News round-up: 12 Aug 2008

My Commentary: The lead story today is about UBS and it.s $5.1 billion in writedowns and what this means for the financial system going forward. When one combines the downbeat assessment by UBS management regarding Q3 and Q4 with the Housing Wire story on Alt-A in the US, it says more losses are to come.

Specifically, the Housing Wire rebuttal of an FT Lex column gives the lie to he notion that all is well in America’s Alt-A universe of home owners. For months now, the statistics have pointed to distress in Alt-A and we should see this borne out in RMBS losses going forward. Jamie Dimon, JPMorgan Chase’s head, made revealing remarks about the situation that I chronicle in my post Prime looks terrible. Obviously, if prime looks terrible, Alt-A is even worse.

I highly suggest reading the feaured article from the FT because it captures my sentiment regarding the potential failure of a major player later this year.

Finally, the articles in the inflation/deflation section suggest the outlook on future price inflation is decidely mixed. We are at a crosroads where it is not clear where consumer prices are headed. I think disinflation is in the cards for ’09, others think more inflation.

Feature article
Investors fear another big financial firm failure – FT

Earnings
UBS reports more sub-prime losses – BBC News

UBS shakes up board in response to further losses – FT

UBS Posts Loss on Debt Writedowns, Settlement Costs – Bloomberg News

UBS to Separate Businesses After Second-Quarter Loss – NY Times

Inflation/Deflation
Slept Through Rice Age, Awoke to Commodity Bear: Caroline Baum – Bloomberg News

Oil price slides to $111 – Fin24

China CPI increase falls to 10-month low in July – MarketWatch

Inflation set to hit 5 per cent as goods prices surge – Times Online

Japan’s wholesale inflation hits 27-year high in July – MarketWatch

Lawsuits
Cuomo Seeks Settlements With 3 More Banks – Deal Book

Morgan Stanley to Buy Back Auction-Rate Securities – Deal Book

Wachovia Revises Loss Downward On Possible Settlement – WSJ

Regulation and Crisis Resolution
Of Short Sales and Strange Bear Trades – Deal Book

A Danish fix for the U.S. mortgage crisis – George Soros, FT

Housing
New home prices soften, construction plummets – National Post

Lex gets it very, very wrong on Alt-A – Housing Wire

Property market grinds to a halt amid mortgage drought – Times Online

House sales drop to lowest level on record – Telegraph

Irish house prices fall twice as fast as a year ago – Irish Independent

Recession
Gloom for European manufacturers – FT

Credit
Moody’s Downgrades Morgan Stanley, Cites ‘Miscues’ – Housing Wire