Morgan Stanley on Wednesday said it expects fourth-quarter earnings to be reduced by about $2.5 billion from a write-down of its U.S. subprime exposure.
The Wall Street investment bank said revenue has been reduced by $3.7 billion for the two months ended Oct. 31 because of the write-down. It said the actual impact on quarterly results will be determined by market events.
It’s less than it was rumored to be, says Tim Seymour.
Guy Adami says it’s not a good thing, but the write-down should knock MS stock to levels at which it should be trading. Adami recommends watching for a buying opportunity. If you think investment banks won’t be in business 6-9 months from now, you’re crazy, he says.
Pete Najarian recommends owning volatility because he expects bigger swings in the stock market. He recommends straddling the S&P 500 (SPY)… buying a call option and a put option.