|Bid||0.00 x 3100|
|Ask||0.00 x 1100|
|Day's Range||49.73 - 50.24|
|52 Week Range||36.74 - 50.24|
|Beta (3Y Monthly)||1.38|
|PE Ratio (TTM)||10.65|
|Earnings Date||Jan 15, 2020 - Jan 20, 2020|
|Forward Dividend & Yield||1.40 (2.85%)|
|1y Target Est||53.41|
Stocks and bonds, domestic and international—all have posted nicely positive returns, along with real estate investment trusts and precious metals. Real assets, such as commodities and energy-related master limited partnerships, have been among the few downers. A 60/40 mix of the (ticker: SPY) and (AGG)—exchange-traded funds that track the most widely used benchmarks for the U.S. equity and fixed-income markets—have returned 19.20% for the year, through Wednesday, according to (MORN) That’s the sort of showing that would please most equity-only investors in a typical year, although putting all your chips in the SPDR ETF would have generated a 26.36% return.
to allow companies to raise capital through direct listings, setting back efforts to expand the low-cost alternative to traditional initial public offerings. NYSE proposed the changes last month in a regulatory filing in which it set out rules for “primary direct floor listings” in which companies could raise a minimum of $250m. “We remain committed to evolving the direct listing product,” an NYSE spokesperson said in a statement.
(Bloomberg Opinion) -- The end of Libor as a benchmark for interest rates on everything from mortgages to credit cards is just two years away, leaving the market in search of a viable substitute. More than $370 trillion of existing financial contracts are pegged to Libor worldwide; of those, roughly $200 trillion are denominated in U.S. dollars and need to be addressed immediately — a monumental task in such a short period.Fortunately, significant progress has been made in moving toward an alternative called the Secured Overnight Financing Rate, or SOFR, which is based on an average daily volume of more than $1 trillion of actual transactions in the U.S. Treasury repo market. I am chair of the Alternative Reference Rates Committee, a public-private committee convened and sponsored by the Federal Reserve to facilitate the transition in the U.S. It recommends institutions stop using Libor as quickly as possible and move to SOFR. As we all know, the best way to get out of a hole is to stop digging.There are misconceptions that SOFR’s daily variability makes it undesirable as a Libor successor. Given the importance of the transition, I am eager to address those concerns, which fundamentally misunderstand how SOFR is truly used in financial contracts. They also vastly oversimplify what SOFR’s variability represents. It’s especially important to understand these complexities as the end of the year approaches, which typically brings wider movements in money market rates.Repo market prices respond to changes in supply and demand. SOFR, which is based on actual transactions, reflects variability in actual market pricing. Unlike Libor, which has become increasingly based on estimates, SOFR accurately measures the market it was created to represent. This is a critical reason the ARRC selected it as its recommended alternative. The ARRC picked SOFR fully aware that market-based rates are inherently variable. Given that SOFR is averaged when used in financial instruments, variability should not be an issue. And as might be expected, those averages have been quite stable. For example, consider the period of money market pressure in September. Although SOFR rose sharply over a few days, a three-month average rose only 2 basis points compared with the weeks before those fluctuations. Over that same period, three-month U.S. dollar Libor rose 4 basis points. In fact, this SOFR average has been less volatile than three-month U.S. dollar Libor over a wide range of market conditions. Although market participants can calculate averages on their own, and some are already doing so, many are understandably uncomfortable with taking on that responsibility. They worry about the consistency of calculation relative to their peers and consumer transparency. That is why we need accessible SOFR averages.In November, the Federal Reserve Bank of New York outlined plans to produce SOFR averages along with a SOFR index. By publishing these averages on its website, which is expected to begin in the first half of 2020, the New York Fed will provide consistently calculated SOFR averages across various terms and an index to facilitate the calculation of averages over custom periods. Because they will be endorsed by the official sector, these averages should give all market participants the peace of mind that they can use the same reliable source.Once publication