44.51 -0.24 (-0.54%)
Pre-Market: 8:46AM EDT
|Bid||44.49 x 4000|
|Ask||44.66 x 4000|
|Day's Range||44.35 - 45.05|
|52 Week Range||36.74 - 50.37|
|Beta (3Y Monthly)||1.30|
|PE Ratio (TTM)||9.78|
|Earnings Date||Oct 14, 2019 - Oct 18, 2019|
|Forward Dividend & Yield||1.40 (3.10%)|
|1y Target Est||52.95|
Morgan Stanley today declared a regular dividend on the outstanding shares of each of the following preferred stock issues:
Morgan Stanley ranked as the top financial adviser in activist campaigns during the first six months of 2019 while Goldman Sachs and Spotlight Advisors each added clients and tied for second place, according to Refinitiv data. Holding onto the No. 1 spot, Morgan Stanley advised 19 companies, including Bristol-Myers Squibb Co and United Technologies Corp, in the first half of 2019. A year ago, when activists launched more campaigns overall, Morgan Stanley counseled 23 companies in the first six months of 2018.
The Zacks Analyst Blog Highlights: Intel, Adobe Systems, Mondelez International, Morgan Stanley and Arista Networks
“When institutional money?” was the cry of retail investors through 2018, as crypto assets sagged and hopes of salvation faded. Institutions have since entered the space, and began to take up positions in bitcoin and other leading assets, but it would be exaggerating to say there’s been a stampede from the direction of Wall Street. […]
(Bloomberg) -- They’re longer than classics like Henry David Thoreau’s “Walden” and modern hits like J.K. Rowling’s “Harry Potter and the Prisoner of Azkaban” but nowhere nearly as engaging.Yet each week, American state and local governments crank out the doorstops by the dozens, creating a dismal stack of soporific homework for money managers studying whether or not to buy their bonds.So Morgan Stanley, one of Wall Street’s biggest investment banks, experimented with farming out the job of reading 120,000-word bond prospectuses to robots, seeing if the results could yield a sort of CliffsNotes that may separate the signal from the noise.Strategists Michael Zezas and Mark Schmidt ran 150 official statements through a machine-learning program. They said it revealed some patterns that could help investors avoid credit-rating downgrades or defaults without reading through hundreds of pages of reports.They focused on bonds issued by local agencies that are backed by riskier projects like continuing-care retirement centers, hospitals and speculative real estate developments. That’s where doing close research is most important because local governments almost never default on their own bonds. Here’s some lessons:More words, better odds: Official statements for continuing-care retirement centers that didn’t default averaged 20,194 words longer than those that did, they found. The tendency also held true for so-called dirt bonds sold for real estate projects.Executive bios: Speculative developments tend to rely on the word “Mr.” to highlight the management of the project, since the riskier deals need to play up their executives’ skills as a key selling point.Boring is better: Higher-quality debt tended to have more references to the financial statement than defaulted or downgraded debt. The more “boring” the documents, the better, the strategists said.It was Morgan Stanley’s first time using natural language processing on municipal-bond issuers’ official statements, Zezas said in an email. The bank reported the results to clients to show how Morgan Stanley takes a quantitative approach to its research.He said they used relatively new techniques and principles outlined by a Stanford University professor, who experimented with it as a way to sift through the huge amounts of information involved in modern political affairs.Zezas said the bank plans to further test its conclusions. Their next step is to gather more official statements, get more data and solicit feedback from clients. The bank said the findings could help analysts when they are asked to provide a quick take on a new bond deal, not serve as their computerized replacements.“We don’t recommend cursory credit analysis,” Zezas and Schmidt said in their report to clients. “However, sometimes a simple rule-of-thumb can help.”