Swiss bank UBS (UBS) reported Tuesday it earned 2 billion Swiss francs ($1.9 billion) -- far better than the loss of 1.4 billion francs in the same quarter last year. Results also easily beat the consensus estimate. Furthermore, the company announced that it should have all the tax matters with the U.S. government settled by October.

The bank enjoyed strong performance from its investment banking sector, which saw pretax profit increase 10%. "This was a good result in volatile market conditions, and demonstrates the progress we are making," CEO Oswald Gruebel said in a statement. "I remain confident in our future and I firmly believe that we have the right strategy in place."

With American Express Co., (AXP), it's best to look down the field, i.e. think long-term, which is why I'm reiterating my Buy rating for the company, first recommended on April 27, 2009 at a price of $27.28. If you bought AXP in April, you're up about 51%.

As forecast, institutional investors (IIs) have looked right past AXP's likely double-digit revenue decline for 2009, to the probable sunnier skies in 2010. In the year ahead, charge-offs should continued to stabilize, amid slowing delinquencies.

A few weeks ago Dodd's Senate banking committee held hearings on the need for regulation of the financial industry. Present were 10 regulators each from one of 10 different regulatory bodies. Dodd commented: "the picture of 10 people was the picture of the problem."

So it seems that we have too many regulators, none of whom were able to individually or collectively deal with the recent financial debacle. Now lawmakers are trying to figure out what to do and how to do it. Obviously there will be fierce power struggles among the existing agencies. Hal Scott, professor at Harvard University said: "its grown topsy turvy since the civil war driven by a reaction of events -- the turf was where industry always wants its own regulator that they can be more comfortable with."

Financial giant Citigroup, Inc. (NYSE: C) will get its chance to impress Wall Street tomorrow morning when it reports its first quarter results.

The stock, which has been in free fall since late 2007, has actually been doing pretty good over the past month, and now it is time to see if the company can live up to expectations. The stock hit a low of $1.02 on March 5, and since that time has climbed a very impressive 290% to its current price of $4.00 a share.

The shares of Wachovia Corporation (NYSE: WB) opened on a gain of nearly 6% this morning, thanks to a positive note from brokerage firm UBS. The analysts raised their price target on WB from $12.50 to $16, and reiterated a "neutral" rating. However, the stock has wasted no time in whittling its early morning gains, and slipped into negative territory before midday.

Yesterday, Wachovia shares closed lower after Friedman Billings & Ramsey reinitiated coverage at "underperform." No surprise there -- but, in today's session, the equity is declining on what should have been a bullish boost from UBS. In fact, most financial stocks are higher today following speculation on a potential buyout bid for Lehman Brothers (NYSE: LEH). The Select Sector SPDR Financial Fund (NYSE: XLF) is sitting on a gain of more than 2% at last check.

Like its peers, investors have been dour on Evercore Partners Inc. (NYSE: EVR), which is a boutique investment bank. But this week, the firm got some nice support; Mizuho Corporate Bank, Ltd., has agreed to purchase $120 million in senior unsecured notes in Evercore. The deal also includes a warrant to purchase 5,454,545 shares at $22 a piece. In fact, Mizuho has agreed to commit $150 million to Evercore-affiliated funds.

With the credit crunch, it's always good to get a slug of cash. But the Evercore deal is more than just a capital infusion. Basically, the firm will strengthen its existing strategic alliance with Mizuho -- so as to better penetrate the Japanese marketplace. For the most part, cross-border deals are likely to become increasingly important for investment banks.

Actually, Evercore recently announced a strategic alliance with G5 Advisors, which is an investment bank in Sao Paulo. With the strong growth in Brazil, there should be some opportunities to snag assignments.

But such things take time to play out. After all, as seen with Evercore's latest quarterly report, revenues were off 9% to $60.1 million, with profits at $2.1 million, or $0.16 per share.

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.

Want a classic example of how the real estate slump is affecting not only the construction industry and home owners, but also states and municipalities, as well?

Consider the plight of the nation's largest city, the City of New York.

Wall Street's mortgage losses have ballooned to such a degree that some firms may pay small or no taxes for years, Bloomberg News reported. That's right: no taxes for years.

