Credit Suisse (NYSE: CS) closed at $46.63 Thursday. CS overall option implied volatility of 40 is above its 26-week average of 34 according to Track Data, suggesting larger price movement.

UBS AG (NYSE: UBS) closed at $23.09 Thursday. UBS July option implied volatility of 53 is above its 26-week average of 42, suggesting larger price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

With the super-growth in emerging economies – especially in India and China – there is likely going to be a secular trend for infrastructure. In fact, this should be the case in mature economies as well, even the US, as the infrastructure is getting fairly old and needs to be replaced.

To deal with the growing infrastructure needs, there will also be a need for substantial amounts of capital. To this end, Morgan Stanley (NYSE: MS) announced it has formed an infrastructure fund, raising $4 billion for the fund.

Meanwhile, General Electric (NYSE: GE) has teamed up with Credit Suisse (NYSE: CS) to create its own fund – with $5.6 billion.

Basically, these funds will focus on things like toll roads, ports, water systems, airports, parking lots and other income-generating platforms. While the upfront costs can be tough, the long-term cash flow characteristics look bright. Perhaps that's why – despite the credit crunch – these funds had little trouble getting started.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

MOST NOTEWORTHY: Credit Suisse, Masimo and Marvell Tech were today's noteworthy upgrades:

• Bear upgraded Credit Suisse Group (NYSE: CS) to Peer Perform from Underperform as they believe the company's balance sheet will stabilize and the company's Private Banking business is holding up well in difficult conditions. Goldman, which raised shares to Neutral from Sell, believes the worst is over regarding the market downturn.
• Citigroup upgraded Masimo Corporation (NASDAQ: MASI) to Buy from Hold citing expectations of a strong Q1 report, expected FDA approval for hemoglobin monitoring in 2H08, and valuation.
• Marvell Technology Group Ltd (NASDAQ: MRVL) was raised at Friedman Billings to Outperform from Market Perform based on valuation and improved business conditions.

OTHER UPGRADES:

• Goldman raised LM Ericsson Telephone Company (NASDAQ: ERIC) to Neutral from Sell.
• JP Morgan upgraded Big Lots Inc (NYSE: BIG) to Overweight from Neutral.
• Petro-Canada (NYSE: PCZ) was upgraded at CIBC to Sector Outperformer from Sector Performer.

Shares of Credit Suisse Group (NYSE: CS) are trading higher despite that fact that the company reported a loss for the first three months of the year, hit by its exposure to the credit markets. European shares didn't react to well though as it was the bank's first quarterly loss in five years.

Credit Suisse posted a first quarter net loss of $2.1 billion as the global effects of the U.S. subprime mortgage crisis came with substantial write-downs. Thus, the company was forced to write down 5.3 billion francs ($5.3 billion) in mortgage securities and big buyout loans.

Making some comments on its quarterly earnings figures, the company stated its dissatisfaction with the current results, but on the positive side "most of our businesses performed well, with revenues near, or in some cases above, those in the first quarter of 2007." Looking ahead, the company's Chief Executive Brady Dougan is confident that Credit Suisse "will continue to serve as a safe haven for clients in uncertain and volatile markets, and to seize the opportunities that arise in times of market dislocation to create long-term value."

MOST NOTEWORTHY: Credit Suisse, Bank of America and Bear Stearns were today's noteworthy downgrades:

• UBS downgraded Credit Suisse (NYSE: CS) to Neutral from Buy to reflect the company's higher-than-expected write-downs in Q1.
  
• Merrill cut Bank of America (NYSE: BAC) to Sell from Neutral and lowered their estimates to reflect a higher credit loss outlook as they now estimate Bank of America's loan provision will rise to $15B in 2008 from $8.4B in 2007.
  
• Sandler O'Neil downgraded Bear Stearns (NYSE: BSC) to Sell from Hold citing share premium to deal value of $10.00.

OTHER DOWNGRADES:

• Citigroup lowered Gap (NYSE: GPS) to Hold from Buy.
  
• Tiffany & Co (NYSE: TIF) was downgraded to Perform from Outperform at Oppenheimer.
  
• JP Morgan downgraded Philips Electronics (NYSE: PHG) to Neutral from Overweight.

HSBC Holdings (NYSE: HBC), a United Kingdom-based banking and financial services company, closed at $80.40 Thursday. HBC April option implied volatility of 39 is above its 26-week average of 29 according to Track Data, suggesting larger price movement.

Credit Suisse (NYSE: CS), a global financial services company, closed at $49.48 Thursday. CS overall option implied volatility of 55 is above its 26-week average of 34, suggesting larger price movement.