begins, more market participants will be able to directly reference SOFR averages. So instead of adding to existing Libor risks, market participants can start constructing new SOFR-based contracts, especially with the clock ticking to the expiration of Libor.To help ease the transition, if institutions must enter new Libor-referencing contracts, they can use fallback language the ARRC has released, which will help market participants safeguard their contracts should Libor no longer be available. They can also consult the ARRC’s practical implementation checklist, which outlines steps to consider during the transition.While many milestones have been reached, two years is a short period to close out the remaining tasks. The strength of institutions individually, and the architecture of the financial system broadly, relies on everyone doing their part to ensure a smooth transition to SOFR.To contact the author of this story: Tom Wipf at email@example.comTo contact the editor responsible for this story: Daniel Niemi at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Tom Wipf is the chair of the Alternative Reference Rates Committee and vice chairman of institutional securities at Morgan Stanley.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- Morgan Stanley’s drive into a lucrative niche in the foreign-exchange market has hit a major road block.The firm has more than doubled its activity since 2016 to overtake rivals such as Goldman Sachs Group Inc. in the bazaar for currency-linked derivatives known as FX options. Now, Morgan Stanley is probing whether traders improperly valued the esoteric securities, concealing as much as $140 million in losses, Bloomberg reported last week, citing people familiar with the matter.The world’s biggest stock brokerage adopted a “go big or go home strategy” in the business, said Mark Williams, a finance lecturer at Boston University’s Questrom School of Business. “Doubling their OTC FX option trading book in only three years, given an already sizable market presence, speaks to Morgan Stanley’s aggressive risk appetite.”While a potential loss would hardly be catastrophic for a broader fixed-income trading business that generated $5 billion in revenue last year, it contrasts with Chief Executive Officer James Gorman’s effort to fashion a steadier, less risky franchise. His approach has allowed Morgan Stanley to close a market-value gap with Goldman Sachs that was more than $50 billion after the financial crisis.Four years ago, Morgan Stanley’s then-equities chief Ted Pick also took control of the firm’s fixed-income unit with a pledge that it would stop trying to be “all things to all people” and pick spots in the bond and currency markets where it could find adequate returns. The bank had long struggled to compete in the area of interest rates and foreign exchange, known collectively as macro trading, where larger commercial banks benefited from the activity of their corporate clients.Morgan Stanley tapped Senad Prusac, who had risen up through the FX options unit, to lead global macro trading and find the bank’s niche in that world. Prusac left Morgan Stanley this year and was recently replaced by Jakob Horder, IFRE reported in September. Overseeing the operation was fixed-income head Sam Kellie-Smith, whose LinkedIn profile also cites a background in FX options trading.The strategy has largely paid off, with Morgan Stanley gaining market share even while it cut headcount and reduced capital dedicated to the fixed-income business. Analysts expect Morgan Stanley to end 2019 with 10% more fixed-income trading revenue than in 2015, while rival Goldman Sachs’s total is set to drop about 20% in the same period.FX options, a small corner of the $6.6-trillion-per-day currency market, provided some of the growth. In early 2016, Morgan Stanley had fewer of the securities than any other major Wall Street bank, according to a Bloomberg analysis of U.S. Federal Reserve filings. By last year, the firm had eclipsed Goldman Sachs and Bank of America Corp. and trailed only Citigroup Inc. and JPMorgan Chase & Co., the filings show.FX options can be a flexible and cheap way to speculate on currencies and hedge against losses, according to Beat Nussbaumer, who helped lead foreign-exchange businesses at firms including Commerzbank AG and UniCredit SpA. Daily trading volume has climbed 16% since 2016 to about $294 billion, according to the Bank for International Settlements.But the instruments can be hard to value and can magnify losses. The trades now in question were tied to the Turkish lira, a currency that whipsawed investors in 2018 and earlier in 2019 amid mounting political tensions, the people said. Those swings roiled a