Oct. 17, 2014, 7:16 AM
Oct. 16, 2014, 5:30 PM
Oct. 14, 2014, 3:31 PM
- Global growth, foreign-exchange, oil, and small caps are the subject of every client inquiry, says David Kostin. His team's recommendation: Buy "American exceptionalism."
- In Kostin's view, U.S. economy and corporate fundamentals are still strong, with economic growth expected by Goldman economists to be 3.2% next year, the fastest expansion since 2005. Europe is expected to grow just 1%.
- What his team likes are those stocks of companies which have a high proportion of domestic sales, plus sectors like Consumer Staples (XLP -0.1%) and Discretionary (XLY +0.7%) which stand to benefit from lower oil prices (plunging again today).
- As for small caps (IWM +0.9%), Kostin is wary, noting downward earnings revisions have boosted small cap P/E ratios even as prices have declined.
- The list of S&P 500 names capturing two or more of Kostin's themes: GT, GM, PCLN, AMZN, CMCSA, LOW, DG, TSN, ADM, CVS, AVP, WAG, PXD, HAL, JPM, BAC, SCHW, PNC, MS, C, GNW, LNC, MET, THC, AET, UNH, ESRX, HUM, WLP, BIIB, GILD, DAL, CMI, FLR, CRM, JBL, MA, FB, MU, FSLR, VMC, MON, T.
Oct. 14, 2014, 11:10 AM
- JPMorgan scored a 2.1% Y/Y increase in FICC revenue in Q3, also up 0.9% from the previous quarter. This comes following sizable trading revenue declines in previous quarters, and further slippage had been expected this quarter.
- Also reporting today, Citigroup showed a 6.7% rise in trading revenue, topping its own guidance.
- The results, says Credit Suisse's Christian Bolu, bode well for Goldman Sachs (GS +0.7%) and Morgan Stanley (MS +0.8%). Helping was the return of at least a little volatility in September (there's been plenty more in Q4's first month), not to mention an easy comparison with last year's poor levels.
- CS's Bolu previously expected Goldman to show a 3% Q3 FICC revenue drop and Morgan a 16% decline.
- Previously: JPMorgan: Interest income and FICC gain
- Previously: Citigroup +2.3% after earnings beat
Oct. 10, 2014, 4:58 PM
- Morgan Stanley (NYSE:MS) says its agreement to sell oil trading and storage businesses to Rosneft (OTC:RNFTF) may not close in time to beat a year-end deadline, as tensions between the U.S. and Russian governments leave the deal in limbo.
- MS, which reached an agreement with Rosneft in December, is running out of time to win approval from the CFIUS committee that weighs national security risks, before its agreement expires at year’s end.
- MS probably would consider other buyers if the agreement with Rosneft unravels.
Oct. 10, 2014, 2:37 PM
- "Steadily improving economic and capital markets backdrop will drive investment banking and loan growth higher, while trading is likely to rebound as the extended period of low volume and volatility is starting to shift back toward more normal conditions in September," say MKM's David Trone and Pankaj Chitrakar, expecting to see earnings for five bulge-bracket banks higher by 11% in Q3.
- The team remains bullish on all five, but sees just four - Citigroup (C -0.9%), Bank of America (BAC +0.5%), Goldman Sachs (GS +0.5%), and Morgan Stanley (MS +0.4%) - beating estimates. JPMorgan (JPM +0.3%) should just meet the $1.38 EPS consensus, they say, with strength in investment banking offset by declining mortgage banking.
Oct. 10, 2014, 12:52 PM
- The banking industry is very close to resolving too big to fail, says Jamie Dimon (JPM +0.6%), speaking publicly for the first time since his cancer diagnosis (other than his July earnings call appearance). He's appearing at a conference roundtable alongside Morgan Stanley's (MS +0.8%) James Gorman, Deutsche's (DB -0.9%) Anshu Jain, and Bank of America's (BAC +0.7%) Brian Moynihan.
- Webcast here
- The most pointed remarks so far come from Deutsche's Jain, who tells those who would continue to further strangle the banks with more regulation to look to Europe. Straightforward banking - taking deposits and making loans - is far more the norm there then here, he says, and the forcing of banks to trim businesses and balance sheets is a large contributor to the Continent's stagnant growth.
- ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, IAT, IAI, SEF, IYG, FXO, FNCL, KBWB, RKH, QABA, FINU, KCE, KRU, KBWR, RWW, RYF, KBWC, KRS, FINZ
Oct. 9, 2014, 10:04 AM
- Morgan Stanley (MS -1.3%) is the only bank to have advised on each of 2014's largest acquisition deals, including serving as the sole banker to WhatsApp in its $18B sale to Facebook, according to Bloomberg. Morgan also had a piece of the Alibaba IPO and has jumped to 4th place from 7th in junk bond underwriting.
- JPMorgan (JPM -0.4%) and CItigroup (C -0.6%), on the other hand, face the fastest-shrinking bonus pools, with The Bank of Dimon notable for having the steepest drop in fixed-income trading revenue among the five largest Wall Street banks.