Rising tax revenues, no more

For much of the current decade, indeed for much of the 1990s as well, the city could count on rising tax revenue from Wall Street firms -- based on increased securities industry business -- as a starting point for the city's budget. Not now: the city, which derives about 20% of its revenue from Wall Street businesses, is projecting a decline in revenue from Wall Street firms -- a contraction that is expected to widen the this year's $1.5 budget deficit in fiscal 2009 to $2.3 billion next year, fiscal 2010, and then to $5.96 billion in fiscal 2011 budget deficit, Bloomberg News reported. The city's budget for fiscal 2009 is $59.1 billion.

The Wall Street recession has put the social service goals of Mayor Michael R. Bloomberg on hold, for the most part. Bloomberg has already asked city department and agency heads to implement a 6.4% spending cut; he will likely ask department heads to identify other cost savings of up to 3%, should revenues continue to come in below projections.

The New York Times reports that S&P held an investment conference yesterday at which leading bankers complained about a rule that requires them to report accurately the value of securities on their books that nobody else wants to own. They complain because this reporting has resulted in $300 billion of losses so far. That cuts into bank earnings and their own bonuses.

Banks naturally don't like having to mark down assets simply because the markets have frozen up. Bob Traficanti, head of accounting policy and deputy comptroller at Citigroup Inc. (NYSE: C), suggested that some assets could be marked as if they would be held until they matured. But this ignores economic reality. If nobody wants to buy an asset, then it has no price. Therefore, for those free marketeers out on Wall Street, the assets have no value at all.

So, as I posted, banks are left trying to make up a value for the assets using computer models on complex spreadsheets. Not surprisingly, different banks use different spreadsheets to value the same kinds of assets. One of the conference participants suggested that regulators should allow banks to get together and compare spreadsheets so they can become more consistent.

MarketWatch has an interesting article today about homebuilder and financial ETFs. The article, titled "Analysts say financial, builder ETFs signaling buy," interviews a couple of leading analysts who feel that both sectors have bottomed out and are "screaming buys."

Morningstar analyst Sonya Morris said that the Financial Select Sector SPDR (AMEX: XLF) is trading "at least 25% below what Morningstar thinks they are worth."

MarketWatch said in the same article, "Most of the analysts agree that valuations are attractive right now in the financial sector. They said that once the sector gets past the problems with the subprime crisis, probably by the end of this year, the shares could move fast."

I think these analysts are probably right, but that we're probably not through going down in the short term.

Zack Miller is the Managing Editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund.

MAJOR PAPERS:

• According to the Wall Street Journal's "Heard on the Street," bears believe it may be too early to bargain hunt among financial stocks, as they think there may be more bad news to come after Citigroup Incorporated (NYSE: C) announced it took an $18B write down in Q4.
• Analysts who follow China's telecom sector believe there are a few prime picks, including China Unicom Limited (NYSE: CHU) and China Mobile Limited (NYSE: CHL), but are advising investors to think long term, the Wall Street Journal reported.

OTHER PAPERS:

• Iron ore talks with China's Baosteel have come to a halt after the company and its peers said price demands from miners BHP Billiton Limited (NYSE: BHP), Rio Tinto PLC (NYSE: RTP) and Companhia Vale do Rio Doce (NYSE: RIO) were "far too high," the Australian Financial Review said.

WEB SITES:

• MiningMx.com reported that BHP Billiton has reached an "impasse" with South Africa's government over the conversion of the company's exploration leases to new order mining rights.

In the "counter-intuitive thesis of the month" category, Morgan Stanley's global head of currency research Stephen Jen is predicting a rise in the dollar during a possible U.S. economic slowdown, Forbes reported Wednesday.

Jen said his research shows that, historically, the dollar tends to rise when the U.S. economy is either growing 1.5% a year or contracting by 1.5% or more a year, and Jen is predicting that the dollar's 2008 performance will be similar to 2005, when the dollar climbed 10% against the largest European currencies.

On Wednesday, the dollar was higher against the world's major currencies, improving 0.21 cents to $1.4684 versus the euro, 0.50 yen to 108.39 versus Japan's yen, and improving 1.35 cents to $1.9596 versus the British pound.

