Bear Stearns said it expects further significant write-downs at UBS due to its exposure to subprime mortgages. The broker is forecasting a write-down of $2 billion to $3 billion in the fourth quarter and a further $5 billion in 2008, resulting in a 36% cut in its 2008 earnings forecast. Subprime exposure is not a major issue for Deutsche Bank, but its fixed income revenue will come under pressure from the deteriorating market conditions in 2008, Bear Stearns said. It added that it expects Alliance & Leicester to struggle against negative metrics for the mortgage industry and a slowdown in corporate momentum. What a coincidence while ES is spiking in three sessions...
Problem is that no-one knows which equities are crap. There is no efficient bond market so correct pricing is difficult.