So much for the string of upside earnings surprises. Morgan Stanley reported a first-quarter loss of 57 cents a share ($177 million) vs. an expected loss of 8 cents. For the month of December--a month that fell, much like earnings at Goldman Sachs--before the official Jan.-March quarter, it lost $1.3 billion.

The big loss generators included a $1 billion writedown for leveraged loans and real estate losses. Despite this, the company would have posted a profit if it weren't an improvement in debt prices, which forced it take a $1.5 billion loss, which reversed a gain booked about a year ago. The bank fared well in investment banking and commodities. It's Tier 1 capital ration remains much higher than its peers. But it will be interesting to see what the stress tests say. It may well be in position to pay back the $10 billion in TARP funds.

For more:
- here's an AP article

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