number of firms and Morgan Stanley is grappling with how its losses happened and whether there were efforts to cover them up. At least four traders have been swept up in the probe, including 27-year-old associate Scott Eisner in London, Bloomberg has reported. Morgan Stanley declined to comment on the matter.Investment banks tailor FX options based on client requests and they’re traded directly between parties, or over-the-counter, rather than through exchanges. While this makes them more opaque, it also makes them more lucrative, according to Nussbaumer.The biggest investment banks shared about $2.9 billion in revenue from FX options in 2018, a 40% increase from 2017, only to see income fall this year, according to data from Coalition Development Ltd.Even before the Morgan Stanley episode, sudden moves in currencies have triggered blowups. Citigroup lost more than $150 million in 2015 when the Swiss central bank let the franc trade freely against the euro, Bloomberg reported at the time. In 2016, Taiwanese banks were fined after selling leveraged structured products that bet on a rising Chinese yuan, which saddled clients with losses after the currency plunged.Morgan Stanley purchased FX option trades with a notional amount of about $718 billion at the end of September, according to the Fed filings. That compares with $512 billion in the same period in 2017 and $320 billion in 2016, the filings show. At the end of the first half of 2019, the firm’s FX options purchased, net of those it sold, was $48 billion, three times that of any other U.S. bank, according to Javier Paz, an analyst with Forex Datasource, an independent consulting firm.“They’re punching above their weight,” said Paz. “This is the repurposing of their expertise in equity options into currency markets.”\--With assistance from Sridhar Natarajan.To contact the reporters on this story: Donal Griffin in London at email@example.com;Stefania Spezzati in London at firstname.lastname@example.orgTo contact the editors responsible for this story: Ambereen Choudhury at email@example.com, James Hertling, Michael J. MooreFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Chewy Inc (NYSE: CHWY ) trades down nearly 32% year to date and 24% from its second-quarter earnings report. One analyst team sees a buying opportunity . The Rating Morgan Stanley analysts Lauren Cassel ...
Investing.com – Etsy fell on Thursday after Morgan Stanley downgraded its outlook on the company on worries that recently introduced sales-tax legislation in some U.S. states and a decision to cut advertising investment may hurt growth.
The package is an implicit acknowledgment that Japan’s economy is still vulnerable despite almost seven years of growth under Mr Abe and marks a return to the free-spending early days of his “Abenomics” stimulus. It comes amid a global move towards looser fiscal policy as governments seek to counter sluggish private demand, taking advantage of their ability to borrow at ultra-low or even negative interest rates.
China is in the beginning of a digital and urban transformation that could remake the country through a significant increase in productivity.
(Bloomberg) -- JFrog Inc., a technology company that makes tools for software developers, has hired Morgan Stanley and JPMorgan Chase & Co. to lead its initial public offering next year, according to people familiar with the matter.JFrog could seek a valuation of $2 billion or more in a U.S. listing, said the people, who asked not to be identified because the matter is private.Plans for an IPO aren’t final and JFrog could decide to remain private, the people said.Representatives for JFrog, Morgan Stanley and JPMorgan declined to comment.JFrog was co-founded in 2008 by former Israeli Air Force Major Shlomi Ben Haim, who remains its chief executive officer, according to the company’s website. The Sunnyvale, California-based company raised $165 million in a funding round last year that included investors Insight Venture Partners, Spark Capital, Battery Ventures and Dell Technologies Capital, according to a statement.Software companies have delivered some of this year’s best IPO returns thanks to their steady business models. Globally, shares of companies such as Zoom Video Communications Inc., Crowdstrike Holdings Inc. and Datadog Inc. have risen an average of 38% from their IPO offer prices this year, according to data compiled by Bloomberg.IPOs this year by consumer-facing internet-related companies including Uber Technologies Inc. and Lyft Inc. haven’t fared as well. Shares of those companies have fallen an average of 7.5% from their offer prices, the data show.To contact the reporter on this story: Crystal Tse in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Liana Baker at email@example.com, Michael Hytha, Matthew MonksFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
