Credit Market Fall-Out #24 – The Downgrading of the Banks
The excerpts below from a Market Watch article shows that the investment banks are beginning to downgrade one another. Let’s face it was going to happen sooner or later.
U.S. stock indexes tumbled more than 2 percent on Tuesday after Merrill Lynch warned that ailing credit markets will hurt bank profits, while reports showing eroding consumer confidence and falling home prices added to concerns about the economy.
Merrill Lynch downgraded Bear Stearns Cos, Lehman Brothers, and Citigroup to "neutral" from "buy" and lowered estimates for the banks' earnings due to turbulence in the debt markets, slowing takeover activity and upheaval in the mortgage sector.
Merrill's move came a day after Goldman Sachs slashed its earnings forecasts on Bear Stearns, Lehman Brothers and Morgan Stanley.
"All the brokers are downgrading each other, which was a long time coming, but obviously, the market is a little jittery surrounding anything related to that stuff these days," said Michael Church, senior portfolio manager at Church Capital Management, in Philadelphia.