage PE-backed corporates going into default. PE Debt held by banks would go down further.
Are these research analyst not doing their jobs as well and diligent as they should or are they not telling the truth for fear of losing their jobs too?
I find it immensely amusing when an analyst of one Wall Street firm downgrading a rival firm. Isn't it like a pot calling a kettle black?
Posted by guest , Apr 02, 2008 9:46AM
@9:20, i will forgive your ignorance this time. the banks are mostly not engaged in the businesses you mention. For the ones that are, you must recall they sustained severe losses in 2007 that should not be repeated in 2008, hence even without these revenue streams 08 earnings should be better than the heavy losses of 07.
although, bank estimates are still to high, but not for the reasons you mention.
Posted by guest , Apr 02, 2008 10:07AM
9:46, thank you for your reply.
I sure hope your assessments are correct.
I have a banker as a tenant. If he can't keep up his rent payment and I have to kick him out. My mortgage will turn subprime..................