• Tag Archives Morgan Stanley
  • Morgan Stanley: “Client Cash Is At Its Lowest Level” As Institutions Dump Stocks To Retail

    The “cash on the sidelines” myth is officially dead.
    Recall that at the end of July, we reported that in its Q2 earnings results, Schwab announced that after years of avoiding equities, clients of the retail brokerage opened the highest number of brokerage accounts in the first half of 2017 since 2000. This is what Schwab said on its Q2 conference call:
    New accounts are at levels we have not seen since the Internet boom of the late 1990s, up 34% over the first half of last year. But maybe more important for the long-term growth of the organization is not so much new accounts, but new-to-firm households, and our new-to-firm retail households were up 50% over that same period from 2016.
    In total, Schwab clients opened over 350,000 new brokerage accounts during the quarter, with the year-to-date total reaching 719,000, marking the biggest first-half increase in 17 years. Total client assets rose 16% to $3.04 trillion. Perhaps more ominously to the sustainability of the market’s melt up, Schwab also adds that the net cash level among its clients has only been lower once since the depths of the financial crisis in Q1 2009:

    This post was published at Zero Hedge on Oct 17, 2017.


  • Morgan Stanley Sees “Greater Risk For A Correction Than We’ve Seen In A While”…But There’s A Catch

    As U. S. equity markets casually melt up to all new highs with each passing day, Morgan Stanley Equity Strategist Michael Wilson, whose 2,550 year-end price target from back in August was just breached in a matter of months, says he’s getting somewhat concerned given Fed tightening, tax cut legislation that looks increasingly unlikely to pass, USD strengthening and extreme levels in pretty much every economic indicator which will make future improvement nearly impossible.
    Given that, Wilson says he now sees “a greater risk for a correction than we have seen in a while…”

    This post was published at Zero Hedge on Oct 16, 2017.


  • Why One Trader Just Called It – “Today Is The Start Of The Market Changeover Process”

    The record-breaking streaks of un-dipping gains; the “epic” bull market (Morgan Stanley’s words, not ours); and the total and utter collapse of all risk premia (equity and credit alike) is all about to end according to former fund manager Richard Breslow: “as the long running debate about lack of volatility in the markets continues, I’ve got some good news for you. As long as you promise to be happy with what you wish for. It’s about to change.”
    Investors are fearless…
    ***
    And reaching for yield, no matter what…

    This post was published at Zero Hedge on Oct 11, 2017.


  • Even Wall Street’s Biggest Bull Calls It: “Q3 Earnings Are A Sell The News Event”

    How do you know stocks are a little overextended? A good indicator is when even the most bullish sellside analyst on Wall Street, Morgan Stanley’s Michael Wilson, whose year-end price target of 2,700 is the highest of all his peers, warns that stocks may see “pullback or consolidation” and that the coming earnings season may be a “sell the news event.”
    Looking at the recent surge in the S&P, Wilson writes that broad stock index had gotten ahead of itself, reaching the low end of the bank’s short term target (2550-75) for the index prior to earnings beginning (it hit 2,552 earlier this morning). He attributed this rush to buy stocks on the “too low” consensus forecast for Q3 EPS:
    The consensus bottom-up forecast for 3Q S&P 500 is just 2.6% and appears too low. A strong 1H and a reluctance of corporates to raise guidance meant that mechanically 2H numbers needed to drift lower. With continued strength in economic growth and momentum in our proprietary leading earnings indicator we think companies will once again deliver versus consensus expectations. Look for continued contribution to overall earnings growth from Tech, Energy, and Financials (ex-Insurance). Accounting changes may also bring forward some earnings recognition, further supporting earnings growth. While the market will be focused on earnings over the next few weeks, bigger picture, NTM EPS estimates continue to rise, which should be a bigger driver of the market’s direction. Looking past calendar year 2017, Wilson underscores the departure observed previously in that twelve month forward earnings have continued their upward trend, instead of being dragged sharply lower, “so the upward trend in NTM EPS is an important factor to consider when thinking about the primary direction of the market.” Indeed, 2017 and 2018 so far appear different from the past three years, which saw zero EPS growth and the only upside in the S&P was due to multiple expansion, i.e., central bank liquidity. This time may be different… unless of course there is a sharp economic decline, which would lead to – you guessed it – an earnings drop.

