UBS announced a $11.9 bn loss today. Lehman said they’d managed to raise $4 bn in new capital to prop themselves up. Ordinary rational folks might think this would be construed as being seriously bad news, but not Wall Street, which instead took off on a manic rally based on … well, you tell me. There’s no good news here I can see.
The Street has done this before, staging crazed rallies for the financials upon the announcement of bad or grim news. Sounds like irrational exuberance to me.
The euphoria didn’t last as that darned reality kept intruding instead. Wall Street partied today. The hangover will be along soon enough.