|Bid||117.84 x 0|
|Ask||118.06 x 0|
|Day's Range||116.58 - 116.58|
|52 Week Range||83.71 - 118.00|
|Beta (3Y Monthly)||N/A|
|PE Ratio (TTM)||N/A|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||N/A|
In recent months, top chief executives like JPMorgan Chase CEO Jamie Dimon and Salesforce Co-CEO Marc Benioff have advocated economic or business reforms of their own.
If (SCHW) and (AMTD) manage to pull off a merger, the combined company would tower over the rest of the brokerage industry. But while investors appear to love the idea of a deal— CNBC and Fox Business reported on Thursday that the companies are in talks—it may not come off without a hitch: The combined company would have immense industry leverage and a merger could face legal and regulatory roadblocks. Schwab (ticker: SCHW) and TD Ameritrade (AMTD) have not announced plans to merge, and they did not immediately respond to a request from Barron’s seeking comment.
DEEP DIVE U.S. brokers that rely on the discount-trading business model are in play, following Charles Schwab’s recent disruptive move to do away with most commissions for online stock trades. It might be helpful for investors to see which investment banks and broker-dealers have been the best financial performers in recent years.
(Bloomberg) -- Saudi Arabia sidelined global banks advising on Aramco’s initial public offering after the deal was pared back to a mainly domestic affair.JPMorgan Chase & Co. and Morgan Stanley are among global coordinators that have been marginalized as the oil giant turns to local lenders Samba Financial Group and National Commercial Bank, as well as HSBC Holdings Plc to handle investor orders, according to people with knowledge of the matter.Bank of America Corp., Citigroup Inc., Credit Suisse Group AG, Goldman Sachs Group Inc. -- also global coordinators -- have been told to submit their orders through the three banks, the people said, asking not to be identified because the matter is private. The international banks won’t have access to the IPO orderbook without Aramco’s permission, they said.Aramco declined to comment. Citigroup, BofA, HSBC, JPMorgan, Credit Suisse, Goldman Sachs and Morgan Stanley declined to comment. Samba and NCB didn’t immediately respond to requests for comment. The decision to sideline the international banks was first reported by the Financial Times.More than 20 global investment banks are working on Aramco’s IPO after it was finally given the green light following repeated delays. Senior bankers delivered pitches that Aramco would be able to achieve Crown Prince Mohammed bin Salman’s $2 trillion target. Saudi officials are now frustrated Wall Street’s biggest names were unable to deliver on those promises.The banks are also set to miss out on an expected fee bonanza after foreign investors snubbed the deal and Aramco decided not to market the share sale outside the Middle East, Bloomberg News has reported.The offering will now rely mainly on local investors after most international money managers balked at even the reduced price target of $1.6 trillion to $1.71 trillion.Aramco was expected to pay the more than two dozen advisers on the deal, including banks, lawyers, marketing and advertising agencies, between $350 million to $450 million, Bloomberg News reported in October. But the final payments will depend on how much equity banks are able to place with investors, the people said.(Updates with details from sixth paragraph.)To contact the reporters on this story: Matthew Martin in Dubai at firstname.lastname@example.org;Archana Narayanan in Dubai at email@example.comTo contact the editors responsible for this story: Stefania Bianchi at firstname.lastname@example.org, Shaji MathewFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
A former foreign exchange trader at JPMorgan Chase & Co was found guilty Wednesday of conspiring to rig trades for his own benefit. Akshay Aiyer was convicted of one count of conspiracy by a jury in federal court in Manhattan, court records show. "This conviction serves as a reminder of our commitment to hold individuals responsible for their involvement in complex financial schemes which violate the integrity of the global financial markets," said Assistant Attorney General Makan Delrahim, of the U.S. Department of Justice, said in a statement.
(Bloomberg) -- Global markets are finally needing to take notice of the rolling protests that have been simmering in Hong Kong for months, with haven assets the main beneficiaries as tensions complicate prospects for a U.S.-China trade truce.Developed-nation bonds extended recent gains and other refuges such as gold and the Japanese yen advanced Wednesday after a move by the U.S. Congress to voice support for Hong Kong demonstrators drew a threat from China to impose unspecified retaliation. The shift marks a deterioration of sentiment on trade that picked up earlier this month amid signs of progress on a so-called phase one trade deal between China and the U.S.“Markets have been guilty for around 20 months of underestimating the risks of a trade deal being done at all,” said Stephen Miller, an adviser in Sydney at GSFM, a unit of Canada’s CI Financial Group. “Whether it’s Treasuries or stocks or currencies, investors are now repositioning their bets in case we see political dysfunctions persist and reach a tipping point that spills over to trade.”The rally in Treasuries dragged the benchmark 10-year yield down as much as 6 basis points to 1.726%, the lowest level since Nov. 1, while bond markets from Tokyo to Frankfurt also advanced. The yen and dollar led among Group-of-10 currencies and U.S. stock futures continued their slide from recent highs.Hong Kong’s position as a global financial hub has already been shaken by months of protests and police responses that have grown increasingly violent, but its impact on many global markets has remained relatively muted. Along with issues such as the Iranian nuclear deal, North Korean weapons tests and the inquiries into U.S. President Donald Trump, Hong Kong is a subject that has tended to take a backseat for traders. But when those risks suddenly gain significance, it can send investors scurrying back to their preferred refuge assets.The haven trade gathered pace after the U.S. Senate on Tuesday unanimously passed a bill aimed at supporting Hong Kong protesters, spurring China to repeat a threat to retaliate. It would be difficult for the U.S. to sign a deal if the demonstrations in Hong Kong are met with violence, U.S. Vice President Mike Pence said earlier this week.Investors have been here before. The U.S. and China were said to be close to sealing a deal about six months ago, only for the U.S. to claim the Asian nation backed away from verbal commitments when the time came to sign the agreement.