Deutsche Bank (NYSE: DB) closed at $112.26 Thursday. DB April option implied volatility of 44 is above its 26-week average of 33, suggesting larger price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

Not since 2003 has Credit Suisse (NYSE: CS) sustained a quarterly loss. Unfortunately, it looks like the streak will end in fiscal Q1.

True, no investment firm seems to be immune from the problems of the credit crunch. In fact, it looks like March has been particularly tough.

However, in the case of Credit Suisse, it looks like some of the damage has been self inflicted. For example, a variety of employees engaged in mispricing of collateralized debt obligations (CDOs). As a result, Credit Suisse expects to take a 2.65 billion franc write down.

No doubt, the employees have been terminated and are being disciplined. And yes, shenanigans have been big problems at other banks, such as Societe Generale SA and MF Global Inc. (NYSE: MF).

Yet, the damage has been done – and, once again, investors have to worry about the risk-management capabilities of Credit Suisse.

In today's trading, the stock price is down 5.22% to $47.25.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.

MAJOR PAPERS:

• Jarrett Lilien, E-Trade Financial Corporation's (NASDAQ: ETFC) president and COO, who lost out on the CEO job last month to Donald Layton, is going to resign from the online brokerage firm, the Wall Street Journal reported; Layton doesn't plan to fill the position.
• Chinese Internet search firm Baidu.com Inc (NASDAQ: BIDU) is poised for aggressive growth but must also confront a number of obstacles, according to the Wall Street Journal's "Heard in Asia," including a number of lawsuits regarding its music services and a vacancy in the CFO position.
• Alibaba Group, a Chinese Internet company , is in advanced talks with investors to finance its acquisition of Yahoo! Inc's (NASDAQ: YHOO) stake to expand its management independence, the Wall Street Journal reported.

OTHER PAPERS:

• According to inside sources, the New York Post reported that billionaire Joseph Lewis and former Bear Stearns Companies Inc (NYSE: BSC) CEO Jimmy Cayne are looking for a white knight that could surpass JPMorgan Chase & Co's (NYSE: JPM) takeover offer for Bear Lewis and Cayne have reportedly reached out to several private equity firms and overseas banks, including Barclays Plc (NYSE: BCS) and Credit Suisse Group (NYSE: CS).

WEB SITES:

• Medical supplies boss Michael Mastromarino, accused of stealing the body parts of around 1,000 corpses, has pleaded guilty to several charges in a deal with prosecutors. The BBC News reported that the Biomedical Tissue Services company shipped bones, skin and tendons to tissue-processing companies such as LifeCell Corporation (NASDAQ: LIFC) and Tutogen Medical Inc (AMEX: TTG), which are in turn facing hundreds of civil lawsuits.

MOST NOTEWORTHY: UBS AG, KLA-Tencor and Level 3 Comm were today's noteworthy downgrades:

• Keefe Bruyette downgraded shares of UBS (NYSE: UBS) to Underperform from Market Perform as they expect as they expect further write-downs to erase profits in 2008.
• Oppenheimer downgraded shares of KLA-Tencor (NASDAQ: KLAC) to Underperform from Perform after checks indicated Intel (NASDAQ: INTC) has chosen Applied Materials' (NASDAQ: AMAT) reticle inspection tool for its entire 32nm node after a long period of evaluation against KLA-Tencor. Oppenheimer believes this represents a $300M shift from KLA-Tencor's dominant market share in reticle inspection.
  
• Jefferies cut Level 3 Communications (NASDAQ: LVLT) to Hold from Buy as they see limited opportunity for near-term share appreciation given the company's integration challenges and the added uncertainty from recent management changes.

OTHER DOWNGRADES:

• Keefe Bruyette downgraded Credit Suisse (NYSE: CS) to Market Perform from Outperform.
  
• Kroger (NYSE: KR) was downgraded to Underweight from Neutral at JP Morgan.
  
• Baird cut Network Appliance (NASDAQ: NTAP) to Neutral from Outperform.

MAJOR PAPERS:

• According to sources, the Wall Street Journal reported that Countrywide Financial Corporation (NYSE: CFC) is under investigation for possible securities fraud. People close to the situation say the inquiry is in its early stages but it involves an inquiry into alleged misrepresentations of the company's financial position and the quality of its mortgage loans.
• The Financial Times reported that Credit Suisse Group (NYSE: CS) has teamed up with three leading academics to create products that will deal with the potentially lucrative hedge fund replication industry. The upcoming suite of products will attempt to mechanically replicate the returns of the major hedge fund strategies.

OTHER PAPERS:

• Rio Tinto Plc (NYSE: RTP) is expected to announce this week that its aluminum business is worth up to $20B more than current estimates, after a rise in aluminum prices; the UK Times reported that the statement could raise pressure on BHP Billiton Limited (NYSE: BHP) to increase its takeover bid for Rio.
• Asset manager Ameriprise Financial Inc (NYSE: AMP) is pairing up with MasterCard Incorporated (NYSE: MA), the Associated Press reported, to become a credit card lender for the first time, the two companies reportedly plan to announce today.