\--With assistance from Jeremy R. Cooke.To contact the reporter on this story: Amanda Albright in New York at email@example.comTo contact the editors responsible for this story: Elizabeth Campbell at firstname.lastname@example.org, William Selway, Michael B. MaroisFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- September is only halfway done and already the S&P 500 Index is up 20% for the year. This is a remarkable achievement, given that earnings growth has stalled and the bond market is pricing in almost a 40% chance of a recession over the next 12 months. That just shows the degree to which lower interest rates have supported stocks. And yet, as is often the case in life, too much of a good thing isn’t always, well, good.This year’s rally – during which the S&P 500’s forward price-to-earnings multiple expanded to 17.6 from 14.5 at the start of January – can be credited to the Federal Reserve’s dovish pivot, which led to the central bank’s first rate cut since 2008 and sparked big declines in market rates. The yield on the benchmark 10-year Treasury note dropped to as low as 1.43% earlier this month from 2.80% back in January.Simple discounted cash-flow analysis shows how lower rates make future earnings more valuable now, justifying higher multiples for equities even without profit growth. So, logic would dictate that the lower rates go, the better for equities. But the experience in Europe shows that there comes a point where ever lower rates begin to work against stocks.In a research note last week, the strategists at Bank of America pointed out how even though 10-year bond yields in Germany have fallen below zero, stocks there only trade at a multiple of about 14 times earnings. That’s little changed from mid-2014, when yields were around 1.25% and the European Central Bank cut its benchmark deposit rate to below zero. The same is true for the broader euro zone, with the Euro Stoxx 600 Index trading at 14.5 times projected earnings, not much different from mid-2014.Of course, the euro zone’s struggles are worse than the U.S. Still, the increasing globalization of the world economy means America is having a much harder time shrugging off the slowdown elsewhere. Morgan Stanley says the U.S.’s share of global gross domestic product has shrunk from 22% in 1990 to 15% today. That’s a big reason traders are pricing in at least three more Fed rate cuts over the next 12 months, bringing its target rate for overnight loans between banks to 1.50% from 2.25% currently.On top of that, the number of Wall Street strategists slashing their Treasury yield estimates has grown in recent weeks, citing the outlook for weaker global growth and inflation. UBS Group AG and BNP Paribas SA, which are among the select group of dealers authorized to trade with the Fed, both slashed their 10-year forecasts, predicting yields will drop to 1% by the end of 2019. Could yields go even lower, tracking those in Europe and Japan by following below zero? Former Fed Chairman Alan Greenspan doesn’t thing that’s a crazy idea, telling Bloomberg News last month that he wouldn’t be surprised if they turned negative.It’s true that the stock market posted a massive rally between early 2009 and mid-2015, rising as much as 215%, as the Fed kept rates near zero and pumped money directly into the financial system via quantitative easing. But that was a time when investors largely believed that central banks still had a lot of arrows left in their quivers to stimulate the economy. That’s not really the case now. The S&P 500 fell four straight days after the Fed cut rates on July 31, dropping a total of 5.59%.Also back then, profits were in recovery mode and stocks were relative cheap, with the forward price-to-earnings ratio holding below 14 for much of that time and peaking at around 17 times in late 2014 – about where it is now - just before the S&P 500 turned in its first annual decline since 2008. This year, though, earnings growth is flat and Bank of America’s strategists are telling its clients that forecasts for an 11% increase next year are “too high.” Stocks have had a good run, with the S&P 500 closing last week at 