“The market reaction could be much more negative if a repeat of May happens,” said Eugene Leow, a fixed-income strategist in DBS Bank in Singapore. Tensions in Hong Kong are also adding “another element of risk at a time when China-U.S. trade talks enter the crucial last stage,” he said.Here are a range of market moves showing investors’ risk-off mood:The 10-year Treasury yield has fallen to a level more than 20 basis points below its peak from earlier this month, while its premium to the 2-year rate -- one of the most-watched curves -- compressed for a sixth dayJapan’s 10-year benchmark dipped 2.6 basis points to negative 0.124%, while equivalent rates in Germany slid around 2 basis points to minus 0.363% and similar Australian yields declined to 1.07%South Korea’s won, often viewed as a proxy for global trade, slipped 0.1%, declining for a third straight dayA JPMorgan gauge of demand for emerging-market currencies has fallen for a second weekThe VIX Index, a measure of expected volatility in U.S. stocks, has risen more than 6% this week“The market mood is definitely shifting,” said Prashant Newnaha, senior strategist at TD Securities in Singapore. “There are a lot of questions on where this deal is sitting at the moment, and developments we’ve had in May are now putting some doubts on whether a deal can be signed at all.”(Updates throughout.)To contact the reporter on this story: Ruth Carson in Singapore at email@example.comTo contact the editors responsible for this story: Tan Hwee Ann at firstname.lastname@example.org, Benjamin Purvis, Nick BakerFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Zero-fee trading first came to exchanged-traded funds and then to online stock and option transactions. Now the strategy is spreading into the cryptocurrency sphere.Seen as the most profitable sector of digital-asset world, trading platforms are feeling the pressure as industry heavyweights such as Binance Holdings Ltd. and BitMex grab market share with both trading volume and coin prices sagging. ShapeShift, which has operated an exchange since 2014, said Wednesday it’s begun offering free “perpetual” trades.“Free trading has become a feature of all fintech direct trading offerings, from Robinhood to SoFi and even JPMorgan,” said Lex Sokolin, global financial technology co-head at ConsenSys, which offers blockchain technology. “So it’s not surprising that in a digital race to acquire the most users, execution prices are starting to collapse.”The practice turned out to be a catalyst for Charles Schwab Corp., which recently reported it opened 142,000 new trading accounts in October, a 31% jump from September, after the brokerage offered zero fees. Fresh income is being generated from interest earned on client cash holdings. Firms in the crypto world are taking notice.“We’ve definitely seen how people often need very simple messages,” Erik Voorhees, the Denver-based chief executive of ShapeShift, said in a phone interview. “Everyone understands free.”ShapeShift lost about 90% of its trading volume a year ago when it began checking user identifications to comply with regulatory guidelines, Voorhees said.Daily-trading volume in crypto overall is about half of what it was in late October, and it’s been sluggish for most of the past few months, according to data compiler CoinMarketCap.com. The percentage of exchanges that are offering no-fee trading has increased to about 10% from 8% in June, data from CryptoCompare, which tracks exchanges. To execute free transactions, traders will have to use so-called Fox tokens that ShapeShift is rolling out. Every user ShapeShift.com will get 100 free tokens, and the exchange may sell additional ones, Voorhees said. Each token -- which are deposited in a user’s crypto wallet and are never spent -- provides $10 of free trading volume on a rolling-30-day basis. So the more Fox tokens customers hold, the more free trades they can execute. Voorhees estimates that 90% of the exchange’s users will be able to do all their trades for free.“We’d rather make a smaller amount of revenue from a larger pool of customers, and get those customers off centralized custodial exchanges,” Voorhees said. “It’s a risk we’re taking, but we think it’s worth it.”Other, mostly smaller, exchanges are offering zero fees as part of short- and long-term promotions. Liquid.com is waiving costs for traders who have less than $25 million per month in transactions. Zebpay introduced zero-trading fees in February. HitBTC lowered its fees in August. Malta-based Binance -- often the largest spot trading exchange -- lets users lower their trading fees by investing in its own cryptocurrency, Binance Coin.“The end result of price wars tends to be consolidation and the starving of smaller players,” Sokolin said. “Already we see this with the dominance of Binance.”To contact the reporter on this story: Olga Kharif in Portland at email@example.comTo contact the editors responsible for this story: Jeremy Herron at firstname.lastname@example.org, Dave Liedtka, Randall JensenFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Explore what’s moving the global economy in the new season of the Stephanomics podcast. Subscribe via Apple Podcast, Spotify or Pocket Cast.European Central Bank watchers who monitor its every signal to gauge the future of interest rates would quite like new President Christine Lagarde to give them some clues when she breaks her silence this week.Three weeks into the role, the Frenchwoman has yet to make a speech on monetary policy. That’s allowed murmurings of unease over the impact of negative interest rates and quantitative easing, emanating from some colleagues as well as from politicians and bankers, to fill the vacuum.Traders in euro area money markets have pared back expectations for further stimulus, and the chance of another 10 basis-point cut by October has fallen to 40% from around 60% when Lagarde took over. While that has largely been a function of cooling trade tensions, investors want to know how the ECB would respond should the economic outlook weaken again.