News that co-founders Larry Page and Sergey Brin are stepping down from active management at Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) will have muted impact on the company but could have a huge impact on Silicon Valley.Source: achinthamb / Shutterstock.com It's not big news because CFO Ruth Porat has been running Alphabet since she joined the team from Morgan Stanley (NYSE:MS) in 2015. Sunder Pichai has been running Google itself over the same tenure.The news should put Alphabet stock under the control of investors. This would give Porat the freedom to deliver the kinds of returns, in the form of stock splits and dividend payouts, Tim Cook has made Apple (NASDAQ:AAPL) policy since succeeding Steve Jobs in 2011.InvestorPlace - Stock Market News, Stock Advice & Trading TipsBut it won't do that. That's because Page and Brin still control Google's voting shares. Investors should ask why. The Curse of the FoundersFounder control has been quite the phenomenon in Silicon Valley since Jobs was cast out of Apple, which he had co-founded, in 1985. Apple's subsequent struggles, and its rise after he re-joined in 1997, seemed to justify founders maintaining control of their public companies through a dual-share structure.The structure has a long history. Arthur Ochs Sulzberger is the sixth in his line to run The New York Times (NYSE:NYT). Family control was made a condition of sale when the company went public in 1967. The same structure holds at News Corporation (NASDAQ:NWS), despite occasional revolts. * 9 Tech Stocks You Wish You'd Bought During 2019 But recently the dual-share structure has become a plague. Dropbox (NASDAQ:DBX), Eventbrite (NYSE:EB), Blue Apron (NYSE:APRN), Roku (NASDAQ:ROKU) and Twilio (NYSE:TWLO) all went public in recent years with dual-share structures. Voting shares in Snap (NYSE:SNAP) are privately held, mostly by the co-founders. China's Alibaba (NYSE:BABA) listed first in New York because it has a dual-share structure, and listed in Hong Kong only after such structures were allowed.Founder control, however, can cost money. It took $1.7 billion to get Adam Neumann out at WeWork because of its dual-share structure.The issue has long-term implications. Between them, Page and Brin have five minor children. Should they inherit voting control of Google stock? How would that serve the interests of shareholders? Google at WarPorat and Pichai need all the authority they can get because Google is under unprecedented government attack around the world. Alphabet spent $21.7 million lobbying Washington last year and about $1 million per year on political contributions, equally split between the parties.As a global company, Alphabet is under attack over its taxes, its search results and its advertising policies in nearly every world capital. A company that Page and Brin launched with the mantra "don't be evil" is now seen by many as the personification of evil.The rot has gotten inside the company, with Google accused of wrongdoing by MeToo organizers, union organizers and right-wing agitators. Pichai has already cut back on its vaunted "all-hands" meetings, fearful of leaks.How Pichai and Porat deal with this won't just impact shareholder value. It could determine whether the internet remains a global resource, or whether it will be Balkanized, as the old phone networks were, by governments who see communication as a threat.Heavy government regulation, and a natural corporate reaction, could also turn Google into a new AT&T (NYSE:T). The latter is a risk-averse company that misses new opportunities like the cloud itself. Google, founded in 1998, is now worth more than three times AT&T. The Bottom Line on Alphabet StockAs an investment, Alphabet stock looks like a star. But it has done no better than the Nasdaq Composite average over the last two years.Barring a dividend, don't expect anything better, until Page and Brin really are out of the way.Dana Blankenhorn is a financial and technology journalist. His latest book is Technology's Big Bang: Yesterday, Today and Tomorrow with Moore's Law, essays on technology available at the Amazon Kindle store. Write him at firstname.lastname@example.org or follow him on Twitter at @danablankenhorn. As of this writing he owned shares in AAPL and BABA. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 9 Tech Stocks You Wish You'd Bought During 2019 * 5 Under-the-Radar Marijuana Stocks With Over 100% Upside * Watch These 5 STARS Stocks as They Change the Future The post Departure of Co-Founders Means Nothing for Alphabet Stock appeared first on InvestorPlace.
