UPDATE: J.P. Morgan Downgrades Morgan Stanley and Goldman Sachs to Neutral Rating

According to a research report published today, J.P. Morgan has downgraded Goldman Sachs GS and Morgan Stanley MS from Overweight to Neutral ratings. In the report, J.P. Morgan explained, “We calculate undiscounted B3T1 2012e capital at risk of 90-120bps from US agencies recently published alternative methodologies for calculating requirements related to specific market risk (NPR2), proposing alternatives to rating agency ratings for sovereign and related positions, Financial Institution and Corporate debt, and securitization positions as required by the Dodd Frank Act, Section 939A. With restrictive RWAs calculations, Volcker, section 716, End-user clearing, in our view NPR2 is another example of US un-coordinated regulatory proposals. We downgrade GS and MS from OW to N.” J.P. Morgan reiterates its $120.00 PT for Goldman Sachs, which closed yesterday at $108.19, and it maintains its $23.00 PT for Morgan Stanley, which closed yesterday at $18.21.