![]() ![]() Germany’s biggest bank, Deutsche Bank, said Tuesday that it would take a $4 billion write-down because of the subprime crisis, and warned that market conditions “have become significantly more challenging during the last few weeks.” Levkovich said.Įven so, enormous losses keep piling up. That is close to the 20.5 percent median decline stocks have experienced over the last nine recessions, Mr. But it suggests the market is willing to look past the valley to some degree.”įrom a high last October of 1,565 to its low of 1,273 last month, the S.& P. “Does it mean all the problems are behind us? No. ![]() Reaction to the news of fresh capital for Lehman and UBS was “quite good,” said Tobias Levkovich, a longtime stock market strategist at Citigroup. 500 still achieving double-digit earnings gains?” he said, referring to the Standard & Poor’s 500-stock index. “If we’re in recession, why is unemployment 5 percent? Why are 80 percent of nonfinancial companies in the S.& P. Paulsen also rejected the idea the economy was in recession. “What we’re in the process of doing is putting in a bottom,” he added. Paulsen, chief investment strategist of Wells Capital Management in Minneapolis, alluding to rate cuts the Federal Reserve made in recent months. Tuesday represented “one of the biggest rallies we’ve had that wasn’t on Fed steroids,” said James W. Other market watchers noted that Tuesday’s big stock market move was different in important ways from previous rallies. Summers added that recent actions by the Federal Reserve, combined with bargain prices for certain financial assets, might be “enough to permit a process of repair to begin.” “One can’t be at all confident the worst of this is behind us.”īut Mr. Summers, who confronted the financial shocks of the late 1990s as Treasury secretary under President Bill Clinton. “There have been several false dawns during this crisis,” said Lawrence H. It projected that investment banking revenue will drop another 20 percent this year, and financial firms will report a further $75 billion in markdowns on top of what they have announced so far. Indeed, a report issued Tuesday by Morgan Stanley concluded that investment banks face their worst crisis in 30 years, surpassing the global financial upheavals of 1998 as well as the stock market crash of 1987. “There’s no end in sight in terms of bad news.” “There’s a ‘hooray’ from the stands, but investors don’t realize the bench has been weakened,” she said. Gruebel signalled on the day of his appointment at the end of February that further cost cuts would be inevitable.“The market has been consistently wrong each time they tried to find a bottom,” said Meredith Whitney, an analyst at Oppenheimer & Company, noting that earlier stock rallies in January and last fall were overwhelmed by more bad news. The bank revised up its 2008 net loss to 20.9 billion Swiss francs on March 11 and said its near-term outlook was extremely cautious, warning that its balance sheet remained exposed to illiquid and volatile markets.Īnalysts expect new Chief Executive Oswald Gruebel, brought in to grapple with UBS's crisis in February after previously turning around Credit Suisse, will choose to get all the bad news out of the way at once in a move termed 'kitchen-sinking'. The tarnished Swiss banking icon is struggling to rebuild its once powerful brand after massive investments in risky US assets forced it to accept government backing to survive. ![]() "This could already be known on April 1," Sonntag said. Sonntag, which cited people familiar with the issue, had said UBS would write down at least another $2 billion on illiquid assets, including asset categories so far out of the spotlight such as collateralised loan obligations (CLOs). The bank, one of Europe's hardest-hit in the crisis, has already written down more than $49 billion since mid-2007 and cut over 7,000 jobs, mostly in investment banking. Shares in UBS, the world's largest wealth manager in terms of assets, had already fallen 7 per cent on Friday as traders said rumours swirled of a profit warning and more writedowns in the first quarter. UBS shares were down 7.3 per cent at 10.54 Swiss francs at 0919 GMT, when the DJ Stoxx European banking sector index was down 5.9 per cent. UBS declined to comment on the report on Monday. Swiss newspaper Sonntag said on Sunday that UBS would write down at least another $2 billion (Dh7.34 billion) on illiquid assets and cut a further 8,000 jobs. Shares in UBS were down 7 per cent on Monday amid expectations the bank could announce more writedowns and job cuts as early as this week.
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