|Bid||13.98 x 1100|
|Ask||22.06 x 900|
|Day's Range||21.87 - 22.25|
|52 Week Range||18.02 - 23.10|
|Beta (3Y Monthly)||0.25|
|PE Ratio (TTM)||4.82|
|Forward Dividend & Yield||1.01 (4.53%)|
|1y Target Est||N/A|
(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.
(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.
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”.
(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.
(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.
A top shareholder in German wind energy project developer PNE has called a non-binding bid from an infrastructure fund run by Morgan Stanley "completely inadequate", a letter seen by Reuters on Wednesday said. PNE late on Monday said it was in talks with Morgan Stanley Infrastructure Partners that could result in a possible takeover at a price of 3.50-3.80 euros per share, which would value the group at up to 295 million euros ($329 million). Shares in PNE, which are up 44% year-to-date, closed up 2.6% at 3.50 euros on Wednesday.
If it hits an $8 billion valuation, McAfee would top the $7.7 billion price Intel paid for the cybersecurity business in 2010.
Morgan Stanley shares a name, or part of a name, with JPMorgan Chase & Co. (JPM) and it is not a coincidence. The “Morgan” in Morgan Stanley is J.P. Morgan’s grandson. The company was founded by Henry S. Morgan, Harold Stanley, and others in 1935.
The investment bank argues that weakening trade and industrial data is more important than the recent strong consumer figures Continue reading...
Goldman Sachs and Morgan Stanley have distinct ways of doing business, with one focusing on high rewards and the other on caution.