    This post was published at Zero Hedge on Oct 9, 2017.


  • A $1.5 Trillion “Quantamental” Market Opportunity

    While the debate rages if retail investors have eased on their boycott of the stock market, making it increasingly difficult for institutional investors to dump their holdings of risk assets to Joe and Jane Sixpack even as active investors continue to suffer unprecedented redemptions amid a historic shift from active to low-cost, factor-driven passive management, in today’s Sunday Start note from Morgan Stanley Andrew Sheets, the cross-asset strategist points out that the next $1.5 trillion market opportunity may be a fusion of retail and institutional preferences, namely a low-cost quant approach to investing, coupled with a legacy, fundamental strategy.
    As Sheets writes, “$1.5 trillion of AuM currently managed under quantitative guidelines could continue its double-digit growth over the next five years. Part of this growth is a ‘pull’ from investors broadening their search for risk premium and uncorrelated returns at lower fees than traditional alternatives. Part of this is a ‘push’, as asset managers see systematic strategies that lend themselves well to automation and scale, offering value over pure ‘beta’ in a traditional active management framework. Relatively small further reallocation by asset owners towards these strategies could still drive significant growth.”
    And while that may come as soothing words to asset managers scrambling to shift from fundamental to a fusion, or “quantamental” investing approach, Morgan Stanley then sets a cautious tone asking whether “this growth is occurring at the wrong time” pointing out that “there are serious concerns over whether the flow we’ve already seen into these strategies explains a recent deterioration in performance, and is leading to a dangerous ‘crowding’ of too much money chasing the same factors.”
    This goes to the whole “ETFs are socialist products which are destroying both portfolio selection and capitalism, and making markets illiquid, fragmented and at risk of seizure” argument that has been discussed here over the past few years.

    This post was published at Zero Hedge on Oct 1, 2017.


  • LBMA Silver Price Benchmark – Changes, but no Wider Participation

    LBMA Silver Price Benchmark – Changes, but no Wider Participation On 21 September, ICE Benchmark Administration (IBA) announced that it will take over the administration of the daily LBMA Silver Price benchmark auction beginning Monday 2 October. This LBMA Silver Price auction is the successor to the former London Silver Fix auction. The auction takes the form of trading unallocated silver positions on an electronic platform. The resulting price from the daily auction provides a daily silver price reference rate or benchmark which is used widely throughout the global precious metals industry. It is also now a Regulated Benchmark, regulated by the UK Financial Conduct Authority.
    Bizarrely, even though it has now been more than 3 years since this new LBMA Silver Price auction was launched, there are still only 7 direct participants in the auction, a fact which flies in the face of all the previous promises from the LBMA that the rejuvenated silver auction would allow dramatically wider auction participation. These 7 participants are HSBC, JPMorgan, Morgan Stanley, Bank of Nova Scotia – ScotiaMocatta, UBS Toronto Dominion Bank, and China Construction Bank.
    Even more surprisingly, from 2 October, ICE states that only 5 of these 7 bullion banks, namely HSBC, JP Morgan, the Bank of Nova Scotia, Toronto Dominion Bank, and Morgan Stanley, will continue to participate, with UBS and China Construction Bank staying on these sidelines because they do not currently have the IT systems in place to process cleared auction trades, a clearing procedure which ICE will be introducing to the auction. Two other commodity trading companies INTL FCStone and Jane Street, will however, join the auction on 2 October. INTL FCStone and Jane Street also recently joined the LBMA Gold Price auction as direct participants.
    Beyond the continued exclusion of the vast majority of global silver participants from the auction, the very fact that a new administrator has had to be drafted in to run this LBMA Silver Price auction is itself noteworthy, as is the ultra-secretive way in which ICE has been selected as the new auction administrator.

    This post was published at Bullion Star on 28 Sep 2017.