(Bloomberg) -- When two Irish brothers started Stripe Inc. together in 2010, there was little question about where they should put their headquarters. It had to be California.Now, though, Stripe is leaving the tech mecca of San Francisco, awash in tech talent and investor cash, and is in the process of moving its main office about 10 miles to neighboring South San Francisco. What’s more, the company—whose $35 billion valuation makes it one of the world’s most valuable startups—is currently building up its staff in another state altogether: New York.In September, Stripe opened an office near Wall Street the company told Bloomberg, and plans to add several hundred employees there in the coming years. The startup’s planned New York growth is on track to outpace its headquarters’.The city has long been a hub for finance, and more recently for tech. “New York is a global leader,’’ said David Singleton, Stripe’s chief technology officer. “It’s just an important market for entrepreneurialism and startups.”Stripe is one of many Bay Area-based fintech companies now building up a New York presence. Plaid Technologies Inc., which connects various apps to customers’ bank accounts, has relocated or hired more than 100 people in the city over the last year, or about a quarter of its staff. Affirm Inc., the lending startup founded by former PayPal Holdings Inc. co-founder Max Levchin, also recently opened up a Manhattan office that has about 50 employees, the company said. And Brex Inc., the business credit card startup most recently valued at $2.6 billion, has permanently relocated its chief financial officer to Midtown, according to a person familiar with the matter who asked not to be identified discussing information that’s not yet public.In some ways, the moves are natural for tech startups with financial ambitions. Despite the growing success of fintech upstarts hailing from San Francisco, Wall Street institutions remain on top of the financial world, and New York offers an appealing pool of potential hires. Uber Technologies Inc., for example, announced the creation of a new unit called Uber Money in October, and will be shopping for fintech talent in and around Manhattan, according to a CNBC report. At Affirm, the company’s New York employees’ resumes are littered with names like Morgan Stanley and Goldman Sachs Group Inc.Often, financial technology companies that are just getting started set up shop in San Francisco to be close to tech workers with experience designing products at big companies, said Mark Goldberg, a partner at Index Ventures. San Francisco's resident tech giant include Uber, Lyft Inc., Twitter Inc. and Airbnb Inc. But “what they don’t understand is the industry,” he said, adding that eventually, many fintech companies look eastward for hiring. “What I think happens is that companies that start on the West Coast end up recognizing that they want to compliment that DNA with capital market expertise, and with people that have been in and around banks.”Meanwhile, tech epicenter San Francisco has become less hospitable for some companies. Last year, voters passed a new tax on businesses that will go to fund homelessness relief efforts, and taxes financial services companies at a higher rate than other types of businesses. Stripe’s decision to leave the city was widely regarded by local officials as related to the passage of the new tax. The company, which strongly opposed the measure, denied that taxes were a major factor in the decision to move.Stripe instead pointed to the limited office space in San Francisco. The city’s asking prices for commercial rent, which are the highest in the nation, climbed 7% over the last year to record levels in the third quarter, according to real estate firm Cushman & Wakefield. And adding to the region’s woes: In recent months fires caused widespread power outages in homes around the Bay Area.Still, none of fintech unicorns Bloomberg spoke to have plans to move their headquarters away from the West Coast. Stripe, while hiring a few hundred people in New York, currently has more than 1,000 employees in Silicon Valley. Affirm’s San Francisco office is many times larger than its Manhattan outpost. And New York-based financial services startups tend to have stubbornly lower valuations than their high-flying West Coast counterparts.For Plaid, New York is a homecoming of sorts. The startup left the city in 2013 after winning TechCrunch’s Disrupt New York Hackathon, and, seeking proximity to engineers and investors, moved its headquarters to San Francisco. “Us coming back and building a really big presence is a strong signal for NYC tech, which has made huge strides in terms of client base, talent, and funding,’’ said Charley Ma, Plaid’s New York City growth manager, who moved from the West Coast for the job last fall. Plaid’s chief executive officer, however, will remain in San Francisco.