“We don’t really know what’s happening behind the scenes,” said Jan von Gerich, chief strategist at Nordea in Helsinki, who recently put back his forecast for more easing from December to March. “Lagarde has not made her monetary policy views and strategic plans clear yet, so the time to try to influence the future course of the ECB is now.”In her first speech as president earlier this month in Berlin, the president told the audience to leave the room if they were looking for views on monetary policy.She could start to lift the fog on Friday when she addresses a banking conference in Frankfurt. Otherwise, the next scheduled occasion is Dec. 12, when she’ll hold a press conference after her first Governing Council meeting and unveil new economic forecasts, including the first predictions for 2022.Airing ViewsMeanwhile, members of the Governing Council who opposed elements of the stimulus launched by Lagarde’s predecessor, Mario Draghi, in his final weeks have been open about their concerns that there’s little room left for rate cuts.In Frankfurt last week, France’s Francois Villeroy de Galhau suggested interest rates are unlikely to fall much further. His Dutch colleague Klaas Knot argued the ECB should be more cautious with unconventional tools. Estonian Governor Madis Muller, who opposed September decision to restart QE, said over the weekend that keeping rates where they are makes sense, but added there was a question of how low they could go before losing effectiveness.JPMorgan economist Greg Fuzesi has scrapped his call for a rate cut in December and currently predicts no further change, citing the inability to read how policy makers are thinking under their new leadership.“Even to this day, policy makers have not made any clear forward-looking statements as opposed to trying to digest the September package,” he said in a report last week. “The arrival of Christine Lagarde seems to have slowed this down further.”Lagarde has good reason to move cautiously. Recent economic reports show the euro area’s downturn seems to be bottoming out and Germany, the largest economy, skirted recession. The ECB’s latest package, however contentious it may have been, could keep providing sufficient stimulus for months to come.The new president’s initial focus seems to be containing acrimony from that decision. That included the unusual step of taking her Governing Council colleagues on a retreat to a luxury hotel outside Frankfurt to discuss how they’ll work together. Still, even proponents of the current policy stance are showing a heightened awareness of the risks it brings. Vice-President Luis de Guindos unveiled the ECB’s Financial Stability Review on Wednesday with a message that loose stimulus is encouraging excessive risk-taking.“The side effects of monetary policy are becoming more tangible, more relevant,” he said in Frankfurt. “This is something that we have to take into consideration, this is something that we have said several times.”Chief economist Philip Lane acknowledged in an interview with La Repubblica published the same day that “there will be a lot of discussion about where exactly the limit is” -- while insisting it hasn’t been reached yet.The debate worries ABN Amro economist Nick Kounis. Like von Gerich at Nordea, he too recently pushed back his forecast for a rate cut to March from December, and described the policy message coming from the Governing Council as mixed and lacking clarity.“Are you trying to convince investors that you’re the kind of institution which can take powerful actions and meet your objectives, or are you actually telling them that you’re out of bullets?” Kounis said. “There is really no in-between.”(Updates with Financial Stability Review from 12th paragraph.)\--With assistance from John Ainger, Alessandro Speciale and Yuko Takeo.To contact the reporter on this story: Piotr Skolimowski in Frankfurt at email@example.comTo contact the editors responsible for this story: Paul Gordon at firstname.lastname@example.org, Craig Stirling, Fergal O'BrienFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Sign up for Next China, a weekly email on where the nation stands now and where it's going next.Deep in the government compound in Beijing, China’s State Council was in session, debating a complicated proposal to help struggling domestic companies.The cabinet meeting in Zhongnanhai, a walled expanse of ornamental lakes and pavilions adjacent to the Forbidden City, took place late in May, days after U.S. President Donald Trump heaped yet more tariffs on China’s exports and restricted the sale of goods to Huawei Technologies Co.On this day though, officials were grappling not over the fallout from the trade war, but how to tackle a home-grown adversary: about $35 trillion in corporate, household and sovereign debt.An official from the National Development and Reform Commission, the modern-day incarnation of the once-mighty State Planning Commission, was suggesting that the People’s Bank of China should release a bolt of cash that could be used by banks to buy stakes in companies, which would then use those funds to repay some of their debt.The central bank governor Yi Gang was present at the meeting, but before he could speak, Premier Li Keqiang dismissed the proposal on the grounds that yet more central bank liquidity wasn’t the answer.For Yi, it was one more small victory. In his 20 months in office, the University of Illinois alumnus has persistently argued against a “flood” of stimulus, instead releasing just enough liquidity to keep the economy on its gradual glide path from the double-digit growth rates of the mid-2000s toward the sub-6% rates expected into the 2020s.Even with worsening data pointing to the risk of a sharper decline, the PBOC is staying the course, for now. While the U.S. Federal Reserve has slashed broad borrowing costs by 75 basis points since July, the PBOC is maintaining the most gradual of approaches, constrained by the fear of re-inflating debt bubbles or stoking already resurgent inflation.That approach has been confirmed this month. A 5 basis point cut to the key 7-day reverse repo rate on Nov. 18 followed a tweak of similar magnitude to the rate the PBOC charges banks to borrow for a year. The loan prime rate -- based on the interest rate for one-year loans that 18 banks offer their best customers -- was set at 4.15% for November, down from 4.20% in October, according to a statement from the PBOC on Wednesday.For the global economy, which has relied on China for about a third of its total growth in recent years, Yi’s moderation has meant there will be no big support to world demand that marked past binges from Beijing. If Yi can pull off his tightrope walk between keeping growth stable and avoiding a debt crisis, China will continue its march toward being the “moderately prosperous” society that the Communist Party wants it to be. Fail, and all bets are off.Yi is building on the work of his predecessor, Zhou Xiaochuan, who in the latter years of his tenure argued that controlling debt had become more important than hitting sky-high economic growth rates. That insight appears to have become internalized at the highest levels.