Don't Bank on a Bottom

Credit Suisse(CS Quote) on Thursday swung to a big first-quarter loss, wrote down more than $5 billion in assets and still investors rejoiced, sending shares up more than 5% on the New York Stock Exchange.

The surge in the Swiss banking outfit's stock price reflects a trend over the past week set by other financials like Merrill Lynch(MER Quote) and Citigroup(C Quote), which also rallied on bad news, as some investors made bets that the sector had hit a bottom -- a view advanced just Thursday by Deutsche Bank analyst Mike Mayo.

"The industry is approaching the later stages of the credit crises that started last summer, given $300 billion of writedowns at global financial firms," Mayo wrote in an industry note. "While the exit may be delayed by greater uncertainty around monoline insurers, the ultimate disposition of CDOs, or continued disruption in short-term money markets, the end seems closer." ...