Wednesday, July 22, 2009

CRE Killing The Moose

Morgan Stanley posted worse then expected earnings this morning. This is their 3rd straight quarterly loss.

The entire model at the Moose has changed. They no longer take huge risks like Goldman. They just cant looking at their potential CRE losses. The Moose has been continued to rein in risk and is relying on a more stable source of revenue, highlighted by its joint venture with Citigroup to combine brokerage operations.

They pretty much lost money across the board in institutional securities, wealth management, and most of all CRE, where the company took another round of haircuts.

Whats interesting are the following statements by the CFO:

Consumer Deleveraging is still a concern for the economy.
Looking for structural change in the banking system in this environment is premature.
"A lot of accounting noise" in this quarter.

Is he admitting that the numbers just don't add up even when you post a loss? What about GS, JP, and the others?

Maybe Kramer from Seinfeld was right when he said "Its All Manipulated by Junk Bonds"

Whats most interesting is that the CFO is stating that they "are gradually dialing up the risk". What does this statement mean?

To make money = lever up. Watch out markets.


  1. What's next for Goldman? Does the government make an educated guess and rush regulations through to prevent them from creating the next bubble?

  2. You must have read Tiabbi's Piece in RS? Rushing Reg is far worse then bad regulation.