Goldman, Morgan Stanley Trading Would Suffer in U.S. Downgrade, Hintz Says

[dkf]

By Michael J. Moore - Aug 1, 2011 5:19 AM GMT-
Goldman Sachs Group Inc. (GS) and Morgan Stanley’s fixed-income trading revenue would likely be crimped if the U.S. credit rating is downgraded, according to Brad Hintz, a Sanford C. Bernstein & Co. analyst.

A downgrade will bring a “never before experienced” environment with changing rates, currency-market volatility and widening credit spreads, Hintz wrote in a note to investors today. “This environment will negatively impact trading revenue, repo financing and debt capital markets activity,” he said. Both firms have liquidity and capital “to navigate challenging market conditions successfully.”

President Barack Obama and Congressional leaders are rushing to push through a compromise to raise the U.S. debt limit by at least $2.1 trillion and slash government spending by $2.4 trillion or more. Ratings companies including Standard & Poor’s have warned that the nation may lose its top AAA sovereign grade depending on the contents of the debt deal.

While a downgrade is likely to happen soon, firms have had time to prepare for the event, Hintz said. That means the decline in Wall Street’s fixed-income trading revenue will likely be less than the 36 percent drop that followed the 1998 Russian default, he wrote.

“Wall Street’s fixed-income trading units are positioning themselves in anticipation of a downgrade and are minimizing their inventory positions,” Hintz wrote.

http://www.bloomberg.com/news/2011-08-01/goldman-morgan-stanley-trading-would-suffer-in-u-s-downgrade-hintz-says.html

[DJ13]

1. Im sorry

I refuse to cry for those assholes.

[undeterred]

2. Tough tomatoes.

[readmoreoften]

3. I'm sure they've finagled put options so they can sell high and buy back low.

They'll make a mint so long as it's temporary.

[Warpy]

4. One fund I own has invested in these scumbags, something I'm unhappy about

and I've complained about but since I'm such a small fish, my complaint was simply put into the circular file and forgotten.

I'll be delighted to see them hurt. They've hurt all of us so much. I don't even care if I lose a few bucks while they're getting hurt. O bla di.

[ixion]

5. suffer? SUFFER? You bastards belong behind bars

that your ponzi scheme may suffer is of little worry.

[SusanaMontana41]

6. Of all the arguments for this "deal," this is the weakest. n/t

[Dawson Leery]

7. Goldman, Morgan Stanley, JP Morgan, AIG, Bank of America,

Royal Bank of Scotland (RBS) need to die off.

[mmonk]

8. That's why it is normally passed (89 times) without conditions attached.

No deals have to be struck to screw the defenseless nor trading for ideological harm to the economy going forward.