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Goldman Sours On Bank of America, Removes It From Conviction Buy List

Tyler Durden's picture




 

One of the longest running Conviction Buy ratings in Goldman history, that of Bank of America, is no more. As of this morning, Richard Ramsden has taken the firm from the coveted position at the top of the ratings pedestal. "BAC results showed many similar operating trends as JPM and C but with the least amount of credit improvement. While we still see significant upside to BAC, in our view JPM is more attractive given the recent convergence in valuation and superior credit trends. Hence we remove BAC from the Conviction list (but retain our Buy  rating) and reiterate our CL-Buy on JPM...the current concern is banks are now fighting shrinkage in both trading and net interest income (NII). Given market volatility, the first can be attributed to a weak quarter but net interest income is a function of low rates and weak loan demand. We believe that NII trend is likely to remain a headwind for the coming two quarters, but based on the experience of regional  and trust banks, NII should recover in 2011." Look for Bank of America to return the favor soon enough.

 

 

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Mon, 07/19/2010 - 08:13 | 476699 bugs_
bugs_'s picture

Could Goldman be right this time?

Mon, 07/19/2010 - 10:18 | 476816 Inspector Asset
Inspector Asset's picture

Could they have it right?

Gee, I wonder...

I have maintained from the inception of the crash, that BAC was never a member of the cartel. Hence, they got lynched by John Thain, who is a cartel member.

With this accouncement, start looking for cartel members cosying up to each other , while shunning the few mega retail banks, studdering along, with the weight of toxic assets.

A consolidation of cartel member banks.

 

Other banks will disappear including Citi.

 

 

 

Mon, 07/19/2010 - 08:15 | 476706 LeBalance
LeBalance's picture

What kind of List was that?  "The You Should Be Convicted of Insanity if You Follow the Squid Advice on this List" List?  Yeah, thought so.

Mon, 07/19/2010 - 08:19 | 476712 Careless Whisper
Careless Whisper's picture

Don't GoldmanSachs Research reports belong on /b/ ?

Mon, 07/19/2010 - 08:22 | 476715 Sean7k
Sean7k's picture

" banks are fighting shrinkage in trading income"

That happens when the only ones you're trading against are other banks.

Mon, 07/19/2010 - 08:30 | 476722 Blano
Blano's picture

Shrinkage reminds me of George Costanza:  "I just got out of the pool!!"

Mon, 07/19/2010 - 08:32 | 476725 Handle with care
Handle with care's picture

Summary and translation:  BAC goosed their profit numbers by the smallest amount by claiming credit performance had improved and grabbing reserves to put in to profits.  Therefore we are taking them off our public conviction buy and putting them on our secret internal real buy list and telling everyone else to sell to us

Mon, 07/19/2010 - 08:54 | 476740 DavidC
DavidC's picture

Quite. And JPM will be OFF our secret internal real buy list following their stellar Q2 figures as a result of accounting shenanigans.

DavidC

Mon, 07/19/2010 - 09:50 | 476782 lizzy36
lizzy36's picture

Hmmm, john paulson, double down/average down on his inflation, housing recovery call?

Mon, 07/19/2010 - 10:10 | 476799 johngaltfla
johngaltfla's picture

Isnt' this like Satan repudiating his son?

Mon, 07/19/2010 - 10:36 | 476852 Ripped Chunk
Ripped Chunk's picture

All the TBTF's need to collapse. Then we can start to think about rebuilding the country.

Mon, 07/19/2010 - 11:31 | 476949 dantes1807
dantes1807's picture

It is a flip of a coin whether Goldman Sachs is right. I'll never understand why anyone pays any attention to what these banks say. They are usually wrong more often than they are right.

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