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Vampire Squid Downgrades Margin Stanley From Conviction Buy To Netural, Warns On Counterparty Risk, Lowers PT From $20 To $16

Tyler Durden's picture




 

GS just did what it does best: pulled the rug from under its most troubled peer: "We are downgrading MS to Neutral and removing shares from the America’s Conviction List. Since being added to the Americas Conviction List on January 29, 2012, MS shares are down 27% vs. flat for the S&P 500. Over the past 12 months, MS shares are down 39% vs. the S&P 500 up 4%. When we added shares to the Conviction List, we noted that MS had addressed a number of legacy issues including (1) the conversion of the MUFG preferred stock to common to bolster common equity capital ratios, (2) elimination of the CIC preferred dividend, (3) removal of the MBIA relationship//hedge overhang, (4) write-down of legacy real estate assets, (5) elimination of non-core asset management businesses, and (6) near-completion of the  integration of Smith Barney and Morgan Stanley Wealth Management. While that all still holds true today and should be beneficial towards long-term “normalized” returns, we believe several capital market overhangs will reduce out-year earnings visibility and cap near-term outperformance. While too soon to tell how counterparties will react to a new capital market ratings distribution post-Moody’s, this cycle has proven that banks with the largest increase in funding spreads have generally lost fixed income trading market share. In addition, with a number of global macro uncertainties likely to weigh on capital markets activity for the foreseeable future, MS has outsized exposure here as well....we are lowering our 12-month price target for MS to $16 (from $20) based on 0.6X TBV (from 0.7x) to reflect challenged near-term earnings power."

Capitalism at its best: kick 'em while they're down.

Goldman summary:

 

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Tue, 06/26/2012 - 08:19 | 2560990 GetZeeGold
GetZeeGold's picture

 

 

Barbarians.....make way for the cannibals.

 

Tue, 06/26/2012 - 08:21 | 2561001 old naughty
old naughty's picture

...another bailout in the making.

Tue, 06/26/2012 - 08:22 | 2561015 bigdumbnugly
bigdumbnugly's picture

kick em while they're down, bitchez..

Tue, 06/26/2012 - 08:27 | 2561041 tocointhephrase
tocointhephrase's picture

more than once if you can!

Tue, 06/26/2012 - 08:30 | 2561058 blindfaith
blindfaith's picture

 

 

Ya think, GS took out a big short position before the 'timely' release?

Tue, 06/26/2012 - 08:34 | 2561067 Biosci
Biosci's picture

They've had the big short position since the 'buy' recommendation.

Tue, 06/26/2012 - 08:40 | 2561087 JPM Hater001
JPM Hater001's picture

How long till they do this to JPM?  I'm giddy to know.

Tue, 06/26/2012 - 08:47 | 2561107 francis_sawyer
francis_sawyer's picture

We all know that crap is king...

Tue, 06/26/2012 - 10:04 | 2561356 malikai
malikai's picture

$5 say this flips to a strong buy in a few months. After they've covered their shorts and QE^5000 is mid stream.

Tue, 06/26/2012 - 08:28 | 2561048 blindfaith
blindfaith's picture

 

 

It is a damn chessgame.  MS transfering their derivites to MS bank where they are taxpayer insured and away from the HoldCo unit.  Their pals in crime, downgrade them to accelerate the the 'banks' decline and trigger a second TBTF crises at MS.

Tell me this is not PLANNED, like over burgers and fine wine at the barbe in the Hamptons last weekend.

Tue, 06/26/2012 - 09:10 | 2561179 Hedgetard55
Hedgetard55's picture

"Burgers and fine wine"? Not even banksters are that crass. Filets and fine wine, or burgers and craft beer.

Tue, 06/26/2012 - 09:17 | 2561204 orangedrinkandchips
orangedrinkandchips's picture

Both of you are close....but I was serving those dirtbags, and if I remember, they ordered grilled Muppet with some Night Train to wash it down.

Tue, 06/26/2012 - 08:22 | 2561006 blindfaith
blindfaith's picture

someone didn't get their cookies and milk i suspect.

Tue, 06/26/2012 - 08:24 | 2561011 slaughterer
slaughterer's picture

Sharks eating sharks in a sea growing ever smaller,

flashing and slashing and crashing,

if the Fed does not throw some meat in there, they will rip at each other's fins,

that is not my beautiful Times Square Office.

http://www.youtube.com/watch?v=c37huAUVJ1U

Tue, 06/26/2012 - 08:23 | 2561018 battle axe
battle axe's picture

Lets be real, the Moody's downgrade was a yawn for the market, so now Goldman has to go after them. Goldman might want to look at their own exodus of partners and shitty business model. In the long run, I would pick MS over GS. Still a lot of people hate GS for the Bullshit they pulled in 08. 

