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To: $Mogul who wrote (119014)	4/28/2008 2:58:25 PM
From: DebtBomb	Read Replies (1) \| Respond to of 306849

Morgan Stanley see big bank woes just beginning Monday April 28, 10:45 am ET By Joseph A. Giannone NEW YORK (Reuters) - Morgan Stanley (NYSE:MS - News) analysts on Monday told clients to "sell the rally" in financial stocks, slashing forecasts for big bank earnings and warning that the current credit crunch is only just beginning. In aggregate, Morgan Stanley reduced its estimates for 2008 large bank earnings by $17 billion, or 26 percent, and reduced 2009 forecasts by $13 billion, or 15 percent. The analysts expect higher loan losses and expenses, offset by higher net interest income, though profits could fall further still if the Federal Reserve stops lowering interest rates. "More capital hikes and dividend cuts (are) coming as our credit deteriorates and forward earnings decline," analysts led by Betsy Graseck wrote in a report. "We think we are only in the third inning of the credit cycle and expect this credit cycle will be worse than (the slump in) 1990-91." A growing number of investors, and industry executives including Morgan Stanley Chief Executive John Mack, in recent weeks have predicted markets are closer to the end of the current mortgage and corporate credit crisis than to the beginning. These more upbeat comments, and recent efforts by banks to bolster their balance sheets, helped spark a rebound in bank stocks last week. Morgan Stanley's top "long" picks have less credit sensitivity or better capital structures: Bank of New York Co (NYSE:BK - News), JPMorgan Chase & Co (NYSE:JPM - News) and PNC Financial Group (NYSE:PNC - News). By contrast, investors should "underweight" banks with greater exposure to mortgages -- Wells Fargo & Co (NYSE:WFC - News) and Wachovia (NYSE:WB - News) -- and those that operate in harder hit sections of the United States -- Fifth Third Bancorp (NasdaqGS:FITB - News) and KeyCorp (NYSE:KEY - News). Morgan Stanley also called for underweighting Citigroup (NYSE:C - News), citing its exposure to risky assets relative to common equity. (Reporting by Joseph A. Giannone, editing by Dave Zimmerman) biz.yahoo.com

To: $Mogul who wrote (119014)	4/28/2008 3:01:06 PM
From: DebtBomb	Read Replies (2) \| Respond to of 306849

Market Sages: The Worst Is Yet to Come for any clowns looking in, grantham is cheney's advisor Posted Apr 28, 2008 12:53pm EDT by Aaron Task in Investing, Newsmakers Related: ^IXIC, ^DJIA, ^SPX, SPY, DIA, QQQQ, ^N225 Positive sentiment is on the rise on Wall Street as the market moves further away from the March lows and the S&P 500 hits the top end of its 1,270-1,400 trading range. This weekend brought bullish results from the "big money poll" in Barron's, but also some more sobering commentary from two Wall Street legends: Jeremy Grantham and Peter Bernstein. In his latest quarterly letter, GMO founder Grantham predicts the U.S. market won't hit bottom until sometime in 2010, citing the painful experience of past post-bubble economies. "The unraveling of the 2000 bubble is a tale still being told," he writes. Author, financial analyst, and market historian Bernstein, meanwhile, poured cold water over hopes for a V-shaped recovery in an interview with The Wall Street Journal. "You don't have a high-growth exit from this, as you've had from other kinds of crises," he says. "Here, the shape of the business cycle is like an L, where it goes down and doesn't turn up. Or like a U, a flat U." Notably, Bernstein isn't as bearish on stock as Grantham, but the message from both market legends is that Wall Street's recent flirtation with optimism is misplaced. Then again, a lot of the folks getting excited in recent weeks have much shorter time frames in mind than the big-picture cycles Grantham and Bernstein are talking about. finance.yahoo.com