With this morning's market rising in spite of news of Credit Suisse (NYSE: CS)'s $2.8 billion write-down and the potential for $203 billion worth of additional Wall Street write-downs on various "structured investments", I began to wonder whether investors have already discounted all the bad news and the market will start to rise.

The Credit Suisse write-downs drew praise from analysts for their reflection of the strength of its risk management but they also shocked investors who sliced 9% of its stock. Credit Suisse took "fair-value" reductions -- an estimated price when no market price is readily available -- of its "structured credit trading positions" of about $2.85 billion. I am not sure why analysts praised Credit Suisse because it's not all that different from any firm struggling with how to value illiquid securities.

Meanwhile, UBS estimated that the world's largest banks could ultimately take $123 billion to $203 billion of additional write-downs on subprime-related securities, structured investment vehicles (SIVs), leveraged loans and commercial mortgage lending. The higher estimate assumes that the troubled bond insurance companies fail -- and this assumption will soon be tested.

When Credit Suisse (NYSE: CS) talked about its results last week, it looked like the bank would be distinguished by having very few write-downs of mortgage-related securities, making it look smarter than its US or European counterparts. That only lasted a few days.

According to The Wall Street Journal, the bank said "first-quarter earnings will be reduced by $1 billion from mismarkings and pricing errors by traders which led to the reduction in the value of some asset-backed securities by $2.85 billion."

Let's say it and be done with it. Big banks and financial houses don't know what they own. This was made clear by AIG's (NYSE:AIG) surprise write-off last week. Financial companies bought and created structured instruments where the risk was not clear or was poorly understood. Those assets cannot be sold now because of a tremendous slowdown in the credit markets and more subprime mortgage defaults.

Because banks are not sure what they own and what it is worth, the odds that more write-down are coming goes up. Banks would have preferred to cleanse themselves of bad news last year. But they can't value what they don't understand.

Douglas A. McIntyre is an editor at 247wallst.com.

Qatar has begun to take a stake in Credit Suisse (NYSE: CS) and indicated that it is part of a program to put $15 billion into banks in the US and UK. "We have a relation with Credit Suisse and we bought some of the stock from the market, actually, but I cannot say what percentage because still we are in the process," the Arab country's prime minister told Bloomberg.

Qatar may get a chance to invest every last dime of its fund. While banks have written off some of their subprime exposure, they still have billions of dollars of structured investments on their balance sheets. They also face potential write-downs on credit card holdings and corporate LBO loans which could drop in value if the credit markets remain largely frozen.

With more losses almost certain, many large banks will have to face what they will do if sovereign funds from Asia and the Middle East want to provide them with billions of dollars to rescue them in exchange for large percentages of ownership. Congress has objected to some of these investments as partial takeovers of the most important banks in the US.

Unless the federal government wants to come up with the money, though, its objections are hollow.

Douglas A. McIntyre is an editor at 247wallst.com.

MOST NOTEWORTHY: General Motors, Ford, Deutsche Bank and Credit Suisse were today's noteworthy downgrades:

• Bear downgraded General Motors Corporation (NYSE: GM) to Underperform from Peer Perform and Ford Motor Company (NYSE: F) to Peer Perform from Outperform citing deterioration in the automotive consumer's ability to purchase vehicles.
• ABN Amro downgrade Deutsche Bank AG (NYSE: DB) to Sell from Hold and Credit Suisse Group (NYSE: CS) to Hold from Buy on concerns of slowing revenue growth amid the subprime crisis.

OTHER DOWNGRADES:

• FormFactor Inc (NASDAQ: FORM) was lowered to Neutral from Buy at Broadpoint.
• National Financial Partners Corp (NYSE: NFP) was downgraded to Neutral from Buy at Merrill.
• Morgan Stanley lowered Expedia Inc (NASDAQ: EXPE) to Underweight from Equal Weight.

On Wednesday, I talked to a friend who is an investment banker for a boutique firm. For about four months, he spent many hours piecing together financing for a company. However, at the 11th hour, the client pulled out and my friend not only lost a juicy fee, but was stuck with the hefty legal bill.

In most financings, an investment banker gets a fee that represents the total value of the transaction (known as getting "points" on a deal). As seen with companies like Goldman (NYSE: GS), these fees can be enormous.

But might this structure encourage bad dealmaking? After all, as seen in my friend's case, there was quite a bit of pressure to close the deal.

Wall Street's fee structure may be a big part of the meltdown in buyout deals and the mortgage mess. If you strike a deal – and get a fee – does it really matter what happens after that?