Egan-Jones Downgrades Morgan Stanley From A+ To A, Negative Outlook

Tyler Durden's picture

It never rains, but it pours. From Egan-Jones:

Morgan Stanley: EJR lowered A+ to A (Neg.) (S&P: A) (MS)


Synopsis: Questions about MS's French bank exposure and level of derivatives exposure. While June results were good, MS' French bank exposure (all asset and off balance sheet classes except derivatives) is estimated at $39B (57% of equity of $68B and 150% of market cap of $26B) of which interbank placements is believed to be a small component. These exposures are significant and unusually large as a percentage of capital. Of equal concern is the estimated $1.78T in notional value of CDS' on MS' books although EJR does acknowledge the netting effect (the net estimated exposure is $457M). The US is likely to provide MS additional support if needed, despite wind-down procedures contained in Dodd Frank. We are downgrading with a neg outlook.

Next stop for Morgan Stanley (after a failed promotional media campaign including Dick Bove, Jim Cramer, Wells Fargo, Credit Suisse, Alliance Bernstein and Mistubishi UFJ): Discount Window?

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GeneMarchbanks's picture

When you're climbing up a mountain and you squirt a chocolate fountain...DIARRHEA!

Al Huxley's picture

They're going to look pretty foolish when the company they just downgraded to 'A' (WTF!) follows Lehman and Bear Stearns into oblivion.

Yamaha's picture

Mayhem - your correct. People only lose money with good investment rated companies -Lehman, Worldcom, AAA mortgages.......

knukles's picture

Talk about downgrades. 
If Moody's dings he US for it's political drama, Kafkesque Theater of the Absurd let alone deteriorating financials, why have they not yet taken the Whole of the EU out to the Shitter and Flayed Them Alive?
Got Principles?

Snidley Whipsnae's picture

If you live 'over there' you hear about the mess here...

If you live 'here' you hear about the mess over there...

Propaganda... it's whats for dinner...

LawsofPhysics's picture

Indeed, but I would say the dinner soup is now meatless.  No protein what so ever.

knukles's picture

Oh yes, while living in Europe (enjoyable ex-pat experience) after many years that became ever so obvious.  Cultural institutioanlized Dialectic on both sides of the equation, world wide. 
Light the neighbor's house on fire, we need a diversion men! See, it's not our fault!  The grass ia aways worse on the other side, be glad you're here!

mayhem_korner's picture



Wonder if Bin Bernanke (credit WB7) is getting a manicure to pretty up his trigger fingers...

Moneyswirth's picture

The US is likely to provide MS additional support if needed, despite wind-down procedures contained in Dodd Frank. 


Thank god the pols got back at those greedy ATM users huh?  Bunch of slackers...

Not only are the markets broken, but our government is FUBAR.

Welcome to the Command Economy Comrade Bitchez!

ivars's picture

it had to be, and it was expected by many that after QE2 stocks will tank. Zerohedge was one of the first to note it. Now they are doing it, e.g. compare to the chart I made in February 6th 2011:

What follows is relatively slow, but accelerated tanking till approx DJIA 7000 in March 2012. After that, a bump up, either in expecations of USD devaluation ( not to be materialized though), or just a normal reaction to oversell- post oversell ( inverse peak crach ) rebound. Than down again, and so on during 2012-2013 ( here is longer prediction chart, made in April 2011):

This one says DJIA will reach even 6000 briefly in early 2013.

I have even longer prediction up to 2014 which I have not published yet- it does not look much better, in general, still below 8000.

Ruffcut's picture

"prediction up to 2014"

Take your crystal ball and shove it back up your ass, where it belongs.

Global Hunter's picture

my chart with the money printing variable on full blast shows stocks going higher long term...see Zimbabwe Industrial Index chart from 2000-2009 for an illustration.




EscapeKey's picture

No doubt GS will upgrade MS later today.

Josh Randall's picture

Correct - there will be some kind of mutual admiration society out of this where all these albatross justify throwing their client's money at each other as though nothing is wrong.

fuu's picture

If only to get short vs retail.

stacking12321's picture

"Morgan Stanley: EJR lowered A+ to A"

an A? well that's not so bad...that's better than 90% of the rest of the class.

Snidley Whipsnae's picture

All the ratings agencies are grading on the curve...

If not, how could a bk US be anything but an F- ???

Josh Randall's picture

COOL ! Just like the Fonz man...Morgan Stanley: AAAAAAAAAAAAaaaaaaaaaaaaaaaaaaaaa!

ForWhomTheTollBuilds's picture

I guess the thing about being a ratings agency is that financial accounting is so complicated that if you want to give a positive rating, you can always find an excuse buried somewhere in the avalance of data.


Conversely, once the agencies turn and *want* to give negative ratings, they don't even have to work as hard as they do above.

buzzsaw99's picture

MS loses money the old fashioned way.

LawsofPhysics's picture

The Chinese people, much like the American people or people in any other country, know what they need to survive.  Only the politicians as puppets for the global banking cartel are "threatening", and proposing "war".  Personally I am looking forward to the return of sound money and the declaration of outright war as I am confident no one will show up for it.  At that point we can put all the dishonest bankers, financial shills, and politicians on an island with live T.V. coverage, simply so we can still watch the kabuki theater now and again.

overmedicatedundersexed's picture

Tvix, faz, rocking this AM..NLY not so dividends??

Ben needs to soothe the markets with his Q&A today..somehow I think another epic fail..and it's FAZ to da moon.

Is this the beginning of the END?? march on the FED coming soon the pols know which way the wind blows.

oogs66's picture

S&P should be out soon with some downgrades

unununium's picture

Maybe JPM takes out MS, the house of Morgan is reunited and ready to dominate the world.

overmedicatedundersexed's picture

..PM's will rocket as this game has been seen before. It's double down time and spin that wheel.. this time it's gotta hit red. we are soooo close to the final implosion do the rest of you feel it coming like a jet black iron ball thru the dark night?

r101958's picture

...and at 1pm MS stock is UP 1% on downgrade news. Got to love the rationale of this 'market'.

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