(Corrects location of early headquarters in first paragraph.)To contact the author of this story: Julie Verhage in New York at email@example.comTo contact the editor responsible for this story: Anne VanderMey at firstname.lastname@example.org, Mark MilianFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- You’ve just witnessed the semi-annual Roku Inc. sell-off. It’s the time of year when investors come to the abrupt realization that they’ve probably paid too much to own shares of the high-flying streaming-TV company, as if valuing anything at 300 times Ebitda were ever rational. Here’s how it usually goes down: An equity analyst downgrades Roku, sending the stock into a tailspin, which leaves onlookers wondering what terribly bad thing occurred at the company — or what a Roku even is. This time, that analyst was Benjamin Swinburne of Morgan Stanley. He cut his rating to the equivalent of a “sell,” and oh, did the market listen: Roku plunged 15% on Monday for one of the Nasdaq’s worst post-Thanksgiving showings.But what changed the last few days between carving the turkey and putting up the Christmas tree? Nothing, really. In fact, Roku’s stock price is still up 344% for the year, and it’s still the most popular streaming-TV device. As of last week, the company was valued at a whopping 322 times analysts’ forward 12-month Ebitda forecasts. Swinburne’s report explained that while Roku’s strategy is sound, its sky-high valuation is unjustified given that revenue growth is projected to slow.When several other analysts gave a similar word of caution in April, it sparked a sell-off then, too. But just as I noted at the time, it’s not that Roku’s business prospects were suddenly and dramatically altered; it’s more a function of an overheated stock price. If you think a perpetual cash-burner like Netflix Inc. is pricey, keep in mind that Roku’s own Ebitda multiple is still almost 10 times higher, even after Monday’s drop:Part of the problem is that in the bewildering market for streaming-TV services, it’s difficult to grasp what Roku does and to hedge what its role will be in the streaming wars. And certainly the $1.7 billion of short interest in Roku shares (per S3 Partners data) adds a degree of pressure to its trading price.Roku is fighting the giants of the streaming world on two fronts. It sells hardware and provides software that’s pre-installed on certain television sets, all of which allow users to access their video-app subscriptions, such as Netflix, Disney+ and CBS All Access in one place. Roku is also competing for advertising dollars through the ad-supported Roku Channel, which is less of a channel in the traditional cable-TV sense and more of a hodgepodge of free movies and shows for cord-cutters looking to save money. Roku devices accounted for 44% of all connected-TV viewing hours in the latest quarter, while Amazon.com Inc.’s Fire TV is in a distant second place with a 20% share, according to Conviva, an industry analytics firm. That’s a strong lead, but competition will intensify. The next frontier in streaming is offering bundles that help solve the consumer pain point of needing to pay for multiple apps individually. Eventually, users will gravitate to platforms with this capability. Comcast Corp.’s Flex platform, I argued last month, may be a step toward bundling streaming services in the way the cable giant packages traditional TV channels and its other services. Apple Inc.’s Apple TV Channels already allows users to subscribe to select apps on an a-la-carte basis through their Apple IDs. But the warnings about the growth outlook require a bit of context: We’re talking about a business that increased revenue by 50% in the third quarter and is projected to do so again this quarter. A slowdown from that level would still be a dream for many corporations its size. “Roku reported a strong quarter for just about any company but Roku,” is how Alan Gould, an analyst for Loop Capital Markets, put it in a note to clients last month. Roku also added 1.7 million active accounts — that’s almost the same number of people who quit traditional pay-TV services such as Comcast’s Xfinity, AT&T Inc.’s DirecTV and Charter Communications Inc.’s Spectrum in the same period. And if Roku’s $16 billion market value shrank enough, an acquirer might just swoop in for the company and all those users and TV-manufacturer relationships.So things aren’t quite as bad for Roku as one might infer from Monday’s plunge. They really aren’t bad at all. But Roku’s the small fry in a land of giants, and even if it doesn’t get trampled, its lavish stock price will keep taking hits.To contact the author of this story: Tara Lachapelle 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.Tara Lachapelle is a Bloomberg Opinion columnist covering the business of entertainment and telecommunications, as well as broader deals. 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.
Investing.com – Roku (NASDAQ:ROKU) shares fell sharply on Monday after Morgan Stanley sounded the alarm on the streaming media platform's valuation amid rising competition and slowing growth.
The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 752 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F […]
The home of the Fighting Irish had a large position in the drug company at the end of the third quarter, and it’s nearly doubled in value since. It also sold Netflix stock, and bought Morgan Stanley and Alibaba stock.
