UBS – Page 4 – Infinite Unknown

Bear Stearns: Insider Trading

August 13, 2008 by Infinite

Aug. 11 (Bloomberg) — On March 11, the day the Federal Reserve attempted to shore up confidence in the credit markets with a $200 billion lending program that for the first time monetized Wall Street’s devalued collateral, somebody else decided Bear Stearns Cos. was going to collapse.

In a gambit with such low odds of success that traders question its legitimacy, someone wagered $1.7 million that Bear Stearns shares would suffer an unprecedented decline within days. Options specialists are convinced that the buyer, or buyers, made a concerted effort to drive the fifth-biggest U.S. securities firm out of business and, in the process, reap a profit of more than $270 million.

Whoever placed the bet used so-called put options that gave purchasers the right to sell 5.7 million Bear Stearns shares for $30 each and 165,000 shares for $25 apiece just nine days later, data compiled by Bloomberg show. That was less than half the $62.97 closing price in New York Stock Exchange composite trading on March 11. The buyers were confident the stock would crash.

“Even if I were the most bearish man on Earth, I can’t imagine buying puts 50 percent below the price with just over a week to expiration,” said Thomas Haugh, general partner of Chicago-based options trading firm PTI Securities & Futures LP. “It’s not even on the page of rational behavior, unless you know something.”

`Lottery Ticket’

The 57,000 puts that traded March 11 at the $30 strike price and the 1,649 that traded at $25 were collectively worth about $1.7 million, Bloomberg data show. Each put is equal to 100 shares of stock.

“That trade amounted to buying a lottery ticket,” said Michael McCarty, chief options and equity strategist at New York-based brokerage Meridian Equity Partners Inc. “Would you buy $1.7 million worth of lottery tickets just because you could? No. Neither would a hedge fund manager.”

Queen’s stockbroker raided, biggest ever crackdown on insider trading

July 30, 2008 by Infinite

The Queen’s stockbroker Cazenove has been caught up in Britain’s biggest ever crackdown on insider trading.

Eight people were arrested in dawn raids yesterday by the City watchdog the Financial Services Authority.

Cazenove admitted that one of the arrested worked at its London offices as a sub-contractor.

A 40-strong team from the FSA swooped on addresses in London and the South East with back-up from City of London police.

Cazenove, the Queen’s stockbroker, has been at the centre of police raids into insider trading

They are believed to have seized computers and paperwork.

Are “Dark Pools” Destined to be the Capital Markets’ Next Black Hole?

July 15, 2008 by Infinite

Related article: – Big Traders Dive Into Dark Pools

We can almost hear that ominous “Jaws” theme music in the background and can see that huge dorsal fin as it slices threateningly through the water – knowing full well that the real terror is hidden beneath the water’s surface.

But this time around, it’s not a “Great White” that’s sparking our fears; it’s a well-capitalized and broadly based series of secret stock exchanges known as “Dark Pools of Liquidity,” “Dark Liquidity,” or just “Dark Pools.”

Most investors have never even heard the term – and are truly shocked to discover these “off-the-books” trading networks actually exist.

But to Wall Street insiders looking to anonymously move billions of dollars in stocks, bonds, and other investment instruments, dark pools are de rigueur – especially when you’re an institutional trader who doesn’t want to reveal your intentions or your actions to the “rest” of the market, until after the fact when the orders are “printed.”

And that makes these dark pools of capital highly problematic when it comes transparency: There is literally none in most pools and only limited visibility in others.

Dark Pools: From Trading Haven to Heavyweight

Dark Pools are electronic “crossing networks” that offer institutional investors many of the same benefits associated with making trades on the stock exchanges’ public limit order books – without tipping their hands to others, meaning publicly quoted prices aren’t affected. This is the capital markets’ version of a godsend – especially for traders who desire to move large blocks of shares without the public investors ever knowing.

Some examples of so-called crossing networks include Liquidnet Inc., Pipeline, the Posit unit of Investment Technology Group (ITG), or the SIGMA X unit of Goldman Sachs Group Inc. (GS).

In an era in which “secret” transactions contributed to what’s shaping up to be the largest credit crisis in history, you’d think that any mechanism that allows insiders to trade in complete secrecy and with total anonymity would be scrutinized more closely than a Roger Clemens vitamin shot. But that’s not the case with Dark Pools.

Gold May Rise to $5,000 on Inflation, Schroder Says

June 21, 2008June 21, 2008 by Infinite

June 19 (Bloomberg) — Gold prices may rise to $5,000 an ounce as investors seek to protect themselves against accelerating inflation, said Schroder Investment Management Ltd., which oversees $277 billion of assets globally.

“You could easily see for the next several years that prices rise not to $1,000 an ounce, but prices rise to $5,000 an ounce or beyond as inflation psychology becomes more and more embedded and people become desperate to have a source of value,” said Christopher Wyke, London-based emerging market debt and commodities product manager at Schroder, which oversees about $10 billion of commodity assets.