  • Morgan Stanley CEO Rejects Dimon: “Bitcoin Is Certainly More Than A Fad”

    Two weeks after JPMorgan CEO Jamie Dimon’s now infamous “Bitcoin is a fraud” comments, Morgan Stanley CEO James Gorman told The Wall Street Journal today that Dimon is wrong and “Bitcoin is certainly more than a fad… the concept of an anonymous currency is an interesting concept.”

    This post was published at Zero Hedge on Sep 27, 2017.


  • BUBBLE ABOUT TO BURST?

    Last month, Anti-Media reported that some of the biggest institutions on Wall Street have issued warnings to investors that planet-wide financial markets are nearing a downturn. From an August 22 article by Bloomberg:
    ‘HSBC Holdings Plc, Citigroup Inc. and Morgan Stanley see mounting evidence that global markets are in the last stage of their rallies before a downturn in the business cycle.
    ‘Analysts at the Wall Street behemoths cite signals including the breakdown of long-standing relationships between stocks, bonds and commodities as well as investors ignoring valuation fundamentals and data. It all means stock and credit markets are at risk of a painful drop.’

    This post was published at The Daily Sheeple on SEPTEMBER 25, 2017.


  • Wall Street Is Attempting to Clone Loyal, Non-Whistleblower Workers

    Last month, Reuters reported that Goldman Sachs was planning ‘to begin’ using personality tests to assist it in hiring personnel ‘in its banking, trading and finance and risk divisions.’
    It’s highly unlikely that Goldman Sachs is just beginning to use personality tests since other major firms on Wall Street have been using them for at least three decades – and not in a good way.
    The Reuters article was penned by Olivia Oran, who also wrote in June of 2016 that major Wall Street firms such as Goldman Sachs, Morgan Stanley, Citigroup and UBS were ‘exploring the use of artificial intelligence software to judge applicants on traits – such as teamwork, curiosity and grit.’ The article further noted that one of the goals of the artificial intelligence software is to ‘avoid the expense of problem hires and turnover…’
    All of the firms mentioned have experienced employees that, in their view, were ‘problem hires.’ The public, however, has viewed those same employees as public interest-motivated whistleblowers.

    This post was published at Wall Street On Parade on September 12, 2017.


  • British People Suddenly Stopped Buying Cars

    – British people suddenly stopped buying cars
    – Massive debt including car loans, very low household savings
    – Brexit and decline in sterling and consumer confidence impacts
    – New cars being bought on PCP by people who could not normally afford them
    – UK car business has ‘exactly the same problems’ as the mortgage market 10 years ago, according to Morgan Stanley
    – Bank of England is investigating to make sure UK banks are not overly exposed…
    – Prudent British people buying gold with cash, not cars with debt
    by Jim Edwards, Business Insider UK
    ***
    British people have suddenly stopped buying cars.
    It’s not clear why. But a number of anti-car trends have hit Britain simultaneously – such as the rise of Uber and a decline in household savings – driving down car sales.
    The chart above of total car sales both old and new, from Barclays, says it all. On this chart, the grey-black line is the crucial one. The blue line (online sales) represents only a small number of purchases. Barclays

    This post was published at Gold Core on September 12, 2017.


  • Morgan Stanley Asks “If Employment So Good,” Why Is This Happening To Credit Card Delinquencies…

    In a new downgrade of subprime lenders Capital One and Synchrony, Morgan Stanley sought to answer the nagging question of why subprime credit card losses are suddenly soaring, per the chart below, “if employment is so good.”

    After reportedly spending the entire month of August analyzing that question, Morgan Stanley came to many of the same conclusions that we note a regular, recurring basis. Apparently, those soaring delinquencies have something to do with stagnant wages in the face of soaring healthcare costs, rising rents and a pullback in consumer credit extension…who could have guessed that?
    Investors ask, “Why are card losses rising if employment is so good?” Our deep dive & quant work shows subprime is stretched from higher rent, healthcare costs & low wage growth, with lower credit availability a coming drag.
    A Tale of Two Consumers, with the subprime consumer increasingly at risk, driving up net charge-offs (NCO) and lowering EPS: The economy is solid and unemployment is very low, but credit card delinquencies have been increasing… so we spent the month of August delving into what is really going on with the US consumer. We found that the average consumer is in good shape but the financial pressures on subprime consumers are high and, critically, rising

    This post was published at Zero Hedge on Sep 8, 2017.


