UBS Outlook as of January 2020

Outlook


(OSI*) Stimulus measures and easing of monetary policy (A) by central banks (1) contributed to a strong performance in financial markets in the fourth quarter and are likely to prevail. A favorable credit environment (2) and a partial resolution of trade disputes (3) should mitigate slowing global economic growth (4).


(OSI*) While the macroeconomic and geopolitical situation remains uncertain, (Bullshit) for the first quarter we expect more typical seasonality (5), supporting earnings. Clients are more active, which should lead to an improvement in transaction-related revenues (6). Higher asset prices should have a positive effect on recurring fee income (7) in our asset gathering businesses. Low and persistently negative interest rates and expectations of continuing easy monetary policy (B) will continue to provide some headwinds to net interest income. (8)


(OSI*) As we execute on our strategy, we are balancing investments to take advantage of opportunities for growth across our businesses and regions, while managing for efficiency. We remain committed to delivering on our financial targets, creating further value through even closer collaboration across all divisions to drive sustainable long-term value for our clients and shareholders . (Bullshit talk)

(OSI) = Open Source Information (*4q19-media-release-en.pdf)

Assessment:

Absolutely nothing in the UBS outlook press release (quoted above) is company specific or indicative of any management decisions having an effect on the results. All factors named in their outlook are related to central banks, interest rates, asset prices, global economic growth and seasonality. The management and supervisory board is currently neither inspiring nor showing any visible skill at managing the future of UBS, to be blunt.

With an investment in UBS you are betting on continued asset bubble inflating by central banks and a global economy not shrinking. Management has given absolutely no indication of actually doing anything company specific, in their published outlook. Very poor. In addition the potentially multi-billion fine from UBS France is hanging over the prospects of the stock. Incidentally one of the only metrics that management could have actually influenced in a positive or decisive way was and is the pending fine. There managment made a high risk decision.

None of this is new of course, so assume it to be discounted in the stock price and there is reason to believe it is actually a cheap stock, based on PE ratio. Of course the price will oscillate with news about trade deals, next IPO wave, new and pending court case related fines and the global economy.

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