DealZone

I love you, you love me

September 19, 2008

morganstan.jpgIn a mutual exchange of affection that would make Barney the Dinosaur proud, rivals Goldman Sachs and Morgan Stanley each issued research notes today praising each other’s business models and stability, following a week that saw shares in both stalwart investment banks swoon and some of their rivals fail.

Goldman’s note, issued this morning, got the lovefest going. It said that the decline in Morgan Stanley’s stock was “exaggerated” by those naughty short sellers. It praised Morgan Stanley as “well positioned to capitalize on future opportunities,” and said, “We believe Morgan Stanley is sound as an on-going entity, ” Not exactly poetry, but heartfelt.

Morgan Stanley reciprocated with its own note about Goldman that said, “business model fears are overdone,” and that “GS has the necessary breathing room to address these questions in a more reasoned manner.”

Both banks may have a reprieve from the stress of shotgun weddings after the U.S. government began crafting a bailout that would curbed short-selling, guaranteed money-market mututal funds and mop up toxic mortgage debt.

Still, Morgan Stanley may find its way into the arms of partners as it continues to hold talks with a number of suitors — just at a less frantic pace.

Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/