Tue, 06/26/2012 - 08:26 | 2561034 BlueCollaredOne
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I wonder if they stand to make millions the same way they did when AIG went down?

Tue, 06/26/2012 - 10:05 | 2561360 malikai
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Yes, the GS basement cleaner will be making millions in bonus $$$ on this deal, just like last time.

Tue, 06/26/2012 - 08:23 | 2561023 ghengis86
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On the south so of Chicago I worked where there was a large warehouse full of rats. They'd set traps out but we hardly caught any. Then one day a trap was set and watched all day. When a rat was finally caught, it only took a few minutes for the other rats to devour the trapped rat.

I suspect GS is engaging in typical rodent behavior.

Tue, 06/26/2012 - 08:49 | 2561113 francis_sawyer
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Even Bad Bad Leroy Brown eventually met his demise...

Tue, 06/26/2012 - 09:22 | 2561223 Offthebeach
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A Squid has to eat. Youm, youm, youm..... I know it will be a while, but I can't wait until The Squid has devoured everything and moves on to its farm of fattened gophers in Washington. I picture The Capital dome enveloped by The Squid, it reaching in the fractured dome, pulling out screaming pols, they being squeezed like grapes and fed to The Squids bloody beak.

Tue, 06/26/2012 - 08:19 | 2560993 Note to self
Note to self's picture

Here we go - now it's getting ugly.

 

Tue, 06/26/2012 - 08:20 | 2560997 disabledvet
disabledvet's picture

"Morgan downgrades Goldman to Full Retard."

Tue, 06/26/2012 - 08:22 | 2561012 GetZeeGold
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A pox on their house to boot.

 

Tue, 06/26/2012 - 08:20 | 2560998 TrainWreck1
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Now MS will have no choice to downgrade Goldman, and JPM will have to downgrade them both.

By the end of the day, if this spirals out of control, they may all be rated lower than Congress.

 

Tue, 06/26/2012 - 08:23 | 2561019 blindfaith
blindfaith's picture

 

 

Not possible.

Tue, 06/26/2012 - 08:23 | 2561020 LawsofPhysics
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More importantly, will it matter (especially since they all own CONgress)?  If it is paper, it is now junk.

Tue, 06/26/2012 - 08:32 | 2561064 TrainWreck1
TrainWreck1's picture

Perhaps the government can learn from this, and get some good internicene squabbling going on - House downgrades Senate, DHS downgrades DOJ, VP downgrades himself...

 

Tue, 06/26/2012 - 08:36 | 2561074 Biosci
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You mean something like subpoenas and being held in contempt and asserting executive privilege?

Tue, 06/26/2012 - 08:44 | 2561101 LawsofPhysics
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Wake us, when someone actually goes to jail.  Want to restore some market confidence?  Hang John Corzine in Times Square.  In the absence of any effective rule of laws or contracts.  Possession is the law.  Shut this whole shit-show down.  All  aspects of the government are out of control, especially since the "government" is nothing more than proxy for the banks and financial houses now. 

Tue, 06/26/2012 - 09:07 | 2561169 Biosci
Biosci's picture

I agree, but I believe this is going to drag on much longer than any of us want it to.  Plan accordingly.

They -- Washington and Wall Street -- have locked themselves into a very stable system of mutual support that can't really be changed from the inside.  Only some exogenous event (like, say, the collapse of the dollar) will induce change, and that's still potentially years away.

Tue, 06/26/2012 - 08:37 | 2561078 LawsofPhysics
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Brilliant.  You should be a political analyst.

Tue, 06/26/2012 - 08:21 | 2561002 Sudden Debt
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16$...

So 7 to 8$ is the real target :)

 

Tue, 06/26/2012 - 08:23 | 2561021 slaughterer
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$4 sounds about right in dark pool zone.  

Tue, 06/26/2012 - 08:24 | 2561027 Sudden Debt
Sudden Debt's picture

Why argue... :)

YOU'RE RIGHT!

 

Tue, 06/26/2012 - 08:22 | 2561008 LawsofPhysics
LawsofPhysics's picture

Goldman is talking about counterparty risk?  Oh wait, that's right they own CONgress, the SEC, and the printing press.

Tue, 06/26/2012 - 10:21 | 2561415 Questan1913
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Don't forget Treasury and State, among others.

Tue, 06/26/2012 - 08:22 | 2561009 bigwavedave
bigwavedave's picture

Coming Soon. Morgan Stanley downgrades GS

Tue, 06/26/2012 - 08:31 | 2561017 Sudden Debt
Tue, 06/26/2012 - 08:25 | 2561031 OhOh
OhOh's picture

And Gold R...............................

