“Words from the Wise” this week comes to you in a shortened format as I do not have access to my normal research resources while on the road in Europe (also see my post “Gone A.W.O.L. - to Slovenia and Switzerland“). Although very little commentary is provided, a full dose of excerpts from interesting news items and quotes from market commentators is included.

While investors’ hopes of an economic recovery might have got ahead of reality, the cartoonists continually reminded us of worrisome issues …

Source: Signe Wilkinson, Washington Post,  June 18, 2009.

The past week’s performance of the major asset classes is summarized by the chart below - a mixed bag so to speak.

Source: StockCharts.com

A summary of

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For Immediate Release

Chicago, IL - May 7, 2009 - Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: UBS AG (UBS), Hawaiian Electric Industries, Inc. (HE), Cabela's Inc. (CAB), Banco Santander Central Hispano SA (STD) and Marvel Entertainment (MVL).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=4579.

Here are highlights from Wednesday's Analyst Blog:

UBS Reports Pre-Announced Loss

As pre-announced, UBS AG (UBS) reported a net loss from continuing operations attributable to UBS shareholders of CHF1.98 billion, driven by trading losses of CHF630 million at the Investment Bank as it continues to shed

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We are continuing our Sell rating on Banco Santander Central Hispano SA (STD) as well as our $7 target price.Santander reported 2009 first quarter net earnings of 2.1 billion, down 4% year over year but above our estimate, as net revenues were higher than anticipated. Net interest income (NII) rose 22% year over year to 6.2 billion on a higher volume of loans and better lending spreads. In addition, NII benefited from the acquisitions of Sovereign, Alliance & Leicester, and GE.Negatively, loss provisions increased 73% year over year on a deterioration in asset quality. Nonperforming loans to total loans worsened, rising to 2.49% from 1.34% a year ago. Total noninterest expense was well controlled and fell 4%, below the rate of net revenue growth, with the result that the efficiency ratio improved 140 basis points. Per-share results were affected by the November 2008 issuance ...

We are continuing our Sell rating on Banco Santander Central Hispano, S.A. (STD), as well as our $7 target price. Santander reported 2008 full-year net earnings of 8.9 billion, up 11% year over year but below our estimate, as loan impairment charges were higher than anticipated. The rise in nonperforming loans was an especially sour note in an otherwise satisfactory performance, relative to European peers.

The company has been on a tear on the acquisition front, with most recent purchases including the UK's Alliance & Leicester, the retail operations of Bradford & Bingley plc in the UK, and the remaining 76% of Sovereign Bancorp that it did not own in the US. On November 28, 2008, Santander completed the sale of 1.599 billion new shares through a rights offering at a price of 4.50 per share for a total capital increase of 7.2 billion.

We are reducing our 2009 EPADS estimates

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As the WSJ reported today, the collapse of Lehman Brothers and the sale of Merrill Lynch to Bank of America is just the latest chapter in a stunning redesign of the financial world.  Stand-alone investment banks are dying rapid deaths, with three down in 2008 already (who can forget the spectacular demise of Bear Stearns?).  In their place, a new king is rising - commercial banks.

The key difference between an investment bank and a commercial bank is the source of their cash flow.  A commercial bank like Bank of America or Wachovia takes consumer deposits, which are insured by the federal government to prevent depositors from pulling out all at once (a major catalyst of the Great Depression in the 1930s that is now prevented by tighter regulation and insurance).  Investment banks take no such deposits, and as a result benefit from lighter government

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