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Originally Posted by r0wr
You think it's gonna occur by the end of this week? Can you say TVIX? How sure of you are this? Is it well known by the public already? Put:call ratio must be high
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banks Braced for Fresh Ratings Cut
Hot off the press this morning.
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Banks are braced for a fresh attack on their profit margins, if Moody’s presses ahead shortly with plans to downgrade short-term funding ratings sectorwide.
Moody’s has put dozens of banks worldwide on notice of potential downgrades, with the latest implemented in Spain last week.
But most attention has focused on the 17 investment banks that the agency placed under review in February, of which six are also under threat that the short-term rating of either their holding company or the bank unit – or both – will be downgraded. The institutions affected are Morgan Stanley, Bank of America, Barclays, Goldman Sachs, Royal Bank of Scotland and UBS.
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The key to finding the trader sentiment however is in another article also published today:
Facebook Fiasco is just latest blow to Morgan Stanley
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A two-notch downgrade could now be three notches because of JPMorgan's bad news. Three notches, say traders, would require Morgan Stanley to have close to $10 billion in extra liquidity, which will not be a problem. The firm last reported $178 billion in total liquidity. It’ll just make a tough situation tougher.
Traders are waiting for Moody's to downgrade Morgan Stanley's credit rating, a move that is expected by the end of the month.
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I'm no expert on Moody's, but I've seen how these guys like to downgrade institutions. And they usually do a packaged-deal, after-bell announcement. It may come after Friday and lead to chaos next Monday. This week may be another consolidation week. Big pros already know this (obviously because they're being targeted).
P.S. JPM halted share buybacks. It listed in the Fed Stress Tests this year, of which JPM jumped the gun on to release it's ambitious buyback scheme, that should JPM lose $31.5 Billion within the periods Q4 2011 - Q4 2013, they would be unable to issue new buybacks. Read that again, carefully. I have no idea if JPM has suspended buybacks because they've crossed this $31.5B USD threshold, or if the quarterly loss allowed has been tresspassed. All I know is there are talks of Dimon being kicked out of the Fed (of which he's a member, fyi), and I know he's being extremely hush about the loss (of which now is surfacing to be $3 Billion in losses).
This, too, just hit the wire:
Double trouble at JP Morgan: trader's losses could exceed $7bn
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Fears were growing that the losses could spiral from an initial $2bn, which was declared on 10 May, as JP Morgan struggles to unwind the massive bets made by the so-called "London Whale" trader Bruno Iksil.
In a further blow, chairman and chief executive Jamie Dimon has suspended plans to use the US bank's own funds to buy back $15bn worth of shares.
Rival traders reckon that the losses could be as high $7bn. "The markets know pretty much what JP Morgan has and in what sizes," said one trader.
Mr Iksil was betting on the credit-worthiness of corporate America and if that starts to fall JP Morgan's losses could mount further.
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Wait, what? The
Credit-Worthiness of Corporate America? But... But... Moody's is going to downgrade all their credit....
^That was just for fun cause this post had been so brutal.