Major Weekend Headlines

• UBS buys Credit Suisse for $3.2 billion as regulators look to shore up the global banking system
• Fed and Global Central Banks Move to Boost Dollar Funding

Another busy weekend for central banks and regulators ended up with two major announcements right before the markets opened in Asia.

UBS agreed to buy Credit Suisse for $3B Swiss francs. The terms of the deal will see Credit Suisse shareholders receive 1 UBS share for every 22.48 Credit Suisse shares they hold. In addition, the Swiss Nation Bank also pledged a loan of up to 100 billion Swiss francs ($108 billion) to support the takeover.

I’m not going to go through the specific details of the deal, it’s not the best, but this is the least they can do, especially since the shareholders will not have any say about this deal. However, at least they found a way to secure financial stability and protect the Swiss economy.

Following the deal announcement, the Fed and major central banks, including the ECB, BOE, BOJ, BOC, and SNB announced a coordinated action to improve liquidity provision through the standing US Dollar liquidity swap lines.

It looks like the central banks are not going to do the same mistake in 2008, by acting early before it’s too late. Is this sufficient? It’s hard to tell because we don’t know the full story yet. The next few days will give us more information. For the time being, if you are a short-term trader, you better watch your positions carefully and don’t forget your stop orders.