  • WHY are banks Too Big to Fail & Too Big To Jail

    There is something much more sinister going on behind the curtain. I have warned that you really are taking your life in your hands doing business in New York City with a bank because NOBODY ever wins against the bankers no matter what they do. This begs the question about why are banks paying huge fines, yet nobody goes to jail, and there is never a trial while class action suits are summarily dismissed? Something is seriously wrong here. To discover the answer, as always, just follow the money!
    Back in 2003, Judge Milton Pollack dismissed two class action suits against Merrill Lynch for putting out bogus research during the DOT. COM Bubble after the investment bank plead guilty and paid huge fines. Judge Pollack wrote a 43 page decision protecting banks even when they produce intentional fake research. The judge said that investors were eager to take that risk and were to blame for their own losses. Pollack then dismissed another 25 lawsuits against the bankers. Similarly, another judge dismissed suits against Credit Suisse First Boston, Goldman Sachs, and Morgan Stanley. Why is it impossible to sue the bankers in America where justice is supposed to exist for all?

    This post was published at Armstrong Economics on Sep 4, 2017.


  • August Payrolls Preview: Prepare For Disappointment

    If there is one common theme across sellside previews of tomorrow’s nonfarm payrolls number, expected at 180K after a surprising jump to 209K in July, it is to brace for disappointment, or in Wall Street parlance, “downside risks.” And it’s not because of Harvey which hit the US far too late in the month to be reflected in the monthly payrolls.
    The simplest reason for tomorrow’s miss is shown in the following Morgan Stanley chart, which predicted the July 209K print with dead-on precision, and which extrapolates the recent Y/Y slowdown in job growth to only 136K jobs in August (which, in the current “bad news is good news” environment, should be sufficient to send stocks to new all time highs as it will mean an even greater delay by the Fed).

    This post was published at Zero Hedge on Sep 1, 2017.


  • All Eyes On August Payrolls, As Global Stocks Rise In Bullish September Start; Yuan Surge Continues

    With payrolls looming (our full preview is here), carbon-based traders around the globe are leery of putting on any major trades and so the overnight session has been rather dull, dominated by the now traditional overnight algo-mediated levitation, which means the VIX is lower and S&P futures are once again modest higher as European and Asian shares continue their ascent.
    ‘A decent payrolls number today would be the icing on the cake in a week that has seen some positive signs that the U. S. economy may be in better shape than was previously thought prior to Jackson Hole,’ analyst Michael Hewson at CMC Markets writes in note. ‘Annual hourly wage growth is currently 2.5%, a little on the weak side for an economy supposedly at full employment, so a strong number here could increase the odds of another rate rise this year, most likely in December.’
    While we have penned a longer preview of today’s jobs report, the only chart that may matter for today’s payrolls print, expected at 180K, is the following from Morgan Stanley, which predicted the July print to the dot, and which anticipates a big miss in the August jobs number, at 136K vs the 180K expected (see full preview here).

    This post was published at Zero Hedge on Sep 1, 2017.


  • Bitcoin Surges To New Record High, Overtakes Paypal & Netflix, Nears Morgan Stanley’s Market Cap

    Amid chaotic swings in the dollar, and flash-crashes in precious metals, it seems anxious global investors have pushed into cryptocurrencies as a safe-haven overnight with the top 5 virtual currencies all soaring.
    ***
    Bitcoin has reached a new record high at $4740…

    This post was published at Zero Hedge on Aug 31, 2017.


