If you are a giant Swiss bank, the one business you are supposed to do better than just about anyone is private banking. So news that UBS is considering selling Paine Webber, the heart of its U.S. wealth management business, which it bought for $10 billion nearly eight years ago, hasn’t gone down well at all. The stock sank more than 4 percent on the news. Though the name of Paine Webber disappeared from Wall St, the operations have remained more-or-less intact, making it relatively easy to hive off, analysts say. Senior bankers say the business could be an attractive buy for Bank of America or Morgan Stanley.
Once upon a time, bank analysts were uniformly upbeat on investment banks. “Sell” ratings were nearly unheard of, and potholes in balance sheets were never as big as the huge, routine earnings beats. Now, with Goldman Sachs’s sector u-turn perhaps at the apex, there is plenty of mud to go around. Today’s hit list includes Barclays, the recipient of 4.5 billion pounds in balance-sheet aid this week. Citigroup says Britain’s third-biggest bank may need to raise a further 9 billion pounds and could take more significant write-downs. Lehman Brothers analyst Roger Freeman took aim at Merrill Lynch, saying the big broker will probably see $5.4 billion of write-downs in the second quarter, mainly from its exposure to monolines. Freeman raised his write-down view by $3 billion for Merrill, making his estimate the highest among Wall Street analysts.
Check out Nike just not doing it in the U.S.
The athletic shoe and apparel maker apparently is not immune to the sluggish U.S. economy. The company said Wednesday that U.S. orders for goods through November were flat.
It also said sales in the fourth quarter rose 4 percent in the U.S., compared with a 16 percent increase for the entire company. U.S. apparel sales rose only 2 percent.
Nike said it will focus on more premium merchandise that is better distributed and can stand out. It also stressed that U.S. profit margins are not eroding.
For Nike, getting through the tough U.S. economy might just be an invigorating workout.
“Strong companies who are able to navigate through those tough times can come out even stronger,” Nike CEO Mark Parker said in a conference call.
Ooh, feel the burn!
Also in the basket:
Anheuser-Busch to reject $46.3 billion InBev offer
The road runs out: Streetwear adapts as market implodes (WWD)
Anheuser-Busch is set to reject InBev‘s $46.3 billion takeover offer, a source tells Reuters. After a few weeks of stonewalling by the company and posturing by Missouri politicians, is that really such a surprise? The company’s defensive strategy will hinge on restructuring the workforce and spinning off non-core assets like the SeaWorld theme parks, but as DealZone’s David Jones notes, those same strategies have already been offered up by InBev as a justification for its bid. Might as well crack open a few icy cold Budweisers — looks like this is going to take a while to sort out.
Among the littany of Bear Stearns golf balls, teddy bears, and tote bags on eBay, one of the top price getters is a holiday card signed by recently indicted former Bear Stearns hedge fund manager Ralph Cioffi, with the bidding now at $81.
So much for the short-term indicators, what about the longer term ones? We are currently sitting right on the 38.2 pct Fibonacci retracement of the entire low to high move of the BSE as you can see from the second chart. From a technical point of view this Fibonacci level is not that strong, as the trend had some good corrections on the way up. Nevertheless, we need to watch it carefully for signs of further support. It will be interesting to see if this level holds in the coming days. We have a market which is short-term bearish but has some good supports, although one very strong one has broken.
The general expectation is that inflation will peak sometime in H2 but we have to be cautious of that view changing as it will have a significant impact on the market. Money market rates are starting to show a worrying uptrend and if the view shifts that the inflation peak is further out, the market will get more negative.
It’s interesting that on Wednesday the stock market moved higher the day following a significant monetary tightening by the Reserve Bank of India.
Was it a relief rally that the bad news was out of the way, or a market that was feeling more comfortable that a challenging problem was being dealt with? In my experience elsewhere in the world, financial markets react well to strong and decisive action by central banks and governments and punish any signs of weakness.