The Importance of Credit Activity in the Financial System

Banks' CEOs have to tread lightly about the signals that they're sending, particularly after what happened in March. If we start to hear little shoots of a credit issue going on at banks, whether big or small, that's when people's antenna will go up and I think we'll get a little bit more nervous. Capital markets, Goldman Sachs and Morgan Stanley, Mike Mayo has done a good job talking about Goldman Sachs. Profit estimates for Goldman Sachs have been cut 50% since the middle of June. Trading revenue expectations for Morgan Stanley are down 25%.