UBS downgrade of BAC seems extremely important. Thank you Bill. And not just from the perspective of the US banking sector. If these guys at UBS (who play golf with the boys at BAC) feel compelled to make this move in the face of (for sure) political pressure, tells me that more thumbs are needed to plug the dike.
Some rats are apparently running down the hawsers seeking dry land.
How ironic that the PMs suffered such a vicious day today in spite of our coming into the best season for this sector.
Someone today spoke of a "sucker rally" in the golds and I can't blame him/her considering the immediate pain, but could he have this backwards? Could this be the irrational and unexplainable move down that proceeds the "big boys" going long?
Take a look at USGL, IAG, GG, AEM, AUY etc. Are these kangaroo tails I see?
If I knew, I would be retired...in three weeks.
Since I don't, I seek counsel...

Today, UBS also thinks that the financial sector is attractive, along with healthcare & industrials. The following is from http://http://investmentexecutive.com/client/en/News/DetailNews.asp?id=35492&IdSection=148&cat=148&BImageCI=1

S&P 500 expected to rally by year's end

Economic slowdown will be mostly confined to consumer stocks, says UBS Securities

Monday, September 11, 2006

By James Langton

UBS Securities LLC has raised its S&P 500 target to 1,450 from 1,400.

“We expect a broad rally by year end. We think industrials, financials, and healthcare are the most attractive sectors. We now see opportunity in tech, but we remain cautious on consumer discretionary,� the firm says in a new report.

The report argues that the current economic slowdown will be mostly confined to consumer areas. It notes that S&P 500 earnings are less exposed to consumers, and it believes they will prove resilient. “Numerous supports have bolstered and should continue to bolster S&P 500 earnings in this consumer led and we believe largely contained slowdown,� it says. These supports include: a healthy global economy, robust infrastructure spending, ongoing efficiency initiatives and moderating input costs, underleveraged balance sheets, and M&A driven consolidation.

UBS says it believes the Fed is done raising rates. “The softer economy and continued investment response will ease inflation pressures over time,� it maintains. “The Fed is showing both vigilance and patience. The era of low long-term interest rates is likely to continue, supporting a high-teens PE on normalized EPS.�

“We consider the S&P 500 undervalued and our best estimate of where it trades in a year is 1,450,� it concludes. “We believe our previous 1,400 target, set in January, can be reached by 2006 year-end or shortly thereafter. This nearly 12% forecast price appreciation is expected to come mostly from a higher PE. Expansion is being driven by a slowing consumer economy, keeping interest rates low, and a healthy global and business economy, keeping S&P EPS growth positive.�

Former BP Executive Takes the 5th

http://www.washtimes.com/business/20060907-023951-4572r.htm

Americans likely to vote their Wallet

http://www.washtimes.com/national/20060910-115757-5017r.htm

Claire,

Can you post a link to the actual UBS report? Who was the author? Thx.

SiO2, I don't have the actual report from UBS, just the article from Investment Executive (URL below). If Bill has access to UBS reports, he should have it. The tone of the report seems to be bullish, so you may not see it on billcara.com :) Maybe the analysts at UBS are not talking to each other. UBS stands for "Undecided if Buy or Sell?" Ha, ha.

www.investmentexecutive.com/client/en/News/DetailNews.asp?id=35492&IdSection=148&cat=148&BImageCI=1

I thought it was interesting that Goldman Sachs cut estimates on BSC, MS and LEH today. No doubt some of them will want to return the favor.

I had this little investment thesis that the banks, with their great run of late, would feel "out of the love". So I bought a few puts in BAC (due to their MBNA exposure) and WFC (due to their 20% mortgage banking exposure). Of course I was "early" and I'm down about 40%. At least this post gave me some affirmation, but I'll feel totally affirmed when some green flashes.

Wonder if analyst have these numbers built into their models?

"What are the CME Housing Futures Predicting?

The Chicago Merc now trades futures on the real estate markets in ten major cities based on the S&P/Case-Shiller Home Price Indices. Based on the futures, we show the expected percent change in single family home prices from June 2006 (the most recent actual data) to the four contract expiration months currently trading (11/06, 2/07, 5/07, and 8/07). The markets are expecting Las Vegas and San Diego to decline the most by next August, while New York and Denver are expected to decline the least. The composite future is looking for the entire housing market to decline by 6.44% by next August."
http://tickersense.typepad.com/ticker_sense/2006/week37/index.html