3,007. The median estimate of strategists surveyed by Bloomberg in January only expected the benchmark to rise to 2,913 this year. But with economists moving up their time frame for when the next recession will hit to 2020 from 2021, earnings estimates coming down and price-to-earnings ratios on the high side, it won’t be easy for stocks to keep marching higher even if the Fed does continue to slash rates. To contact the author of this story: Robert Burgess at email@example.comTo contact the editor responsible for this story: Beth Williams at firstname.lastname@example.orgThis 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) -- Treasuries extended their September tumble, sending the benchmark 10-year yield to its highest level since early August, amid stronger-than-expected U.S. economic data.Bonds fell after August retail sales and the September University of Michigan consumer sentiment index increased more than forecast, buoying confidence in the economic expansion. Yields across the curve rose, with the 10-year climbing more than 12 basis points to 1.90%, up from a three-year low of 1.43% early this month. The spread between 2-year and 10-year yields, considered a recession indicator when it inverts, as it did in August for the first time since 2007, widened back above 9 basis points.The decline in Treasuries comes as some central-bank officials are re-evaluating the effectiveness of easing efforts ahead of the Federal Reserve’s Sept. 18 meeting. Odds of a quarter-point rate cut, which futures had fully priced in for weeks, slipped to reflect a small chance of no change. Helping fuel the move, top European Central Bank officials questioned the quantitative-easing plan unveiled Thursday. Yields climbed across developed markets: In Japan, the 10-year rate had its biggest intraday jump in more than year.“Central banks are looking at how much effect they are having by continuing to lower rates,” said Jason Ware, head of institutional trading for 280Securities in San Francisco. “The market may have overshot to the downside and driven yields too low with an overly grim outlook on what’s happening in the economy.”Traders also pared expectations for how much more the Fed will lower rates this year, and now see less than a half-point of additional easing. At one point last month, the market had priced in almost 70 basis points of further cuts in 2019 as trade friction mounted.The increase in U.S. 10-year yields spurred a jump in futures volume as the rate exceeded its 50-day average.As Treasury yields surged, U.S. dollar swap spreads -- the gap between the fixed component of a swap and the matching Treasury yield -- also climbed. That’s typically a sign of paying flows exacerbating moves that support higher yields as big investors look to reduce portfolio duration.Lack of interest from homeowners to refinance their mortgages in a rising yield environment may be one of the factors that would drive investors to reduce duration by selling Treasuries, or paying in swaps.In August, Treasuries had their biggest monthly gain since the depths of the 2008 financial crisis and yields tumbled on the back of sliding yields in Europe and concern about the U.S.-China trade war. The magnitude of the rally left the market vulnerable to a sell-off, interest-rate strategists at Morgan Stanley said last week.(Adds swaps in sixth, seventh paragraphs and strategists in eighth paragraph.)\--With assistance from Edward Bolingbroke.To contact the reporter on this story: Vivien Lou Chen in San Francisco at email@example.comTo contact the editors responsible for this story: Benjamin Purvis at firstname.lastname@example.org, Mark Tannenbaum, Elizabeth StantonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Deutsche Bank (DB) agrees to pay settlement charges despite not admitting the allegations. Also, it agrees to share information with the regulators that can help prove other banks guilty.
The question goes to the heart of securities markets, which routinely churn billions of dollars of orders per day. Without it, they cannot meet regulatory requirements such as getting the best price on trades, reporting transactions or valuing assets.