(Bloomberg) -- The trades at the heart of a probe that’s now rocking Morgan Stanley’s currency desks were bets linked to the Turkish lira managed by a 27-year-old trader.The firm is investigating suspected mismarking of securities to conceal losses of as much as $140 million in a portfolio handled day-to-day by London-based Scott Eisner, a 2014 Yale University graduate and associate at the firm, according to people with knowledge of the matter. Morgan Stanley has already fired or placed on leave a handful of traders in connection with the incident, said the people, who asked not to be named discussing confidential information.The wager was tied to the Turkish lira, the people said, a currency that whipsawed investors in 2018 and earlier in 2019 amid mounting political tensions. Those swings caused issues for a number of firms across the financial industry, and now Morgan Stanley is grappling with how its losses happened and whether there were efforts to cover them up.At least three other traders have been swept up in the probe, including foreign-exchange options trader Rodrigo Jolig, also based in London. Two senior colleagues, Thiago Melzer and Mitchell Nadel, are based in New York. Their ultimate employment status isn’t yet clear, but at least some of them are leaving the bank, the people said. Eisner declined to comment, as did Nadel. The other traders didn’t return calls seeking comment.Morgan Stanley’s internal probe is ongoing and it’s unclear what the ultimate findings will be. It’s also uncertain how much autonomy Eisner had on the trades or if he was following directives from superiors. A spokesman for Morgan Stanley declined to comment.The Turkish lira has tripped up Wall Street traders in the last couple of years as the currency fluctuated with the country’s volatile politics. BNP Paribas SA and Barclays Plc were among lenders that lost tens of millions of dollars last year amid wild swings in prices on Turkish assets while Citigroup Inc. faced losses of up to $180 million on a loan to a client that had made wrong-way bets linked to the currency.Traders were caught again in March amid uncertainty in the days running up to an election that tested support for President Recep Tayyip Erdogan, and the cost of borrowing liras overnight soared past 1,000 percent. Volatility in the currency has since calmed to its lowest in more than a year.In so-called mismarking, the value placed on securities doesn’t reflect their actual worth. The scope of the probe at Morgan Stanley includes currency options that give buyers the right to trade at a set price in the future, enabling them to both speculate and hedge against potential losses, the people said. Dealing in foreign-exchange options surged 16% to $294 billion per day in April, according to the most recent data from the Bank for International Settlements.Morgan Stanley’s currency options desk has struggled this year amid a slump in the volatility that generates profits for traders, even in the more unruly emerging markets, according to a person with knowledge of the performance. The JPMorgan Global FX volatility index trades at the lowest since the summer of 2014.It has been a turbulent week for securities firms in London and New York after Citigroup was fined 44 million pounds ($57 million) by the Bank of England for years of inaccurate reporting to regulators about the lender’s capital and liquidity levels. The incidents point to weak internal controls at investment banks a decade on since the financial crisis.Natixis SA, the French lender roiled by risk-management problems since last year, has suspended a senior trader at a subsidiary in New York pending an internal investigation, Bloomberg News reported this week.Officials at the French bank are reviewing issues around how some of the senior trader’s transactions have been recorded, the people said. The bank is also examining how he managed his portfolio of trades, they said, requesting anonymity as the details aren’t public.\--With assistance from Silla Brush and Michelle F. Davis.To contact the reporters on this story: Stefania Spezzati in London at email@example.com;Donal Griffin in London at firstname.lastname@example.org;Viren Vaghela in London at email@example.comTo contact the editors responsible for this story: Ambereen Choudhury at firstname.lastname@example.org, ;Michael J. Moore at email@example.com, Sree Vidya BhaktavatsalamFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Morgan Stanley (NYSE: MS) showed four traders the door after they reportedly tried to hide between $100 million and $140 million in trading losses, according to Bloomberg. Four traders were fired from Morgan Stanley for allegedly mismarking securities that concealed a nine-digit loss, Bloomberg reported. The employees were part of the foreign exchange trading desk and the loss was linked to an emerging market currency. Morgan Stanley's probe into the reported wrongdoings is part of a growing frequency of "misconduct cases in the U.S. and Europe in recent years," Angela Gallo, a finance lecturer at Cass Business School, told Bloomberg.
