Whoa, Nellie. This nag is getting ready to work in the morning
"Morgan Stanley on Wednesday posted its own quarterly deficit, dogged, as rival Goldman Sachs reported a day earlier, by frozen credit markets, falling asset prices and stagnant underwriting.
Morgan said it lost $2.30 billion, or $2.34 a share, in the fiscal fourth quarter, compared to a loss of $3.59 billion, or $3.61 a share, in the year-earlier period. Net revenue was $1.8 billion, compared with negative $400 million in last year's fourth quarter. "
Source: Marketwatch
Included in the kitchen sink Morgan Stanley heaved into the latest quarter are the returns "investment" banks will aim for henceforth. By default (no pun intended), the United States, through its elected representatives and duly authorized agencies, holds the reins. The bridled horse may whinny and stand on its hind legs every now and then, but if it wants a feedbag full of oats at the end of its laboring day, it will have to accept ROEs that are well below what its previously unyoked shareholders had come to demand.
Hindsight is perfect, but oh that Lehman, Citigroup and AIG had realized sooner that the world had changed. John Mack, a smart guy, knows which side his bread is buttered on. Expect steady though unspectacular results from now on. Wall Street is in the stable, munching contentedly, looking forward to a hitch to the plow in the morning. Not as fun as galloping in the pasture but it beats a trip to the glue factory.
So, I'd be a buyer of MS and Goldman (both of which could be buyers of banks or sellers themselves).
Full disclosure: I own 2 shares of MS (at $16.64, up $1.02 on the day as I write), having sold much more years before to buy a house. I do not own GS (at $79.19, up $3.19 on the day).
Miss Market is giving us that come-hither look.
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