- JPMorgan, Citigroup, and Wells Fargo are set to release Q3 results next Tuesday, with Bank of America, Goldman Sachs, and Morgan Stanley following shortly thereafter.
Oct. 7, 2014, 7:39 AM
- Ahead of Q3 earnings results set for release this month, Wells Fargo lifts its price targets on those banks with sizable capital markets businesses, citing strong investment banking action and trading activity that's stopped falling.
- Outperform-rated Ciitgroup (NYSE:C) and JPMorgan (NYSE:JPM) have their price targets lifted to $60 from $57, and $68 from $66, respectively.
- Market Perform-rated Bank of America (NYSE:BAC), Goldman Sachs (NYSE:GS), and Morgan Stanley (NYSE:MS) have their targets lifted to $19 from $17, $195 from $185, and $37 from $35, respectively.
Sep. 25, 2014, 7:11 AM
- Sanctions could make financing day-to-day operations a near-impossibility, according to sources close to Rosneft (OTC:RNFTF), reports Reuters. The chances of a deal going through, they say, range from "possible" to "highly unlikely."
- The business up for sale trades actual barrels of crude oil, not just futures contracts, putting Morgan Stanley (NYSE:MS) under regulatory pressure to exit an operation where something like an oil tanker leak could expose it to billions in liability.
- Rosneft late last year agreed to pay between $300M-$400M in cash for the unit, but the actual operation of the business requires billions in bank lines of credit - something which could prove difficult to secure given Western sanctions.
- "This deal just cannot go through," says one of Reuters' sources. "It is not an issue of finding $300M to buy the business. Rosneft has the money. But it won't be able to operate it."
Sep. 24, 2014, 8:30 AM| Comment!
Sep. 17, 2014, 3:16 PM
- Leading markets higher as the reality of higher interest rates gets nearer is the financial sector (XLF +0.9%). Whether its banks, brokerages, or insurers, a higher benchmark rate for some time has been considered a key bullish catalyst. An especially large move is being seen in the online brokerage names who have been forced to forego money market fees for years thanks to ZIRP: E*Trade (ETFC +3%), Schwab(SCHW +3.2%), Ameritrade (AMTD +2%).
- Morgan Stanley (MS +1.8%), Bank of America (BAC +1.2%), JPMorgan (JPM +0.9%)
- U.S. Bancorp (USB +1.1%), Regions Financial (RF +2%), New York Community Bank (NYCB +0.8%), Huntington Bancshares (HBAN +1.3%), KeyCorp (KEY +1.3%)
- MetLife (MET +0.6%), Voya Financial (VOYA +0.7%).
- Chubb(CB +0.4%), AIG (AIG +1.1%), Hartford (HIG +0.8%)
- Financial sector ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, KIE, IAT, SEF, IYG, IAK, FXO, KBWB, FNCL, RKH, QABA, FINU, KRU, KBWR, RWW, KBWP, RYF, KBWI, KRS, FINZ
Sep. 16, 2014, 8:22 AM
- Magnum Hunter Resources (NYSE:MHR) says it is bringing in Morgan Stanley as a partner in its Eureka Hunter natural gas gathering subsidiary in the Marcellus and Utica shale fields, giving the two co-ownership in the business valued at $1B.
- Morgan Stanley Infrastructure (NYSE:MS) agrees to pay $65M to MHR for a 6.5% stake and will buy ArcLight Capital Partners' 41% stake in the business for an unspecified amount.
Sep. 16, 2014, 7:20 AM
- Morgan Stanley's (NYSE:MS) chairman of China investment banking Alex To plans to exit soon to run Bank of America's (NYSE:BAC) investment bank in that country. To joined Morgan in 2006 and played a key role in Shuanghai's purchase of Smithfield foods last year. His bank currently ranks sixth in investment banking revenue in Asia ex-Japan, according to Dealogic. BofA ranks ninth.
- The move is the latest in a series of management moves in China investment banking - in July JPMorgan grabbed UBS's top guy, and last month Morgan Stanley lured over a Deutsche Bank executive.
Sep. 9, 2014, 12:24 PM
- The Fed intends to impose a capital surcharge on banks tougher than the international standard, according to Fed Governor Daniel Tarullo's prepared remarks for the Senate Banking Committee. Those banks with heavier reliance on short-term funding like overnight loans - i.e. Goldman Sachs (GS -1%) and Morgan Stanley (MS -1.8%) - will likely face even more rigorous requirements.
- Officials haven't yet decided on a number, but reportedly are considering as much as 200 basis points more than the top range of 2.5% of risk-weighted assets agreed to by international regulators.
- What's not yet clear is who would need to raise capital to meet the new, tougher standard.
- Citigroup (C -1%), Bank of America (BAC -0.6%), JPMorgan (JPM -1.3%), Wells Fargo (WFC -0.4%), State Street (STT -1.1%), Bank of New York Mellon (BK -0.9%)
- ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, IAI, SEF, IYG, FXO, FNCL, FINU, KCE, RWW, RYF, KBWC, FINZ
Sep. 5, 2014, 9:46 AM
MS vs. ETF Alternatives
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