Investors are turning to gold for protection as two-thirds of the world’s population cope with inflation rates that are climbing to more than 10 percent, Wyke said. Cash and inflation- linked bonds are poor substitutes as low interest rates, coupled with surging inflation, erode the real value of assets, he said.

Wealthy Investors Shift Funds From Global Banks to Reduce Risks

June 19, 2008 by Infinite

June 19 (Bloomberg) — High-net worth individuals, those coveted financial-services customers with at least $2 million to invest, are shifting assets from brokerages and large global banks to smaller, more conservative alternatives.

“For the first time in my career, I saw concern about the location of one’s assets,” said Robert Balentine, the head of Wilmington Trust Corp.‘s investment management group. “We’ve seen tangible evidence of very wealthy clients shifting assets out of brokerage firms in great numbers.”

Trust companies like Wilmington are benefiting from record subprime-infected losses at companies led by Zurich-based UBS AG, the world’s biggest money manager for the rich. UBS clients probably withdrew a net $39 billion during the past three months after the company reported more than $38 billion of writedowns and credit-market losses in the past year, London-based analysts at JPMorgan Chase & Co. estimate.

Clients may say “if UBS can’t manage its own capital, then what the hell are they going to do with mine?” said David Maude, a financial services consultant in Verona, Italy, who calls UBS the “Rolls Royce” of the industry. “It does tarnish their reputation, certainly.”

UBS contacted 2.5 million Swiss consumer and wealth- management customers last month after losing 11.5 billion francs ($10.9 billion) in the first quarter and seeing a net withdrawal of 12.8 billion francs in its asset and wealth-management units.

The company has responded with “proactive, ongoing communication” with clients, said Jim Pierce, co-head of UBS’s U.S. Wealth Management Advisory Group, in an e-mailed response to questions. UBS is “willing to have the difficult conversations,” Pierce said.

U.S. Market

Banks’ credit crisis solutions have echoes of 1929 Depression

June 3, 2008 by Infinite

As banks look to shore up their balance sheets in the wake of the credit squeeze, Philip Aldrick asks whether it is all short-term trickery

Investors gather in New York’s financial district after the stock market crash of 1929, which heralded the onset of the Great Depression

‘We are in the midst of the worst financial crisis since the 1930s,” warns the eminent financier George Soros in his latest book, The New Paradigm for Financial Markets. It’s a rather extreme view, but the man who broke the Bank of England is not alone in his dark funk. At a recent event, one banker laced Soros’s sentiment with a little gallows humour, ruefully predicting “10 years of depression followed by a world war”.

Comparisons with the great crash of 1929 are inevitable and the parallels manifold. Then it was an over-inflated stock market that burst before wider economic malaise ushered in the Great Depression.

This time, in the words of Intermediate Capital managing director Tom Attwood, sub-prime was merely “a catalyst” for the inevitable pricking of the credit market bubble as “disciplines were bypassed in favour of loan book growth at almost any cost”. Again the talk is of recession, certainly in the US and possibly in the UK.

Perhaps the most intriguing parallel, though, is the crude attempt at self-preservation made by the investment trusts in 1929 and the banks now.

In the great crash, investment trusts with vast cross-holdings in each other tried to stem their collapse by buying up their own stock in what the economist JK Galbraith in his book, The Great Crash 1929, described as an act of “fiscal self-immolation”. At the time, “support of the stock of one’s own company seemed a bold, imaginative and effective course,” Galbraith wrote, but ultimately the trusts were just “swindling themselves”.

Modern economists have compared the trusts’ actions with what the banks are now doing. “They seem to be just papering over the cracks,” says Brendan Brown, chief economist at Mitsubishi UFJ Securities.

Airbus at `Less Than Zero’ Value Still Loses Altitude

May 24, 2008 by Infinite

May 23 (Bloomberg) — Airbus SAS, the world’s largest commercial aircraft maker, is valued at “less than zero” after this year’s 32 percent drop in the shares of parent European Aeronautic, Defence & Space Co., according to Lehman Brothers Holdings Inc. analyst Joe Campbell.

“The market is viewing Airbus as a liability, rather than an asset,” said Campbell, 62, who is based in New York and has ranked among the top five aerospace analysts for six consecutive years in an Institutional Investor magazine poll.

EADS, based in Paris and Munich, on May 13 reported an additional three-month delay in deliveries of the A380 superjumbo jetliner, which was already two years behind schedule. Before the latest setback, the company had cut its profit forecast by $6 billion through 2010.

Airbus, based in Toulouse, France, is also six months to a year late on the A400M military transport. It has a 20 billion- euro ($31.4 billion) contract with six European governments and Turkey for 180 of the planes. Additional cost overruns and penalty payments may drain cash needed for the $16 billion expense of developing the Airbus A350, a long-range jet competing with Boeing Co.‘s 787 and 777.

