Morgan Stanley – Goldman behind the scenes eliminating all competition? fictive story how Hollywood might write the plot

Remember me quoting ‘Phillp Manduca’ a Hedge Fund manager this week saying that top executives of Goldman were pleasantly amused about the ongoing stress in the markets since they have high hopes to make some killings on behalf of the distress of others? Well, so far they are doing very well. Three of their top competitors are gone (LEH, BSC and MER since BAC will not run a full scale investment bank — and in case guess-who is head of the investment bank Mr. Thain, an ex-Goldman president and CIO). So, only Morgan Stanley is left and that’s an easy target now in these markets.

Let’s play devil’s advocate. Moody’s (Mr. Buffett, who is the biggest share holder of Moody’s and GS) one of the companies responsible for the CDO disaster, is about to down grade (they did not yet) Morgan’s credit rating. That they do on a day while we are in a crash – strange timing – and just before MS gets the capital infusion by Mitsubishi. That alone could scare Mitsubishi away since their deal is not a good one anymore and usually they should at least renegotiate, otherwise they lock in a loss of $3-4 bil. right away which would be stupid to do. Temasek has also renegotiated the MER deal. A pullback of Mitsubishi would send MS in immediate distress and the stock would tumble and get into that same position as LEH. The charts show a potential for a drop to 5 anyway. So for some evil forces behind the scenes that would be one more competitor gone, since there will be not much business left anyway. JPM could be the white knight again and thereby reunify the good old Morgan by buying what is left.

One thing I forgot to mention is that it is not nice that Moody’s waited for this until financial could be shorted.

This is just a fictive story and has nothing to do with things going on in reality.

Excerpt from CNBC:

Pressure mounted on Morgan Stanley on Friday, with investors unconvinced about its deal with Mitsubishi UFJ and two analyst reports citing concerns about the bank’s earnings outlook.

Shares of Morgan Stanley cnbc_comboQuoteMove(‘popup_ms_ID0ENF15839609’);[MS 12.45 UNCH (0) ] cnbc_quoteComponent_init_getData(“ms”,”WSODQ_COMPONENT_MS_ID0ENF15839609″,”WSODQ”,”true”,”ID0ENF15839609″,”off”,”false”,”inLineQuote”); have lost nearly half their value in the last three days, on worries Mitsubishi UFJ may back out of injecting the much-needed capital.

The plunge came despite promises from both banks that the deal was expected to close on Tuesday.

Morgan Stanley

“Until the deal is finalized, there’s uncertainty in the market,” said Marco Mak, head of research, at Tai Fook Securities. “There are so many rumors. It’s basically a loss of confidence.”

The two analyst reports, one by brokerage Ladenburg Thalman, the other by ratings agency Moody’s, came at an extremely delicate time for the bank, with its stock headed toward single digit territory.

~ by behindthematrix on October 10, 2008.

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