Eurozone inflation rebounded more than expected in November, breaking a string of monthly declines in consumer price growth and adding to signs that the region’s economy has started to stabilise in recent months. Consumer prices increased 1 per cent in November from a year earlier, according to a flash estimate from Eurostat. Prices rose 0.8 per cent in September and 0.7 per cent in October.
(Bloomberg) -- Morgan Stanley fired or placed on leave at least four traders over an alleged mismarking of securities that concealed losses of between $100 million and $140 million, according to people with knowledge of the matter.The firm is investigating the suspected mismarking, which was linked to emerging-market currencies, said the people, who asked not to be identified as the details are private. Tom Walton, a spokesman for the New York-based bank, declined to comment.The traders who have been identified as part of the probe include Scott Eisner and Rodrigo Jolig, both based in London, and two senior New York-based colleagues, Thiago Melzer and Mitchell Nadel, the people said. Eisner, Jolig, Melzer and Nadel didn’t respond to requests for comment. Their ultimate employment status isn’t yet clear, but at least some of them are leaving the bank, the people said.Melzer was given responsibility for foreign exchange and emerging-markets Americas trading in March, while Nadel runs macro trading in the Americas, including rates and currencies. Eisner was managing orders for the Central and Eastern Europe, Middle East and Africa currency book, known as CEEMEA, according to his LinkedIn profile.In so-called mismarking, the value placed on securities doesn’t reflect their actual worth. The scope of the probe at Morgan Stanley includes currency options that give buyers the right to trade at a set price in the future, enabling them to both speculate and hedge against potential losses. Dealing in foreign-exchange options surged 16% to $294 billion per day in April, according to the most recent data from the Bank for International Settlements.Morgan Stanley’s currency options desk has struggled this year amid a slump in the volatility that generates profits for traders, even in the more unruly emerging markets, according to a person with knowledge of the performance. The JPMorgan Global FX volatility index trades at the lowest since the summer of 2014.Third QuarterThe Wall Street firm booked some of the losses in the third quarter, one of the people said. Morgan Stanley reported a 21% increase in overall fixed-income trading revenue, a result that was “partially offset by a decline in foreign exchange,” according to its third-quarter earnings presentation.The probe shows “the amount of effort still needed in these large organizations to reduce episodes of misconduct,” said Angela Gallo, a finance lecturer at Cass Business School. “The frequency of misconduct cases in the U.S. and Europe in recent years speaks very loudly that more fundamental changes are required.”It has been a turbulent week for securities firms in London and New York after Citigroup Inc. was fined 44 million pounds ($57 million) by the Bank of England for years of inaccurate reporting to regulators about the lender’s capital and liquidity levels. The incidents point to weak internal controls at investment banks a decade on since the financial crisis.Natixis SA, the French lender roiled by risk-management problems since last year, has suspended a senior trader at a subsidiary in New York pending an internal investigation, Bloomberg News reported this week.Officials at the French bank are reviewing issues around how some of the senior trader’s transactions have been recorded, the people said. The bank is also examining how he managed his portfolio of trades, they said, requesting anonymity as the details aren’t public.(Updates with additional details in final paragraph.)\--With assistance from Silla Brush.To contact the reporters on this story: Stefania Spezzati in London at firstname.lastname@example.org;Donal Griffin in London at email@example.com;Viren Vaghela in London at firstname.lastname@example.orgTo contact the editors responsible for this story: Ambereen Choudhury at email@example.com, Dale CroftsFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Morgan Stanley has suspended several traders after the US bank discovered faulty values had been used for emerging markets options contracts that could cost the bank up to $150m. It is not clear how long the faulty pricing has been applied to the contracts, which people familiar with the matter said were linked to the Turkish lira, but that currency last experienced violent moves in March this year. The Financial Conduct Authority is aware of the issue, a person familiar with the matter said.