Shares in Citigroup Inc. ($51.79 0.19%) fell sharply Thursday after Goldman Sachs Group ($160.73 1.83%) analyst William Tanoma singled the firm out for more mortgage-led losses in its upcoming Q2 earnings report, saying that the firm could take writedowns of as much as $8.9 billion in the quarter.
These days, it's rare that any proclamation of pending financial disaster can shock market participants -- but that's exactly what the Royal Bank of Scotland managed to pull off, despite likely wear-out on the topic.
On Wednesday, the bank warned clients to brace themselves for a coming full-scale global financial crash as inflation freezes key nation's central banks.
It's looking awfully good to be Goldman Sachs Group Inc. ($160.73 1.83%) these days. With Lehman Brothers Holdings Inc. ($0.00 0%) backed into a corner, Morgan Stanley ($25.16 0.09%) stumbled out of the gate on Wednesday after announcing that net earnings had fallen to just $1.03 billion in the second quarter, or 95 cents a share, compared to $2.36 billion, or $2.24, a year earlier.
Wear-out isn't just a concept for media and advertising planners; it also describes the public's appetite for things like the word "subprime" and "credit crunch." And after the Fed's bailout of Bear Stearns -- a move that we still think was the right thing to do here at HW -- credit concerns eased somewhat, and investors started to breathe easier.
Is the worst behind us? Really?
Running a global structured credit operation these days is tough work. Just ask Matt Zola, who resigned today as global head of structured credit at Morgan Stanley ($25.16 0.09%), according to a report by Bloomberg News on Tuesday morning.
As expected, UBS AG ($18.48 -0.1%) said Tuesday that it lost 11.5 billion Swiss francs ($10.9 billion), as the battered financial giant absorbed $19.5 billion in mortgage and related write-downs. The bank had warned of the write-downs in early April.
Morgan Stanley ($25.16 0.09%) execs are planning another round of layoffs at the Wall Street firm, this time hitting 1,500 employees, according to a report Monday by CNBC. Citing senior sources inside the company, CNBC said that the cuts will span all business units.
Perhaps the best thing that can be said about Credit Suisse Group's ($29.71 -0.4625%) first quarterly loss in over five years is that CEO Brady Dougan isn't content to play Pollyanna about the state of the mortgage and credit markets.
In remarks that raised more than a few eyebrows among industry participants yesterday, Morgan Stanley CEO John Mack delivered something akin to a pep talk to reporters on the sidelines of the Wall Street bank's annual meeting in New York.
Via Reuters:
Market demand for collateralized debt obligations remains well off year-ago standards, but March did see a relatively large uptick in new issuances for the complex securities that have helped fuel much of the credit mess surrounding riskier mortgages.
According to a report from Morgan Stanley, $13.4 billion of CDOs were issued in March, up from $3.3 billion in January and February -- the first quarter total of $16.7 billion, however, was well off the $165 billion pace recorded one year earlier.