 

No Drops like a stone!

Tue, 06/26/2012 - 08:25 | 2561033 bdc63
bdc63's picture

how do they even do this stuff with a straight face anymore? ...

Tue, 06/26/2012 - 08:31 | 2561061 Vince Clortho
Vince Clortho's picture

because past experience has taught them that they can.

Tue, 06/26/2012 - 08:31 | 2561062 Seize Mars
Seize Mars's picture

 

 

..."It's hard to play a gig in this town and keep a straight face..."

Shawn Mullins

Tue, 06/26/2012 - 08:26 | 2561037 The Onion Of Tw...
The Onion Of Twickenham's picture

That's funny. In you story you have a link to a previous ZH news report about a GS downgrade for Visa issued on Dec 17th 2010.

 

On that date the Visa shared price was $66.90. One year later it was $101.53.

 

Go figure...

Tue, 06/26/2012 - 08:27 | 2561045 RobotTrader
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As per the script, gold and silver are the first items thrown overboard on the news.

Tue, 06/26/2012 - 08:29 | 2561054 lizzy36
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Dog eat Dog world and Margin Stanley is wearing milkBone panties.

Tue, 06/26/2012 - 08:46 | 2561103 LawsofPhysics
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Edible panties,  mmmmmm, so it is a win-win?  Sorry lizzy could not resist.

Tue, 06/26/2012 - 08:36 | 2561076 blindfaith
blindfaith's picture

 

Dimon must have broken some fraternity rule.  More to come, am sure of that.

Fasten your seatbelts and Hang on to you cocktails, it is going to be a bumby week.

Tue, 06/26/2012 - 08:43 | 2561096 Budd aka Sidewinder
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I wonder how many of MS HNW clients were emailed a copy of the release today?

Tue, 06/26/2012 - 08:57 | 2561138 rufusbird
rufusbird's picture

Oops... meant for blind faith comment above..... You meant James Gorman!

Tue, 06/26/2012 - 08:50 | 2561105 slackrabbit
slackrabbit's picture

Run PotMeetKeetle.bat

/Open Sarc

IF CounterParty.Risk =  Squid goto RiskID

ElseIF

CounterParty.Rsk =  MS goto RiskID 

EndIf

 

RiskID:

CounterParty.Risk = ME

 

/Close Sarc

Tue, 06/26/2012 - 08:48 | 2561109 e-recep
e-recep's picture

Nice, they are fucking each other now.

Tue, 06/26/2012 - 08:55 | 2561137 Decoy
Decoy's picture

Conviction List or Convict List?

Tue, 06/26/2012 - 09:12 | 2561184 brooklynlou
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MS was on Goldman's "America’s Conviction List"?

Shouldn't it be called "America’s Should Be Convicted List"?

Tue, 06/26/2012 - 09:15 | 2561192 orangedrinkandchips
orangedrinkandchips's picture

"pile on the rabbit, pile on the rabbit!"

"kick em when their up, kick em when their down....."
Dirty laundry.....

Way overdue...

but you know GS has to FUCK THE MUPPETS FIRST BY PUTTING IT ON THE GOOD LIST TO START FROM...

LOSE 37%....THEN DOWNGRADE....classic shit....

roasted muppet with a side of fabre beans!

Tue, 06/26/2012 - 09:15 | 2561195 dizzyfingers
dizzyfingers's picture

As long as they keep paying those policians, they're golden: http://www.opensecrets.org/index.php

Tue, 06/26/2012 - 09:20 | 2561216 michigan independant
Tue, 06/26/2012 - 09:27 | 2561242 JohnG
JohnG's picture

Leeeeeeeeeroy Jenkins!

Tue, 06/26/2012 - 09:55 | 2561327 Nobody For President
Nobody For President's picture

The Squid analysts need to cut back on the bath salts.

Tue, 06/26/2012 - 10:32 | 2561446 Questan1913
Questan1913's picture

They all will be the last to go, but go they will, along with reserve currency status for the dollar.  When the equivalent of wooden stakes are pounded through the heart of these criminal institutions and I mean the whole financial complex life will start coming back to the real economy.  Americans of the future will look back at this time and and wonder in absolute amazement how the current stranglehold these entities have on 330 million people could ever have been tolerated.

Tue, 06/26/2012 - 12:29 | 2562006 Das Capitalist
Das Capitalist's picture

Does anyone know how to get a copy of a report issued today by Goldman on Suntech Power (STP)?

Do NOT follow this link or you will be banned from the site!