(Bloomberg Opinion) -- It’s been a busy week for General Electric Co. On Tuesday, the company announced it would sell another chunk of its stake in its Baker Hughes oil and gas venture, ultimately raising about $3 billion. Two day later, it said it would buy back up to $5 billion of bonds. This activity gave CEO Larry Culp something concrete to point to on Thursday when he took the podium at a Morgan Stanley conference to update analysts and investors on the industrial conglomerate’s turnaround progress. “We’re doing what we said we would do," Culp said. That means "tending to the balance sheet, making sure that we’re strengthening our overall financial position, and making sure that we’re in a position to run the businesses better."GE’s efforts to reduce its bloated debt load are a positive; that’s what it’s supposed to be doing. Culp’s ability and willingness to be proactive is undoubtedly an improvement over former CEO John Flannery’s long stretches of paralysis. But the timing of this flurry of deleveraging steps strikes me as slightly curious.Most companies wouldn’t go around buying back bonds when rates are so low; they would swap them out for new bonds at better terms. GE, however, has pledged not to add any new debt through 2021, and appears to be trying to signal its liquidity is such that it doesn’t need to. Yet Culp has also talked about running the company with a higher cash balance in order to reduce its reliance on commercial paper. And the $21.4 billion divestiture of GE’s biopharmaceutical business to Danaher Corp. – the linchpin in Culp’s debt reduction plan – hasn’t closed yet.Perhaps the Baker Hughes stake sale and the bond buyback were planned well in advance; perhaps GE is just being opportunistic and taking advantage of recent trading conditions. I can’t help but notice, though, that GE’s actions this week appeared to hit at the heart of criticisms made by Bernie Madoff whistle-blower Harry Markopolos last month in a lengthy, explosive report.Markopolos has an agreement with an undisclosed hedge fund that will give him a share of the profits from bets that GE shares will decline. GE has called his allegations “meritless.” His report claimed GE needed to immediately funnel $18.5 billion in cash into its troubled long-term care insurance business and accused the company of avoiding a writedown on its Baker Hughes stake. One way to read the debt buyback is that GE must not be too worried about a fresh cash shortfall at the insurance unit if it’s willing to plop down $5 billion to repurchase bonds on a voluntary basis. And GE’s stake sale this week will bring its holdings in Baker Hughes below 50%, which will prompt a charge that could be in the ballpark of $8 billion to $9 billion but also allow management to put one more inevitable writedown behind them.(1)There were a number of flaws in the Markopolos report, not least his liberal use of hyperbole, but it struck a nerve with investors who were already wary of more negative surprises at GE and the opaqueness of its underlying financials. Whether or not there’s any truth to his allegations, being on the hot seat like that appears to have shaken GE executives as well.What’s most telling is the one Markopolos criticism that GE hasn’t yet moved to address, and that is the lack of detailed transparency in its financial statements and the seeming differences in its aviation unit’s accounting relative to engine partner Safran SA. Culp missed an opportunity when he became CEO to move away from GE’s historical tendency to rely on a myriad of adjustments and a micromanaging of Wall Street expectations to bolster the appearance of the company’s results. This week’s actions and Culp’s presentation were in a way a reminder that of all of Markopolos’s claims, questionable as the others may be, that one has the potential to stick.Otherwise, the key takeaways from Culp’s Thursday presentation were that he expects the drop in interest rates to result in a “somewhere south” of $1.5 billion hit to its GAAP reserve assumptions for the long-term care insurance business, before accounting for any other adjustments as part of a third-quarter test. GE's projected pension benefit obligations, meanwhile, will also increase because of the drop in interest rates. Offsetting that is an improvement in returns, but GE is still looking at an impact in the $7 billion range, Culp said. Neither of those figures are disastrous, but serve as a reminder that it’s not just regular old debt that’s looming over GE. There are many other demands on its cash.Culp gave no update to GE’s expectation for roughly zero dollars in industrial free cash flow this year. Interestingly, he did allude to the idea that the company’s forecasts for 25 to 30 gigawatts of gas turbine demand this year may prove overly dire; still, I remain skeptical of GE’s ability to drive a huge surge in free cash flow at the power unit over the next few years. Other challenges at the company include persistent questions about the true underlying free cash flow of the aviation unit, the loss of cash-flow contributions from divested assets and the need to backstop its huge underfunded pension balance with more cash. Culp didn't rule out additional contributions to the pension over the next few years.Progress on the debt reduction front is good, but without a significant increase in free cash flow, it will be a while before GE can shift investors’ focus elsewhere. (1) GE said in July that deconsolidating Baker Hughes's results from its own would prompt a $7.4 billion writedown, based on the company's stock price at the time of $24.84. This week, it said every $1 change in Baker Hughes's stock price would increase or decrease that number by about $500 million. GE's share offering was priced at $21.50 and the stock was trading on Thursday for about $22.50.To contact the author of this story: Brooke Sutherland at email@example.comTo contact the editor responsible for this story: Beth Williams at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brooke Sutherland is a Bloomberg Opinion columnist covering deals and industrial companies. She previously wrote an M&A column for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
As the market matures, individual investors seek more product choices that match their interests and impact measurement capabilities. More than eight in ten U.S. individual investors now express interest in sustainable investing, while half take part in at least one sustainable investing activity, according to a new survey published today by the Morgan Stanley Institute for Sustainable Investing. The third edition of the individual investor survey, Sustainable Signals, examines the attitudes, perceptions and behaviors of individual investors towards sustainable investing.
