Swamp Report would not be the first to say “takes one to know one”. 24/7 Wall St. reports that Friday, May 1, JP Morgan issued a negative bank research call for the major money center and super-regional banks:
“Bank of America Corporation (NYSE: BAC), Citigroup, Inc. (NYSE: C), U.S. Bancorp (NYSE: USB), Wells Fargo & Company (NYSE: WFC), SunTrust Banks, Inc. (NYSE: STI), and others were all hit by the note. Analysts do not actually cover their own companies, but you can’t really get away from the notion that the analyst downgrade also throws JPMorgan under the bus as well.”
Effectively, JP Morgan has labeled several of its fellow money center banks as goats and contrary to 24/7′s opinion, wants us to think that JP Morgan is a sheep. Richard Ramsden of Goldman Sachs boldly called Citigroup a goat, er, sell on April 20, citing Citigroup’s looming credit losses. But of course, Goldman is a sheep, after all “we can sell bonds to suckers, er, public investors without government gaurantees”. An earlier, April 3 Bloomberg quote of Ramsden:
The relaxation of fair-value accounting rules won’t prevent bank shares from falling because growth in bad loans is accelerating, according to Goldman Sachs Group Inc. “Our core view is that banks will not bottom until underperforming asset growth decelerates,” Richard Ramsden, a New York-based analyst at Goldman Sachs, wrote in a report today. “Loans are going bad faster than banks earn money.”
Estimates of Ramsden from a still earlier Bloomberg report on April 1:
A March 24 report from Goldman Sachs Group Inc. analyst Richard Ramsden [ ] estimated that Bank of America Corp., Citigroup Inc. and JPMorgan Chase & Co. are all carrying commercial mortgages at 100 percent of face value. Yet commercial mortgages may be the next shoe to drop for banks. “Commercial credit losses are likely to be quite onerous during 2009,” Friedman Billings Ramsey Group Inc. analyst James Abbott wrote in a report this week. These losses “will be significantly larger than what most are expecting.”
Apparently, a sheep can call a goat a goat, but a goat can’t call itself a sheep, unless a bonifide sheep backs him up. The market didn’t really react on Friday to JP Morgan’s call… So, is JP Morgan a bonifide sheep? What about Goldman?
