S&P Warns Inv Banks Profits May Plunge 70%
- Thread starter Cdntrader
- Start date
was there a source story in print for this or was it just cnbc?
Its on Reuters. Its not a prediction but the result of a "stress test simulation" they performed on assets they believe the respective firms own.
http://www.reuters.com/article/bankingfinancial-SP/idUSN2933783920070829
http://www.reuters.com/article/bankingfinancial-SP/idUSN2933783920070829
S and P just trying to cover their arses and gain some respectability.
any day now the lawsuits will start rolling in after the worst rating grades on debt , bonds and paper ever issued.
short the rating agencies.
they will get it in the neck for the mess they have helped cause big time.
any day now the lawsuits will start rolling in after the worst rating grades on debt , bonds and paper ever issued.
short the rating agencies.
they will get it in the neck for the mess they have helped cause big time.
Actually, its rather distressing that they are throwing around the terms "stress testing of assets" - you NEVER hear S&P or Moodys talk about this area of valuation in a public statement about Wall Street players (or anyone for that matter) until WELL after the fact. What's coming down the pike next out of the ratings agencies mouths........
Anyone who has had to deal with ratings agencies on the job will tell you this - as a trader or investor, if you are relying on the agencies to guide you in any way shape or form, you will always be too late in your decisions. If you are long a corporate bond, the company will have filed for bankruptcy before they will even issue a downgrade. They NEVER upgrade or downgrade anyone until WELL after the fact. (I'm exaggerating here, but not much)
The ratings agencies are NOT completely objective companies offering everyone an untainted and unbiased viewpoint. Companies have to be PAY Moodys and S&P a yearly fee to get rated - and let me tell you, it ain't cheap, I know first hand. So you have a complete conflict of interest - because they have to issue ratings changes, but they don't want to lose you as a customer.
Hmmmm......why does that sound familiar......oh yea, Investment Banks getting paid fees by clients for doing financing work, while at the same time issuing buy and sell recommendations on that client's stock.....so to keep the client fees coming in, they tout the stock to placate the client, regardless of how the company is actually doing (didn't that happen with the internet sector Mr. Bloget???). Oh, but wait, I forgot.....they take care of that by building a wall of air between the bankers and the analysts.....what do they call it again......oh yea, "the chinese wall" :eek:
Anyone who has had to deal with ratings agencies on the job will tell you this - as a trader or investor, if you are relying on the agencies to guide you in any way shape or form, you will always be too late in your decisions. If you are long a corporate bond, the company will have filed for bankruptcy before they will even issue a downgrade. They NEVER upgrade or downgrade anyone until WELL after the fact. (I'm exaggerating here, but not much)
The ratings agencies are NOT completely objective companies offering everyone an untainted and unbiased viewpoint. Companies have to be PAY Moodys and S&P a yearly fee to get rated - and let me tell you, it ain't cheap, I know first hand. So you have a complete conflict of interest - because they have to issue ratings changes, but they don't want to lose you as a customer.
Hmmmm......why does that sound familiar......oh yea, Investment Banks getting paid fees by clients for doing financing work, while at the same time issuing buy and sell recommendations on that client's stock.....so to keep the client fees coming in, they tout the stock to placate the client, regardless of how the company is actually doing (didn't that happen with the internet sector Mr. Bloget???). Oh, but wait, I forgot.....they take care of that by building a wall of air between the bankers and the analysts.....what do they call it again......oh yea, "the chinese wall" :eek: