Wachovia (WB) tries to call the bottom in one of the financials, upgrading Morgan Stanley (MS) from Market Perform to OUTPERFORM. Wachovia cited the following reasons for the bullishness:
- the retail brokerage unit should be valued higher due to its recurring revenue streams [in a recession?]
- there is shrinking competition in prime brokerage [fair enough]
- deleveraging [hmmm…in the old days, this made i-banks worth less, not more, because earnings growth slows. But could this mean investors are finally valuing attention to risk?]
- continued strength in commodities [for now]
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