“The balance between debt and growth is a task that Chinese policy makers will need to address over the longer term, for 10 years or more, unless there can be fundamental structural reform to get rid of some of it,” said George Wu, chief economist at Changjiang Securities Co in Beijing, who served 12 years in the PBOC’s monetary policy department. “Otherwise, the debt will just be rolled over, not removed, like an ostrich burying its head in the sand.”From his office at the bank’s headquarters -- a squat office block at the gateway to Beijing’s financial district covered in bronze reflective glass -- Yi is also trying to continue Zhou’s decade-and-a-half quest to modernize the institution from its roots as the only bank in Maoist China to one of the must-watch monetary guardians of the world.Foreigners are already more invested in China’s economic future than ever before, and that’s only set to deepen as its financial barriers come down. In September, executives from JPMorgan Chase & Co., and Goldman Sachs Group Inc. were among outsiders that met with Yi and other regulators at the Ritz-Carlton Hotel about a kilometer from the PBOC headquarters -- evidence that the trade war has done little to derail the rush to gain a share of an estimated $9 billion in annual profits.International investors are already directly exposed to the ups and downs of its stock market through indexes like MSCI Inc’s and are set to own as much as 20% of its sovereign bonds by 2023 according to Citigroup Inc. As those asset prices swing around on PBOC actions, global investors will demand more transparency from Yi, and he’ll need to provide it if he wants to keep the money pouring in.Hampering Yi’s ability to explain his policies and pave the way for any change in direction is the fact that he doesn’t have the formal independence enjoyed by the world’s other major central banks. While day-to-day operations such as liquidity management in money markets are assumed to be at the PBOC’s discretion, it’s the State Council that has the final word on benchmark interest-rate settings.Indeed, opacity is a feature of the policy-making process in China, not a bug. Unlike the formally independent Fed or European Central Bank, the PBOC must painstakingly build consensus for its proposed course of action with a range of other ministries, and then win approval from the top leadership.For now, the leadership is on his side. Yi’s boss is the silver-haired Liu He, who’s been leading the nation’s trade negotiations with the U.S. Liu is widely believed to have been the “authoritative person” interviewed in a landmark piece in the nation’s flagship People’s Daily back in 2016 arguing policy makers should prioritize de-leveraging ahead of short-term economic growth. In a somewhat complex structure, Guo Shuqing, a high-profile banking regulator, is the Communist Party’s secretary for the PBOC.The bureaucratic system of policy making, known as “countersignature,” means that debates with the rest of government are just as important as those within the central bank. To maintain room for negotiating, very little is let into the public domain about how policy makers think before an initial consensus is reached. Where investors can pick over the details of the ECB or Bank of Japan’s economic modeling and the viewpoints of officials, the PBOC’s internal procedures are confidential like those of any Chinese government ministry.As a result, investors can be wrong-footed, sometimes dramatically. Like the botched yuan devaluation of 2015 that sent global markets plunging. Or, to a lesser extent, a bond rout this year due to dashed expectations of larger stimulus that has yet to arrive.“For China to properly make its financial markets more international, the PBOC ought to take the lead to adopt a more proactive and international posture in communicating with their ‘clients,’” said Stephen Jen, founder and co-chief investment officer of Eurizon Slj Capital. “Sometimes the timing and the nature of the actions taken by the central bank confuse the market as they are not accompanied by any statements or explained in speeches.”The PBOC, NDRC and State Council declined to comment on the content of the cabinet meeting. The PBOC did not grant a request for comment on monetary policy and transparency issues. Governor Yi conducted his first interview with foreign media with Bloomberg Television in June.A sliver of light is beginning to penetrate the black box. The central bank widely consulted and spoke publicly about a reform of the interest-rate system introduced this year and its daily liquidity operations are now accompanied by commentary on the PBOC’s view of the market. More press conferences with foreign media attending have been held this year than before, and more information is also released in English.But market participants still have to guess the timing and content of major liquidity operations. There are no regular policy meetings that decide on official interest rates. And the interest-rate reform has added to the complexity of the central bank toolkit and left observers with even more policy levers to keep an eye on without any single one being decisive.When Yi has spoken publicly, investors would have done well to listen. In an interview with Bloomberg News in June, Yi warned against that “flood” of liquidity and signaled officials weren’t wedded to defending any particular level of the yuan. The nation’s currency weakened past 7 per dollar about two months later and he’s kept his word on stimulus restraint.Barring some unforeseen crisis, like a marked worsening in the trade standoff with the U.S. or a blow-up in the property market, Yi appears set to continue his tightrope walk.“Starting with Governor Zhou and continuing with Yi Gang, they have convinced the top leadership that it is very important to reduce financial risks,” said Nicholas Lardy, a senior fellow at the Peterson Institute for International Economics in Washington. “It would appear President Xi Jinping has bought the idea.(Updates LPR rate in eighth paragraph)To contact Bloomberg News staff for this story: Yinan Zhao in Beijing at email@example.com;Jeffrey Black in Hong Kong at firstname.lastname@example.orgTo contact the editors responsible for this story: Malcolm Scott at email@example.com, James Mayger, Jeffrey BlackFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
High-dividend stocks can be misleading. Here's a smart way to find stable stocks with high dividends. Watch these 14 dividend payers on IBD's radar.
