Banking & Finance

Goldman Sachs Pans Financials (FNM, FRE, MI, JPM, BSC, LEH, MER, WM)

Goldman Sachs has made some key downgrades in the financial sector today.  The firm has cut both Fannie Mae (NYSE: FNM) and Freddie mac (NYSE: FRE) from an already “neutral” rating, with implied negative, down to the loathed “SELL” rating.

It has also removed it rating on Marshall & Ilsley (NYSE: MI) down to a Neutral from a Buy rating. 

Goldman Sachs has also lowered estimates on Bear Stearns (NYSE: BSC), J.P.Morgan Chase (NYSE: JPM), Lehman Brothers (NYSE: LEH), Merrill Lynch (NYSE: MER), Morgan Stanley (NYSE: MS), and Washington Mutual (NYSE: WM).  Others were hit as well, but these are the major calls.

The firm wants investors to stay defensive regardless of bailout pacts.  It believes that Freddie mac is a short ahead of earnings this week and believes you can own a Put Spread in Wa-Mu.

Jon C. Ogg
February 25, 2008