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Two Ways To Play: Morgan Stanley's Earnings Adventure


Strengthen your portfolio in good times and bad.

RBS Warns of Global Crash

The Daily Telegraph reports strategists at the Royal Bank of Scotland have advised clients to brace for a full-on global stock market crash. Analyst Bob Janjuah, RBS' credit strategist said "a very nasty period is soon to be upon us" and warned clients to be prepared.

The bank's research team said the S&P 500 index could fall more than 300 points to 1050 by September. The contagion would likely hit the markets in Europe and the emerging markets which would amount to one of the worse bear markets in the last century. For more context on the trading environment, see Professor Bennet Sedacca's What's Next for the Credit Crisis?

From the Bull Pen: Bulls could look to low beta plays in such an environment. General Mills (GIS) could be an option and pull-backs near the $60 level could be a possible entry level.

From the Bear Cave: Bears might consider downside plays in high beta stocks like Apple (AAPL) in that scenario. Entry near $190 should the stock approach that level.

Morgan's 2Q

Morgan Stanley's (MS) 2Q figures are out. The second largest U.S. securities firm said profits fell 57% to $1.03 billion, or 95 cents per share, above expectations of 92 cents per share. Revenues fell 38% year-over-year to $6.51 billion vs. $7.05 billion consensus. The company reduced its leverage and adjusted leverage ratios to 25.1x and 14.1x respectively. CEO John Mack said "Given the turbulent environment this quarter, we stayed close to shore and continued strengthening the firm's capital and liquidity positions." Further, Mack said with "careful management" of capital, risk and liquidity, the company is well positioned to serve its clients and seize attractive risk-return opportunities. See Todd's Recipe For A Market Meltdown.

From the Bull Pen: Bulls can consider MasterCard (MA) for a trade. Pullbacks toward $260 could be an entry level.

From the Bear Cave: Those bearish on the financial sector may continue to play the UltraShort Financials (SKF) which corresponds to twice the inverse of the DJ financials index. Sell-stops can be set near $117.

For more ideas in real time throughout the trading day, check out Minyanville's Buzz & Banter.

Quick Check Around the World

Asian trading closed skewed to the upside with the Hang Seng +1.16%, Nikkei +0.73%, Sensex -1.75%, Taiwan -0.19% and Shanghai +5.24%.

A glance finds Europe bleeding red with the CAC -1.03%, DAX -0.66%, FTSE -1.45%

As of 8:50 AM EST, S&P Futures are down -8.70 points to 1344, and Nasdaq Futures are lower -13.75 points to 1972.

Look At Commodities

In commodities, crude oil is higher +1.08 to 135.09. Gold is up +0.70 to 884.30. Silver is up +0.345 to 17.425. Copper is higher +2.65 to 368.0.

The dollar index is higher +0.094 to 73.612.

On the Radar


10:30 Crude Inventories: -4560 k prior

Click here for the full trading radar.

It's hump day! Good luck!
No positions in stocks mentioned.

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