(Bloomberg) -- Even by his own standards, hedge fund perma-bear Russell Clark has never been this pessimistic.In his boldest move against stocks, the money manager raised the net short position in his Horseman Global Fund to 111% of gross assets, according to an investor letter sent Monday. The famed short seller has persistently wagered against equities since 2012.Clark is pitted against one of the longest bull markets in history, fired up by central bank interventions and low interest rates since the 2008 financial crisis. The S&P 500 Index has surged to a record, decimating bearish hedge funds and raising questions if the short sellers will survive long enough to profit from the next bear market.“I can see all the problems with the markets, and I can see how they will unwind, and how we will make money from it,” Clark, who runs London-based Horseman Capital Management’s main fund, told clients in October. “The issue is timing.”After years of double-digit returns, Clark hit a rough patch in 2016, when his fund slumped 24%. He’s now on track for his biggest annual loss yet, with the strategy losing 27% this year through October. Its assets have declined to $263 million from $1.7 billion at the end of 2015.Clark declined to comment beyond his newsletter.Not AloneThe fund manager is not alone in flagging concerns. His London-based peer Crispin Odey has long been a vocal critic of central bank interventions, predicting market chaos as a result.The world’s richest individuals share Clark’s concerns and are hunkering down for a potentially turbulent 2020. In a survey of more than 3,400 respondents by UBS Global Wealth Management, most expect a big drop in markets before the end of next year and 25% of their average assets are currently in cash.Clark has wagered against autocallables, complex equity-linked securities that aim to generate regular income for their buyers. Investors hungry for yield have piled into them, artificially suppressing stock market volatility. Clark is betting that such trades will collapse and volatility will soar.In his latest letter, Clark also expressed growing unease over the safety of derivatives clearinghouses, echoing recent comments by JPMorgan Chase & Co. and BlackRock Inc., among others.He said clearinghouses are now “very risky” as regulations enforced after the global crisis have driven more business to the firms without adequate financial resources to combat threats. Clark said initial margin, a type of collateral to support derivatives trades, needs to rise by about six times for the financial system to be considered safe.Born and raised in Canberra, Australia, Clark joined Horseman in 2006. He purchased the controlling interest of the firm from its founder John Horseman and other partners last month to show his commitment to the strategy.“The investing world at large is about to discover the pitfalls of levered long investing at the end of the cycle,” Clark wrote last month. “Exciting times indeed.”\--With assistance from Silla Brush.To contact the reporter on this story: Nishant Kumar in London at firstname.lastname@example.orgTo contact the editors responsible for this story: Shelley Robinson at email@example.com, Chris Bourke, Patrick HenryFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Locally based Globalscape Inc. has secured a huge source of credit, among multiple moves it's made following a recent positive quarterly earnings report that continued its streak of favorable results. Globalscape (AMEX: GSB), a publicly traded secure data transfer company, entered into a five-year, $55 million senior secured credit facility with a syndicate of banks led by JPMorgan, according to a news release. The new credit facility provides for a term loan facility in the principal amount of $50 million and revolving commitments in an aggregate principal amount of $5 million with JPMorgan (NYSE: JPM) and East West Bank.
(Bloomberg Opinion) -- Interest rates are not only low but, adjusted for inflation, the yield on the benchmark 10-year Treasury note is zero. This has been the case for some years now, and will likely continue in a world of chronic excess capacity and surplus savings that has been generated by globalization.Yet individual investors and financial institutions are far from recognizing and adapting to this reality. Instead, they’re taking bigger risks in their search for yield. The result may be severe financial problems, especially if the recession I believe the economy is nearing unfolds. Examples of extreme risk taking and high financial leverage are legion. The Federal Reserve agrees; in a twice-yearly report meant to flag stability threats on the central bank’s radar, it said that continuing low interest rates could dent U.S. bank profits and push bankers into riskier behavior that might threaten the nation’s financial stability.State pension funds have cut their expected returns, but their 7.25% average forecast is likely to be proven a fantasy. Funds with more than $1 billion in assets had a median return of 6.8% in the year ending June 30, the lowest since 2016. They’ll need to do better. Large public funds had $4.4 trillion in assets as of June 30, or $4.2 trillion less than they need to pay promised future benefits, according to the Federal Reserve. And the situation is deteriorating, with liabilities