Posted on 10/09/2008 5:41:39 PM PDT by BGHater
Plunge also due to concerns about Mitsubishi investment; 'you can short Morgan Stanley today'
The stock price of Morgan Stanley plunged as much as 25% on Thursday. The drop was attributed to the end of the SEC’s ban on short-selling of financial stock, as well as concern about the status of a planned $9 billion investment by Japan’s top bank, Mitsubishi UFJ Financial Group.
“There is continued unease about the prospects of the Mitsubishi deal going through, and that has also impacted (their) credit default spread,” said Matt McCormick, Portfolio Manager and banking analyst at Bahl & Gaynor Investment Counsel in Cincinnati.
On Wednesday, MUFG said it had no plans to back out of the investment despite a recent sell-off in the New York-based firm’s shares.
Morgan Stanley debt protection costs rose 7 percentage points to around 25% upfront, according to an analyst.
“The market is definitely trading on rumors, not news, and if there’s any type of potential problem, traders are quick to head for the exits on any stocks, but even more so on financials like Morgan Stanley,” said Mr. McCormick.
Others suggested that the end of a nearly three-week prohibition on investors’ ability to make bearish bets on financial stocks could be a factor.
“You can short Morgan Stanley today,” said one trader, speaking on condition of anonymity. “Also that $8 billion infusion will not be enough to fix their problems.”
Bank of America’s planned takeover of Merrill Lynch and the bankruptcy filing of Lehman Brothers have left Morgan Stanley and Goldman Sachs Group Inc as the sole surviving independent brokerages.
Glad Goldman's got that investment from Buffet between the banning....
JP Morgan just bought WAMU..... ummmmm
I always that they bought WAMU to be too big to fail.. We shall see.
Ever.
L
JPMorgan has not lost money in any quarter, although they have had write-offs.
The earnings announcement for the 3rd quarter is next Wednesday, October 15.
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