Challenging operating backdrop and muted loan growth are likely to continue to adversely impact Morgan Stanley's (MS) prospects in the second half of 2019.
Morgan Stanley today announced further enhancements to its Morgan Stanley at Work Financial Wellness platform. Changes include the addition of digital portal enhancements, student loan refinancing capabilities and financial coaching to its Financial Wellness program for employees of mid-to-large size corporations. “With more than 50 percent of employees citing financial stress as their biggest concern, there is a strong desire among employers to offer Financial Wellness programs to help reduce employee stress, improve retention and engagement1,” said Brian McDonald, Head of Morgan Stanley at Work.
Morgan Stanley’s investment bank continues to suffer from the same headwinds that hit revenues in the first half of the year, while its net interest income will fall thanks to a “dramatically different” interest rate environment, finance boss Jon Pruzan. Speaking at the Barclays financials conference in New York on Wednesday, Mr Pruzan said client activity was down in equities trading thanks to “a lot of uncertainty about what’s going to happen next” in everything from trade wars to the global economy. In fixed income, the credit business is going well but foreign exchange trading volumes are at “very low levels” he said, while in investment banking, new listings are “clearly much slower than they were last year”.
Though the latest steepening of the yield curve benefited bank ETFs on Sep 9, chances of volatility in the longer-term period may keep gains in bank ETFs at check.
Saudi Arabia is accelerating plans for the initial public offering of state oil giant Saudi Aramco, according to people familiar with the company, aiming to list a sliver of the business on its domestic exchange by the end of this year. The move would see it initially float just 1 per cent of the world’s largest company by revenues in Riyadh as Crown Prince Mohammed bin Salman pushes to have a faster listing. Plans to sell up to 5 per cent of Aramco were first announced by Crown Prince Mohammed — who is widely known as MBS — three years ago as the centrepiece of his plan to overhaul the kingdom’s economy and ultimately reduce its reliance on oil, but have faced frequent delays.
(Bloomberg) -- Morgan Stanley has hired Umi Mehta, an investment banker focused on internet companies, from Bank of America Corp. in Silicon Valley, according to people familiar with the matter.Mehta has started work as a managing director of global internet at Morgan Stanley’s office in Menlo Park, California, working alongside Kate Claassen as co-head of the group, said the people, who asked to not be identified because the hiring isn’t public.Representatives for Bank of America and Morgan Stanley declined to comment.Mehta joined Bank of America in 2010 and was most recently a managing director and head of U.S. internet investment banking, according to his LinkedIn page. Mehta previously worked at Royal Bank of Canada and Bank of Montreal.He has advised clients including Uber Technologies Inc., AppLovin Corp., Carvana Co., Angie’s List Inc., Chegg Inc., Rent the Runway Inc., Wix.com Ltd. and Zynga Inc., the people said.Morgan Stanley has advised on some of this year’s biggest internet-related IPOs, including ride-hailing giant Uber, which raised $8.1 billion in May.More listings are on the way from companies including home fitness start up Peloton Interactive Inc., which filed for an IPO last month.Online fashion marketplace Poshmark Inc. has delayed its IPO until next year to focus on improving sales, people familiar with the matter said last week.To contact the reporter on this story: Liana Baker in New York at email@example.comTo contact the editors responsible for this story: Daniel Hauck at firstname.lastname@example.org, Matthew Monks, Nabila AhmedFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
DUBAI/LONDON (Reuters) - Saudi Arabia plans a gradual listing of Aramco on its domestic market, sources familiar with the matter said on Monday, as it finalizes the roles banks will play in the initial public offering (IPO) of the world's biggest oil company. The kingdom intends to list 1% of the state oil giant on the Riyadh stock exchange before the end of this year and another 1% in 2020, the sources said, as initial steps ahead of a public sale of around 5% of Aramco. Based on the indicated $2 trillion valuation that Saudi Aramco had hoped to achieve, a 1% float would be worth $20 billion, a huge milestone for the local stock market.