up 64% since 2007 but assets gaining only 30%, according to the Pew Charitable Trust.If investments fall short, public pension funds have three unsavory choices. The first is to ask state legislatures for more money, but most of them are looking to cut, not add, expenses. The second is to curtail retiree benefits, which is next to impossible politically. Besides, many pension benefits are set by law.Third, they can move out on the risk curve to achieve higher returns, and that’s what they’ve done for the most part. Pension funds in the U.S., U.K., Japan, Australia, Canada, Switzerland and the Netherlands allocated 26% of their assets in 2018 to alternative and riskier investments, up from 19% in 2008, according to Willis Towers. These include real estate, venture capital, private equity and even greenhouses and bonds rated barely above junk.As long as the Fed keeps short-term rates above zero, the difference between what banks pay on deposits and other sources of funding and what they earn on longer-term loans will remain compressed and could well be reduced further. This, of course, is just another manifestation of a flat yield curve.Net interest income at three large banks—JPMorgan Chase & Co., Wells Fargo & Co. and Citigroup Inc. —fell 2% in the third quarter from the second, and the average net interest margin shrank from 2.66% to 2.54%. And they didn’t make it up on volume. Total loans were essentially flat, which is not that surprising as large banks are shifting to portfolio investments, namely Treasuries, which rose 5.1% in the third quarter compared with a 0.9% increase in loans outstanding.With the persistent constriction on interest rate margins, banks will no doubt also emphasize fee income in the years ahead. Ironically, security brokers and advisors are moving in exactly the opposite direction, potentially to their peril. And with the race to zero brokerage commissions, firms such as Charles Schwab Corp, Fidelity Investments, Vanguard Group Inc. and Robinhood Markets Inc. are shifting from brokerage to banking. Schwab’s commission revenue has declined to 7% of annual revenue from 14% in 2014, while it’s 11% for E*Trade Financial Corp. and 15% for TD Ameritrade Holding Corp.Those three firms held a total of $6 trillion in client money at the end of the third quarter, compared with $2.9 trillion at Bank of America Corp.’s wealth-management business, and they profit from spread lending—investing low-cost, often free client money at higher interest rates. They are betting their customers will remain insensitive to returns on their money and that free commissions will induce investors to leave these excess funds with them. Still, average money-market yields are much higher at 1.8% and in the first half of this year, and Schwab clients moved $58 billion into money-market accounts and other higher-yield alternatives. Also, Robinhood Markets just announced a 2% return for uninvested customer cash through partner banks.Savers are slowly but reluctantly adapting to zero real interest rates, and one of the arguments in favor of stocks is that they offer better total returns. The average dividend yield on the S&P 500 Index is 1.9%, just above the interest rate on the 10-year Treasury note. This has kept stocks very inflated with the cyclically-adjusted price-to-earnings ratio about 50% above its long-term average. In Europe, negative interest rates are inducing depositors to put currency in vaults and to save even more for retirement rather than spend. In Switzerland, individuals are fleeing to real estate, stoking fears of overbuilding.With robust demand, global sales of new government and private sector debt obligations are soaring, notably junk bonds. Some $4.6 trillion was issued through August, up 12% from a year earlier, according to S&P Global Ratings. Net corporate debt in relation to cash flow soared from 1.2 times in 2010 to 1.7 times at the end of 2018.Today’s risk-taking in search of high returns is not as eye-catching as was the subprime mortgage bonanza, but it’s much more widespread and, therefore, ominous. My advice to individual and institutional investors: reduce your leverage and risk and adapt to an era of chronic flat real interest rates.To contact the author of this story: Gary Shilling at firstname.lastname@example.orgTo contact the editor responsible for this story: Robert Burgess at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.A. Gary Shilling is president of A. Gary Shilling & Co., a New Jersey consultancy, a Registered Investment Advisor and author of “The Age of Deleveraging: Investment Strategies for a Decade of Slow Growth and Deflation.” Some portfolios he manages invest in currencies and commodities. For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Needham Bank would be the third bank in two years to open a location in Roxbury. Prior to that, the neighborhood had gone more than two decades without a new bank branch.
Presidential candidates are promising to help ease the burden of student loan debt but David Klein, the CEO of CommonBond says refinancing student debt now may help millions struggling to get a break.
A look at how portfolio assets can be periodically rebalanced (from better-performing asset classes to underperformers, for example) and occasionally sold to supplement income for retirees.
