Adami, a former Goldman Guy, is particularly taken with the fact that former i-bank doesn’t like the new strings that are attached to TARP. “It leads me to believe they want to pay their people, which makes me think they anticipate a good year.”
Fox-Pitt Kelton analyst David Trone concurs. And he notes that both firms have marked their troubled assets about 20% below their rivals. That too, should bode well.
Trone doesn’t even think they need the government to create a bad bank to soak up their bad assets. He says even if they don’t sell assets to a new aggregator bank (bad bank) – “the creation of one will improve secondary market demand for bad assets and allow Goldman Sachs and Morgan Stanley to sell holdings at a premium.”
Sounds kind of bullish. “We believe these developments could be a positive for the shares” in the short term, Trone says.
What’s the trade?
“We have a short-termbullish call on Goldman and Morgan,” says Trone. “But once we get a move they will probably trade in a range.”
"For a medium-term play you can look at JP Morgan,” he counsels
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Trader disclosure: On Feb. 4th, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Finerman Owns (PAL), (MSFT), (BAC); Finerman's Firm Owns (DNA) & (DNA) Calls; Finerman's Firm Is Short (IYR), (IJR), (IWM), (MDY), (SPY), (USO); Najarian Owns (CAT) Call Spread; Najarian Owns (EEM) Call Spread; Najarian Owns (FCX) & (FCX) Calls; Najarian Owns (ENER) & (ENER) Call Spread; Najarian Owns (GDX) Call Spread; Najarian Owns (MSFT) & (MSFT) Short Calls; Najarian Owns (MS) & (MS) Short Calls; Najarian Owns (MOS) Call Spread; Najarian Owns (DLTR) Calls; Najarian Owns (PALM) Calls; Seymour Owns (BAC), (EEM), (FXI), (MOS), (PBR), (CBRE)
FPK or its affiliates received compensation for financial services from (BAC) during the past 12 months.