Wed, Jun. 15, 3:17 PM
- Having already shed value in June as expectations for rate hikes evaporated, the financial sector (XLF +0.7%) is showing relative strength following the FOMC's standing pat and dialing back expectations for the future level of the Fed Funds rate.
- The S&P 500 is higher by just half the amount of the financials.
- Within financials, the banks (KBE +1.1%), (KRE +1.1%) are particularly strong, led by Bank of America (BAC +1.5%), Morgan Stanley (MS +1.3%), Citigroup (C +1%), BB&T (BBT +1.2%), Fifth Third (FITB +2.2%), SunTrust (STI +1.4%), Zion (ZION +1.3%).
Tue, Jun. 14, 2:17 PM
- Presenting at his bank's financials conference, Morgan Stanley (MS -2.2%) CEO James Gorman leads off pointing out the change in the make-up of Morgan's revenue from 2009 to today. Revenues last year of $34.5B compared to $28.7B in 2009, but wealth management takes a much bigger slice of the pie, and trading a much smaller portion. Combined with Investment Management, Wealth Management now makes up more than 50% of overall revenues.
- Still, a 7% ROE in 2015 badly lags the 9-11% targeted range. Morgan plans to get to that target through modest revenue growth, expense cuts, and capital returns. As for capital returns, the Feds are making things difficult - despite $3.2B in buybacks and dividends in 2015 and $1.6B in 2014, common equity has risen to $68B from $63B.
- Presentation slides and webcast
Mon, Jun. 13, 2:52 PM
- As the advisor to Microsoft on its $26B LinkedIn purchase, Morgan Stanley (NYSE:MS) could reap $10M-$20M. More importantly if not for business than at least for conversations on the golf course this summer, it pushes the bank past Goldman Sachs (NYSE:GS) as #1 in technology, media, and telecommunications M&A this year.
- It's maybe not surprising seeing Goldman left out of the deal given its work with then-CEO Steve Ballmer on Microsoft's 2014 purchase of Nokia Oyj's phone business - a deal then opposed by current CEO Satya Nadella. Microsoft has since written off nearly all of that acquisition.
- Should Microsoft raise somewhere in the area of $15B to complete the purchase, underwriters could earn another $40M-$60M in fees.
Thu, Jun. 9, 2:48 PM
- The Dodd Frank stress test (DFAST) results are due on June 23 and the Comprehensive Capital Analysis (CCAR) on June 29.
- Noting a severely adverse scenario even more rigorous than in the past, Morningstar's Dan Werner says it will be hard to read anything negative into a bank's passing the test.
- Barclay's Jason Goldberg points out Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS) as two poised to thrive if the government were to allow them to draw down capital, but "when" is the big question as next year's tests are expected to be even harder. The two are trading at about 1x book and sport ROEs of roughly 10% - both gauges were about twice those amounts prior to the financial crisis.
- JPMorgan's Kian Abouhossein expects Citizens Financial (NYSE:CFG), Citigroup (NYSE:C), Bank of America (NYSE:BAC), and SunTrust (NYSE:STI) to have outsized increases in capital return this year, driven mostly by buybacks.
- One wild card: This year's tests requires banks to model for negative interest rates.
Mon, Jun. 6, 1:30 PM
- In the latest of a long-line of big asset managers getting into the ETF business, Morgan Stanley (NYSE:MS) is seeking a regulatory green light to launch both passive and actively-managed ETFs.
- With trading revenue in a secular slowdown and regulatory pressure hitting other traditional business lines, Wall Street's big banks are looking for growth where the can find it. Investment management makes up just 10% of Morgan's overall revenue, and traditional asset management revenue of $403M in Q1 was lower by 8% Y/Y.
- Morgan Stanley helped launch the ETF boom in the mid-90s with its indexing operation MSCI (now an independent company).
- Previously: Franklin Templeton gets into ETFs (June 6)
Mon, Jun. 6, 3:44 AM
- Goldman Sachs (NYSE:GS) received more than a quarter of a million applications from students and graduates for jobs this summer, a rising number that is way more than the bank could ever employ.