(Bloomberg Opinion) -- Unlike the bond market, which is largely anchored in economic reality, the stock market is based on hope. Everyone knows and understands that, but it’s still next to impossible to reconcile the latest leg higher in equities — which has pushed the Dow Jones Industrial Average, S&P 500 Index and Nasdaq Composite Index to records — with the latest economic data. Consider Friday, when all those benchmark indexes posted their biggest gains of the week even though a Commerce Department report showed that retail sales in October failed to rebound enough to offset concern about September’s horrible numbers. That was enough to spur JPMorgan Chase & Co., which as the largest U.S. bank should know a little something about the economy, to cut its fourth-quarter estimate of gross domestic product to a meager 1.25% from what was an already low 1.75% on an annualized basis. But none of that matters to the stock market, which has tied its belief in an upswing in the economy to every comment made by U.S. and Chinese officials on “phase one” of a trade deal. The problem is that no one truly knows what it will contain or accomplish. White House economic adviser Larry Kudlow told reporters late Thursday in Washington that “we are coming down to the short strokes” and are “in communication with them every single day.” And here’s where hope comes into play for the stock market. The hope is that unlike in the past, when the White House signaled that a deal was at hand, this time will be different. If it is, that might ease the uncertainty hanging over business leaders, ignite faster growth and allow companies to meet earnings estimates for 2020 that remain stubbornly high at just less than 10%.This wouldn’t be much of a concern if stocks were cheap, but they’re anything but. The S&P 500 is trading at 17.2 times the following year’s projected earnings. That ratio has been higher only once since the economy began to recover from the financial crisis, and that was during late 2017, just before the S&P 500 tumbled 10% over the course of a few weeks in late January and early February 2018.Put another way, all the good news that equity investors are anticipating is already reflected in stock prices — and then some. Proof for that comes in the widely followed monthly survey of fund managers by Bank of America Merrill Lynch. The latest results were released last Tuesday and showed that a net 6% of those polled expect a strong global economy next year, compared with negative 37% in September’s survey. That was the biggest month-over-month jump on record. But that came before the retail sales report, which should provide plenty of reason for pause heading into the holiday season. Sales in the “control group” subset, which some analysts view as a more reliable gauge of underlying consumer demand, increased 0.3% as projected, but the September figure was revised to a decline of 0.1% from no change. That was the fourth consecutive month this series was revised lower. “We’re more dependent on the consumer than ever in this expansion, and we’re getting some signs the consumer is slowing” Stephen Gallagher, chief U.S. economist at Societe Generale SA, told Bloomberg News. Although the bond market is no longer pricing in an imminent recession, it hasn’t exactly embraced the “all is fine” narrative like stocks have. Yields on U.S. Treasuries average 1.77%, which is in the middle of the 1.51% to 2% range they have been stuck in since July. And don’t forget, those yields averaged 3% this time last year.The phrase “priced for perfection” gets tossed around a lot by investors. This time, it feels appropriate given how much hope is priced into stock prices. To contact the author of this story: Robert Burgess at firstname.lastname@example.orgTo contact the editor responsible for this story: Daniel Niemi at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Robert Burgess is an editor for Bloomberg Opinion. He is the former global executive editor in charge of financial markets for Bloomberg News. As managing editor, he led the company’s news coverage of credit markets during the global financial crisis.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- With little more than six weeks to the end of 2019, the signs are that the worst days of the year for emerging markets are in the past. But don’t bet on any major rally either.Expected volatility is close to its lowest levels since 2014, stocks are failing to take their cue from bullish signals and a trio of central banks are poised to back away from stimulus-inducing rate cuts this week. That leaves markets largely hostage to the ups and downs of the trade talks, with the latest phone call between U.S. and Chinese officials on Saturday likely to trigger at least a bout of optimism at the start of the week.“Emerging markets are a mixed bag for the moment,” said Anders Faergemann, a London-based senior money manager at Pinebridge Investments, which oversees about $97 billion worldwide. “We are taking a selective approach, treating each country as an individual credit and spending more time reviewing the economic fundamentals.”Protests in Latin America, Lebanon and Hong Kong will also probably cause “some consternation” for emerging markets in the short term, according to Faergemann, who says he favors Ukraine and Egypt for their reforms, while staying on the lookout for “improving stories” in countries such as Ghana, Angola and Ivory Coast.Stocks, currencies and bonds rebounded on Friday to trim last week’s losses after White House economic adviser Larry Kudlow signaled a trade deal was coming down to the final stages. JPMorgan Chase & Co’s implied volatility index for developing-nation currencies was at 7.3% Monday, near the five-year low of 6.9% reached in July.Listen here for the emerging markets weekly podcast.Whither Rates?Traders were adding bets at the end of last week on a South African rate cut as the rand strengthened and oil prices moderated, even as most economists predicted that the central bank will maintain its benchmark on ThursdayThe five-year breakeven rate, seen as a gauge of expectations for price increases over the period, fell to as low to 4.42 percentage points on Friday, the lowest level since at least 2012, when Bloomberg started compiling the dataRead more: Record-Low Breakeven Rate Spurs South Africa Policy-Easing BetsPolicy makers in Indonesia will probably keep the benchmark rate on hold on Thursday after 100 basis points of cuts this year, according to a Bloomberg survey. Governor Perry Warjiyo said last month any further moves would depend on data. Economic growth eased to 5.02% in the third quarter, the slowest pace in more than two yearsThe rupiah is Asia’s best-performing currency this year after the Thai baht and Philippine pesoHungary will probably keep its benchmark interest rate unchanged on Tuesday. Zambia will decide on monetary policy the following dayRussia’s central bank chief will face questions from parliament on Wednesday on why she isn’t moving faster to cut rates amid sputtering economic growthRead: Best Days for Emerging Debt Could Be Over on Fewer Rate CutsAramco Kicks Off RoadshowSaudi Arabia put a preliminary valuation on its state-owned oil giant Aramco of between $1.6 trillion and $1.71 trillion, short of the $2 trillion target set by Crown Prince Mohammed bin Salman in 2016. Aramco said Sunday it plans to offer 