Andrew Resnick, independent currency trader, told BloggingStocks Wednesday that Jen's thesis is plausible.

I seriously enjoy reading Ina Steiner. She's the editor of AuctionBytes.com. I like her stuff because she's just so damn objective. She simply lays out the facts and lets you come to your own conclusions. I also like Ina because she continuously holds a very bright light directly at eBay (NASDAQ: EBAY).

Recently, Ina opened the floor at the AuctionBytes blog for discussion about the involvement of Meg Whitman in the Mitt Romney campaign. Needless to say, the situation has raised some eyebrows. Personally, I don't care what direction either Meg or Mitt choose to go. Ina's readers, however, had a very dim view of the situation. My question is, has Meg's insurgence into the political realm affected the shareholders of eBay?

Forget for a moment all the ill conceived plans that eBay has tripped over. Ignore the Skype debacle, the eBay China crash, the silencing of Stubhub and the host of other demons that in my opinion the Whitman crew has set loose, buried or denied. Forget for a moment about all that cash flowing into eBay coffers with nothing better accomplished than to outsource customer service and to pay Whitman's salary. Ignore the wolf at the door in the form of Amazon Inc.(NASDAQ: AMZN). Never mind that eBay has lost its shine and reputation and is yet to pay a dividend to its shareholders. I'm talking about presidential politics and corporate wrangling here.

Sudden large, negative financial events can disrupt, or at least critique, even the most bedrock economic tenets, let alone recently-percolated conventional wisdom.

On the heels of the housing and credit market crunches, one conventional wisdom item that's currently coming under criticism is the notion of "decoupling" [Subscription required] - the theory that despite a slowing U.S. economy, the European and Asian engines of growth would be sufficient to maintain adequate global GDP growth, The Wall Street Journal reported.

The International Monetary Fund published a chapter in April 2007 entitled "Decoupling the Train," which argued that the U.S.'s mild GDP growth was caused by a housing sector correction. Housing was less global than other commodities, it argued, and hence would not impact the world economy as much.

For example, about two months ago, the IMF projected that global economic growth would slow just slightly in 2008 to 4.8% from 5.2% this year.

Well, I have to admit that this is not a problem I'm suffering from.

Don't get me wrong: I have plenty of problems (many of them exacerbated by this bearish market we're slogging through), but my direct exposure to Citigroup (NYSE: C) is quite limited.

This is a problem, however, from which super-investor Prince Alwaleed is suffering. Billionaire Saudi Prince Alwaleed bin Talal is actually Citigroup's largest individual shareholder with an almost 4% stake in the global banking monolith. With Citigroup's stock swooning, Alwaleed's holdings have seen some major volatility.

Interestingly, he is still quite positive on the stock, at least publicly. In an interview this week, Alwaleed said, "I want to make it clear that I fully support the leadership of Citigroup and think it is a very strong company with a good future."

I dunno -- crises come and go, wars are waged, and over-leveraged hedge funds (read LTCM fiasco) blow up and the world's bank, Citigroup, marches on. Alwaleed seems O.K. with the whole thing -- he claims his purchase price, adjusted for dividends and stock splits, works out to be almost $3 per share.

I'm not shedding a tear for this billionaire. But I have to admit that I'm a little miffed.

Anyone who has sat through a U.S. Congressional hearing -- present company included -- will tell you that the hearings are often 99% exasperation and 1% illumination.

Hours of each session can go by without hearing anything voters/readers really need to know about. Still, every once in a while, up pops something imaginative, sometimes even involving a topic that wasn't intended to be the focus of the hearing.

Such an event occurred Thursday during U.S. Federal Reserve Chairman Ben Bernanke's testimony before the U.S. Congress' Joint Economic Committee.

Bernanke, responding to a question from U.S. Senator and Committee Chairman Charles Schumer (D-New York) on the federal government's $417,000 insurance cap on mortgages, suggested that Congress could consider allowing Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE), under a temporary plan, to buy mortgages up to $1 million from banks and mortgage companies, pay the U.S. Government a fee for having the federal government guarantee them, then turn them into securities to be sold as investments.