Goldman Sachs downgraded to Equal Weight from Overweight at Morgan Stanley

Morgan Stanley analyst Betsy Graseck downgraded Goldman Sachs (GS) to Equal Weight from Overweight with a price target of $558, down from $659. The firm says recent trade developments drive up recession risk. The analyst now expects slower GDP growth with rising economic uncertainty to push out the capital markets rebound, incrementally slow loan growth, and drive net charge offs across consumer and commercial loans slightly above its prior estimates. Morgan Stanley moved its large cap bank industry view from Attractive to In-Line. Goldman is the most exposed large bap bank to investment banking revenues, which has “the fastest twitch response” to recession risk and deteriorating market conditions, much faster than loan growth at traditional commercial banks, the analyst tells investors in a research note.