1.5% of its shares on the local stock exchange, less than expectedThe Saudi Tadawul index swung between gains and losses Sunday to end the day little changedRead more: Aramco at $1.7 Trillion Gives Stock Room to Rise, Analysts SaySri Lankans VoteA family of strongmen who tilted Sri Lanka toward reliance on China clinched victory in a tightly-fought presidential election, as voting showed the country remains divided down ethnic linesGotabhaya Rajapaksa, the brother of former president Mahinda Rajapaksa, won 52.3% of the votes. Ruling alliance candidate Sajith Premadasa had 42% at the final countThe yield premium investors demand to own Sri Lanka’s dollar bonds over U.S. Treasuries narrowed 47 basis points this year to 489 basis points as of Friday, according to a J.P. Morgan Chase & Co. index.Economic DataArgentine investors, still awaiting President-elect Alberto Fernandez’s economic policy plans, will be on edge this week as they digest trade balance data. The peso remains the world’s worst-performing currency of the yearIn Chile, where stocks and the peso rallied on Friday on optimism over a new constitution, third-quarter gross domestic product data on Monday will probably show a recovering economy, though some analysts have changed their outlooks since protests broke out in October. The week-ending rally was the first significant relief for Chilean assets after the government’s move to raise subway fares sparked unrestGDP figures for the same period in Peru on Thursday are also expected to flag some recovery, though growth probably remained below potential. The data may explain why the central bank unexpectedly cut interest rates this month and downgraded its growth forecast for the year, even though the peso gained over the course of 2019Thailand will also unveil trade figures for October on Thursday after a report Monday showed the nation’s economy grew more slowly than expected in the third quarter. The government lowered its forecast for full-year growth as the country deals with the impact of the trade war and a strong currencyOn Wednesday, the central bank will release minutes of its Nov. 6 meeting, when it cut its key rate to a record low and announced measures to curb the strength of the bahtFor the first time since 2015, China cut its seven-day reverse repurchase rate to 2.5% from 2.55% on Monday following a string of poor economic data. This will renew focus on the repricing announcement of its one-year and five-year loan prime rate on Wednesday. The LPR indicates the price that banks charge clients for loansSouth Korea is due to give an indication how its exports -- a bellwether for global trade - - are performing in November. Its 20-day reading on exports and imports will be released on ThursdayTaiwan will report data on export orders for October on Wednesday.Russia’s industrial production data will offer clues on whether the economy’s third-quarter rebound will be sustained in the last three months of the year\--With assistance from Karl Lester M. Yap, Alec D.B. McCabe, Marcus Wong and Tomoko Yamazaki.To contact the reporters on this story: Netty Ismail in Dubai at firstname.lastname@example.org;Lilian Karunungan in Singapore at email@example.com;Sydney Maki in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Alex Nicholson at email@example.com, Justin Carrigan, Dana El BaltajiFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- JPMorgan Asset Management has upgraded its outlook on global equities, as the U.S. and China get closer to reaching a trade agreement and the probability of a U.S. recession recedes.While still cautious on stocks overall, the money manager has “moved closer” to a neutral equity positioning in multi-asset portfolios, Patrik Schowitz, the firm’s global multi-asset strategist, said in a report.Schowitz expects mid-single-digit stock returns in 2020. Emerging market and U.S. large-cap equities are now the firm’s most favored areas, and it is turning more positive on cyclical equity markets.“The environment has shifted in recent weeks,” Schowitz said. “Investors appear to be regaining their appetite for risk,” with share prices rising from October lows. The MSCI All Country World Index is less than 1% away from an all-time high after the recent rebound.In addition to optimism over a trade deal, Schowitz said the mood has lifted on improving macro data. The probability of a U.S. recession in the next 12 months has receded to 20-30% from nearly 50% “just a few weeks ago,” the firm estimates.Earnings were better than expected in the quarter ended September, suggesting that global earnings have bottomed, the strategist wrote. “Investors should be able to look through further near-term downgrades,” since economic momentum is picking up, he added.However, Schowitz warned that it is “too early to give the all-clear for risk assets,” given that trade talks could still fail and economic data improvement may not be sustained. The strategist’s least preferred areas are Australia and U.S. small-cap equities.To contact the reporter on this story: Ishika Mookerjee in Singapore at firstname.lastname@example.orgTo contact the editors responsible for this story: Lianting Tu at email@example.com, Kurt Schussler, Naoto HosodaFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Asian dollar bond sales have jumped to a record of almost $300 billion this year, the kind of unprecedented supply that can start to make investors feel a bit queasy.But money managers may avoid such indigestion, as signs suggest a slowdown in offerings ahead that would help keep returns attractive, some argue.The market has been red hot this year, with global central banks cutting rates and the hunt for yield accelerating. Issuance in the region excluding Japan is running at $299 billion, the most for similar periods in previous years, with several borrowers kicking off roadshows on Monday for potential new deals. The debt has returned the most in five years in 2019, at about 11%.Analysts at JPMorgan Chase & Co. expect supply to be lower next year in part because of pre-funding in 2019 and more stringent Chinese regulation of debt sales by local property developers, the biggest source of high-yield dollar notes in the region.Morgan Stanley upgraded its recommendation on Chinese high-yield property bonds to overweight, citing an expectation for lower issuance in 2020, and inflows skewed to the lower-rated Asian notes, according to a report.“Our global economics team is expecting trade tensions and monetary policy to ease concurrently for the first time in seven quarters, lifting global growth” in the first quarter of 2020 and onwards, Kelvin Pang, a credit strategist at Morgan Stanley in Hong Kong, wrote in the report.Goldman Sachs Group Inc. likes Asian high-yield dollar bonds, based on the view that global growth will be stable and assuming there’s no escalation of trade tensions.To contact the reporters on this story: Finbarr Flynn in Tokyo at firstname.lastname@example.org;Annie Lee in Hong Kong at email@example.comTo contact the editors responsible for this story: Andrew Monahan at firstname.lastname@example.org, ;Neha D'silva at email@example.com, Ken McCallumFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
While many investors may worry about the effects that the U.S.-China trade war, Brexit and Middle East tensions are having on the global economy, Jamie Dimon has this advice: Relax.