- The trend is mirrored at several other large banks such as JPMorgan (NYSE:JPM), Morgan Stanley (NYSE:MS), BofA (NYSE:BAC) and Citigroup (NYSE:C).
- According to figures provided to the Financial Times, the number of these applications has risen more than 40% globally since 2012.
Thu, Jun. 2, 2:22 PM
- Morgan Stanley (NYSE:MS) is scrapping its longtime 1-to-5 scale for rating employees, and is instead asking managers to choose words to describe employees, reports Bloomberg. Goldman last month ended a similar system.
- It's all about trying to retain talent, with these moves coming alongside others like requiring the occasional weekend off or encouraging a bit of personal time.
- "Wall Street isn’t suddenly going to become a 9-to-5 job where there’s no pressure,” says a managing director at a recruiting firm. “But they want to make working conditions better and feedback more detailed.”
Thu, Jun. 2, 11:24 AM
- In separate public comments today, Fed governors Daniel Tarullo and Jerome Powell said the Fed will require the eight largest U.S. banks to hold even more capital if they want to pass stress tests.
- The goal, says Powell, is to make capital requirements so difficult that the largest lenders have to honestly assess whether it would be a better idea to break themselves up.
- For now, the Fed is going to make 2015's capital surcharges permanent, which alone makes things tougher. "Really quite significant, probably the most significant additional potential capital requirement on the horizon." says former OCC Director John Dugan.
- The eight: Bank of America (BAC -0.1%), Citigroup (C -0.3%), JPMorgan (JPM -0.4%), Morgan Stanley (MS -0.7%), Wells Fargo (WFC -0.5%), State Street (STT -0.7%), Goldman Sachs (GS -0.7%), BNY Mellon (BK -0.5%)
Thu, Jun. 2, 7:45 AM
- May monthly performance was: +1.13%
- 52-week performance vs. the S&P 500 is: -3%
- No dividends were paid in May
- Top 10 Holdings as of 3/31/2016: JPMorgan Chase & Co (JPM): 2.92%, US Treasury Note 1.125%, Citigroup Inc (C): 2.72%, US Treasury Note 0.5%, General Electric Co (GE): 2.16%, Bank of America Corporation (BAC): 1.79%, Morgan Stanley (MS): 1.36%, Target Corp (TGT): 1.36%, US Treasury Note 1.625%, Carnival Corp (CCL): 1.29%
Wed, Jun. 1, 9:11 AM
- Ahead of this month's release of the stress test and CCAR results, BMO Capital recommends going long Discover (NYSE:DFS) and Morgan Stanley (NYSE:MS), while shorting Comerica (NYSE:CMA) and Fifth Third Bancorp (NASDAQ:FITB).
- A check of the stress test criteria has BMO preferring those lenders with less asset sensitivity, limited exposure to capital markets, limited overseas exposure, low expectations for payout boosts, and high starting capital ratios.
- For those expecting the Fed to surprise with a June rate hike, buy SunTrust (NYSE:STI) against shorts in Comerica and Fifth Third.
Fri, May 20, 7:23 AM
- Bao Yi, CE of Morgan Stanley Huaxin Securities (NYSE:MS) is leaving the bank to start his own investment firm, reports the WSJ.
- Bao has been with Morgan Stanley since 2006 and came to Huaxin in 2011 (Morgan's stake is 33%).
- Revenue in 2015 was $83M, up 36% from the previous year.
- In other news, the bank is moving 75 jobs from its operations team in Shanghai to India and Hong Kong, according to Bloomberg. The relocation won't reduce the headcount of the operations team in Asia.
Wed, May 18, 11:12 AM
- Sweeping new compensation rules released by six federal agencies last month would free up pay restrictions for the BlackRock's (NYSE:BLK) of the world, while tightening them for banks like JPMorgan (NYSE:JPM), Wells Fargo (NYSE:WFC), Bank of America (NYSE:BAC), Morgan Stanley (NYSE:MS), and Goldman Sachs (NYSE:GS).