A February 2007 recovery plan meant to help Airbus cope with a weakening dollar as it competes with Chicago-based Boeing for dominance of the $60 billion-a-year airliner market has stumbled. The planemaker sought in part to shift investment for new planes to subcontractors who would buy Airbus plants. It chose local companies in France and Germany that lacked the capital to shoulder the risk and the plan fell apart.

French bank Credit Agricole seeks six billion euros after subprime losses

May 13, 2008May 13, 2008 by Infinite

French banking giant Credit Agricole said on Tuesday it was seeking 5.9 billion euros (9.2 billion dollars) in fresh cash from shareholders after taking new charges of 1.2 billion euros for problems in the US subprime market.

(Credit Agricole and giant UBS are just drawing fresh cash from shareholders into the market before the crash happens. If this would be a game of chess – and for the elite behind the scenes it is. They are not after money. They have all the money in the world. They are after POWER. – then one could really admire those people for their excellent moves. They have left (almost) nothing out. – The Infinite Unknown)

JPMorgan Chase CEO: Recession Just Beginning

May 13, 2008May 13, 2008 by Infinite

NEW YORK — JPMorgan Chase & Co.’s chief executive said Monday that while the crisis in the credit markets appears to be three-quarters over, he believes a U.S. recession is just beginning.

“Even if the capital markets crisis resolves, it does not mean that this country will not go into a bad recession,” said CEO James Dimon, whose bank saw its first-quarter profit fall by half due to the recent collapse of the U.S. mortgage market. “The recession just started.”

“We don’t know if it’s going to be mild or severe,” he continued, speaking at a conference in New York hosted by Swiss bank UBS AG. “We’re thinking there’s a third of a chance that it’s going to be pretty bad … closer to the 1982 recession than the very mild recessions we had in 2001 and 1990.”

JPMorgan Admits Receiving Multi-Billion Dollar Gift From the Fed

May 13, 2008May 13, 2008 by Infinite

The controversial deal orchestrated by the Federal Reserve that pushed Bear Stearns into the hands of JPMorgan Chase, at the height of the sub-prime crisis, will turn into billions of dollars in gains for for JPMorgan Chase.

The deal will result in an immediate second quarter gain of $1 billion for JPMorgan Chase, admitted Chairman and Chief Executive Officer Jamie Dimon.

(Guess who paid or will pay for this gift? – The Infinite Unknown)

Global free market for food and energy faces biggest threat in decades

December 6, 2008May 9, 2008 by Infinite

The global free market for food and energy is facing its biggest threat in decades as a host of countries push through draconian measures to hold down prices, raising fears of a new “resource nationalism” that could endanger world food security.

Somali’s demonstrate against high food prices in the capital Mogadishu. At least two people were killed in clashes

India shocked the markets yesterday by suspending trading in futures contracts for a range of farm products in a bid to clamp down on alleged speculators and curb inflation, now running at 7.6pc.

The country’s Forward Markets Commission said contracts for soybean oil, chana (chickpeas), potatoes, and rubber had been banned for four months, even though a report by the Indian parliament last month concluded that soaring food costs had almost nothing to do with the futures contracts. Traders in Mumbai slammed the ban as an act of brazen political populism.

The move has been seen as a concession to India’s Communist MPs – key allies of premier Manmohan Singh – who want a full-fledged ban on futures trading in sugar, cooking oil, and grains.

As food and fuel riots spread across the world, a string of governments have resorted to steps that menace the free flow of food and key commodities. Argentina has banned beef exports, while Egypt and India have stopped shipments of rice.

Read more Ambrose Evans-Pritchard

Why the price of peak oil is famine

Kazakhstan has prohibited wheat exports. Russia has slapped a 40pc export duty on shipments, and Pakistan a 35pc duty.

China, Cambodia, Malaysia, Philipines, Sri Lanka, and Vietnam have all imposed export controls or forms of rationing to ease the crisis.

UN Secretary-General Ban Ki-moon has warned that this lurch towards national controls is becoming a threat to the open global system we all take for granted. “If not handled properly, this crisis could result in a cascade of others and affect political security around the world,” he said.

A new report by UBS says the scramble for scarce raw materials is turning ever more political, with ominous implications for ill-endowed societies that rely on imports.

“The bottom line is that countries with resources, particularly in food and energy are becoming more protective of these resources,” it said.

(I know I am repeating myself and I know that many are already well prepared. This is for the ones that are not:
Store food and water “NOW”. Do this in a relaxed manner because your brain shuts down when you are under stress and in survival mode. – The Infinite Unknown)

Bear Stearns gets emergency funds

March 17, 2008March 14, 2008 by Infinite

Bear Stearns is one of the best-known US Wall Street firms

US bank Bear Stearns has got emergency funding, in a move that raises fears that one of Wall Street’s biggest names is on the verge of collapsing.

JP Morgan Chase will provide the money to Bear Stearns for 28 days with the Federal Reserve of New York’s backing.