Investors may sue Bank of America (BAC), Morgan Stanley (MS), Goldman Sachs (GS), Deutsche Bank (DB) and BNP Paribas for conspiring to rig prices on bonds.
(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. Undaunted by Turkey’s near-certain failure to come close to its economic growth goal this year, President Recep Tayyip Erdogan has set a target for 2020 that’s twice as ambitious.Gross domestic product must grow 5% in 2020, a target the government is “going to lock in on,” Erdogan told an economy forum on Wednesday. The official goal of 2.3% for this year is all but unattainable after a continuous annual contraction that started in the fourth quarter of 2018. Morgan Stanley estimates Turkey’s potential growth at about 3.7%.Erdogan, who advocates an unorthodox theory that high interest rates cause rather than curb inflation, made clear that easier monetary policy will be the centerpiece of Turkey’s efforts to replicate growth levels last seen before a currency crash last year. Reiterating that he’s “allergic” to elevated borrowing costs, the president said the central bank under its new governor is committed to bringing interest rates lower.“The policy rate will fall further,” Erdogan said, citing the recent slowdown in consumer inflation. “I’m opposed to elevated levels of interest rates.”With the economy still fragile but on the mend, a government approach that’s starting to take shape is focused on creating incentives for banks to ramp up credit while lowering the cost of money. But the fixation on growth at all costs risks spooking the market and exposing the vulnerabilities that pushed Turkey to the brink a year ago.Chasing GrowthIn a sign that investors remain on edge, the lira traded weaker against the dollar after Erdogan’s comments, on course for its first drop in five days.The aim unveiled by Erdogan is comparable to the targets in the government’s medium-term program before the Turkish currency’s meltdown upended its plans in 2018. The goal for economic growth in 2020 was revised to 3.5% a year ago, with new projections due soon.For now, a slump in investment and subdued bank lending are in the way of faster recovery. The International Monetary Fund sees Turkey’s GDP expansion at under 3% in 2020-2021 and rising to around 3.5% in the following two years. The most upbeat forecasts for next year put growth at 3.5%, according to a Bloomberg survey of analysts, whose median is 2.2%.Cheaper MoneyErdogan’s call for lower rates also sets the tone for the central bank as it prepares to review borrowing costs a week from now. The second straight cut is probably a given with inflation heading for lows not seen since last year’s currency crash. A more stable lira and the effect of a high base of comparison could push price growth into single digits as early as this month.Governor Murat Uysal had only been in office a few weeks when he slashed the benchmark by 425 basis points to 19.75% in July, the biggest rate cut in at least 17 years. His predecessor was fired for not cutting rates quickly enough.The new governor signaled that more cuts were on the cards but also vowed to preserve “a reasonable rate of real return” for investors. Adjusted for prices, Turkey’s rate is now at 4.7%, above peers such as South Africa, Russia and South Korea.Still, stimulus alone may not be enough for an economy more burdened by leverage than in the past, according to Morgan Stanley.“Monetary and fiscal policy were better equipped to cope with economic slowdowns previously,” Ercan Erguzel, an economist at Morgan Stanley, said in a report. “So, a strong recovery from 2020 onwards may not be a foregone conclusion.”To contact the reporter on this story: Cagan Koc in Istanbul at email@example.comTo contact the editors responsible for this story: Onur Ant at firstname.lastname@example.org, ;Lin Noueihed at email@example.com, Paul Abelsky, Mark WilliamsFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.