- Source: Bloomberg
- The result is likely an even stronger flow of talent exodus from the big banks and to outfits like BlackRock, Vanguard, Pimco, and Fidelity, to name four.
- “They keep making it more difficult to be a big bank,” says a D.C. attorney.
- At those lenders with more than $250B in assets, top management would have 60% of their bonuses deferred for four years. Tough, but even tougher are clawback provisions allowing banks to take back money up to seven years after bonuses vest.
- Though mammoth in size, the overwhelming majority of assets at BlackRock and the like are client, not proprietary assets. Thus, they aren't subject to the same restrictions. Franklin Resources (NYSE:BEN), for instance, has $743B in AUM, but only about $16B of its own assets. Blackstone (NYSE:BX) manages $344B, but only $22B of its own money.
Fri, May 13, 6:25 PM
- Third Point's 13F filing shows it took new positions in EMC (EMC, 7M shares), Google (GOOGL, 700K shares) and Baxalta (BXLT, 6M shares) while selling out of eBay (EBAY, 4M shares), and Morgan Stanley (MS, 3M shares).
- Like Appaloosa, the firm also took a new stake in Twenty-First Century Fox (FOXA, for 1.45M shares).
- Third Point trimmed its stake in Amgen (NASDAQ:AMGN) by two-thirds, selling 6.04M shares, and cut its holdings in J M Smucker (NYSE:SJM) by 875,000. It did boost holdings in Yum Brands (NYSE:YUM) with 5.4M additional shares, as well as 1.5M in calls.
Thu, May 12, 12:33 PM
- Value-at-risk at JPMorgan (NYSE:JPM) jumped 50% amid Q1's volatility, reports Bloomberg. It's a figure standing in sharp contrast to declines of 25% or more at Bank of America (NYSE:BAC), Citigroup (NYSE:C), and Deutshce Bank (NYSE:DB), and smaller falls at UBS, Goldman Sachs (NYSE:GS), and Morgan Stanley (NYSE:MS).
- For Bank of America, it says the risk in its trading portfolio in Q1 was the lowest in any quarter since the Merrill Lynch merger in 2009.
- While cutting VaR reduces risk, it also limits profits, and in past times. notes a former Fed bank examiner turned college teacher, banks used episodes of higher volatility to step in and make money. In a Dodd-Frank world, making money in this fashion may not be received well by regulators.
Mon, May 9, 2:19 PM
- Putting it plainly, CLSA's Mike Mayo and Rob Rutschow would like to know when the bank plans on moving from value destruction to value creation. They note the 2017 consensus view has Morgan Stanley (NYSE:MS) missing its 9-11% ROE target for the 3rd consecutive year.
- ROE is expected to be just 8% this year, and 7% in 2016.
- As for excess capital, if we were on the board, says the CLSA team, and saw Morgan in the same SIFI bucket as Bank of America, we'd say "do something."
- The annual meeting is May 17, and Mayo/Rutschow will be there.
Mon, May 2, 7:25 AM
- April monthly performance was: +2.64%
- 52-week performance vs. the S&P 500 is: -1%
- No dividends were paid in April
- Top 10 Holdings as of 12/31/2015: JPMorgan Chase & Co (JPM): 3.18%, Citigroup Inc (C): 3.13%, General Electric Co (GE): 2.46%, US Treasury Note 1.625%, Bank of America Corporation (BAC): 1.94%, Morgan Stanley (MS): 1.58%, US Treasury Note 2.25%, Carnival Corp (CCL): 1.29%, PNC Financial Services Group Inc (PNC): 1.26%, Citizens Financial Group Inc (CFG): 1.26%
Morgan Stanley is a global financial services firm which, through its subsidiaries and affiliates, provides investment banking products and services to its clients and customers including corporations, governments, financial institutions, and individuals. It operates through the following... More
Industry: Investment Brokerage - National
Country: United States
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