  • Keiser Report: Empire of Debt (E1114)

    The following video was published by RT on Aug 24, 2017
    Max & Stacy discuss the narcissism of central banks holding $15 trillion in their own assets. They also discuss Morgan Stanley saying that some of their investors see Bitcoin as a better hedge to inflation than gold. Max continues his interview with Dan Collins of TheChinaMoneyReport.com to discuss the looming trade war between the US and China, and the mountain of US treasuries owned by China.


  • Compass Point: “Odds Of A Government Shutdown Are Now Dramatically Higher”

    Over the weekend, Morgan Stanley reminded its clients that the biggest threat facing markets over the coming weeks is the ‘three-headed policy monster’ inside Washington: raising the debt ceiling, passing a budget and embarking on tax reform. As MS cross-asset strategist Andrew Sheets noted, “none are easy, but we see the debt ceiling as the most immediate test.”
    He then cautioned that while the most likely outcome is that, after some tension, the debt ceiling gets raised “we don’t think it will be easy, or smooth, and it may require some form of market pressure to get different sides to fall in line. I’ve spoken to investors who are comforted by FOMC transcripts from 2011 that discussed prioritization of debt payments in order to avoid default. I am not. First, I worry that this reduces the urgency of what remains a serious issue. Second, this prioritization would require delaying payments to programmes like Social Security and Medicare, with real human and economic cost. And third, while the mechanics of this prioritisation may work, it is untested in a live environment.”
    As reported earlier, the market’s concerns about a potential debt ceiling crisis, so far mostly contained, have once again started to bubble to the surface, with the Oct. 5 T-Bill rate rising to the highest level since August 1st, suggesting that bond traders see rising odds of a “worst case outcome” and partially answering our question from Monday whether “Markets Are Sleepwalking Into A Debt Ceiling Crisis: Mnuchin Issues Another Warning.”

    This post was published at Zero Hedge on Aug 23, 2017.


  • Are Markets Sleepwalking Into A Debt Ceiling Crisis: Mnuchin Issues Another Warning

    Over the weekend, Morgan Stanley reminded its clients that perhaps the biggest threat facing markets over the coming weeks is the ‘three-headed policy monster’ inside Washington: raising the debt ceiling, passing a budget and embarking on tax reform. As MS cross-asset strategist Andrew Sheets noted, “none are easy, but we see the debt ceiling as the most immediate test.”
    He then cautioned that while the most likely outcome is that, after some tension, the debt ceiling gets raised “we don’t think it will be easy, or smooth, and it may require some form of market pressure to get different sides to fall in line. I’ve spoken to investors who are comforted by FOMC transcripts from 2011 that discussed prioritization of debt payments in order to avoid default. I am not. First, I worry that this reduces the urgency of what remains a serious issue. Second, this prioritization would require delaying payments to programmes like Social Security and Medicare, with real human and economic cost. And third, while the mechanics of this prioritisation may work, it is untested in a live environment.”
    Perhaps sensing that the market is getting increasingly concerned about the potential standoff over the debt ceiling debate, which could eventually lead to a technical default, moments ago Treasury Secretary Steven Mnuchin, speaking at an event in Louisville, said that “we need to raise the debt limit and it’s my strong preference is that there’s a clean raise of the debt limit.”

    This post was published at Zero Hedge on Aug 21, 2017.


  • Morgan Stanley: Here Comes “The Three-Headed Policy Monster”

    One month ago, Morgan Stanley’s chief cross-asset strategist looked at the current state of the market – “the S&P 500, Russell 2000 and NASDAQ have hit all-time highs. Volatility has plunged back down near all-time lows. Credit is tighter and yields have been stable” – and asked “what rattles this market. What breaks the egg?”
    His answer was five-fold, including valuations, inflation, geopolitics and China, but the biggest concern was what is coming in just one month on the US legislative docket:
    The debt ceiling worries us most, given that action may need to be taken within as little as seven weeks.
    It was “seven weeks” four weeks ago, which means that the D(debt)-day for the US government – now expected ti hit in the first days of October – is ever closer, even as the domestic political situation in the U. S. gets progressively worse.

    This post was published at Zero Hedge on Aug 20, 2017.


  • ‘Inconvenient’ Fact: Morgan Stanley Says Electric Cars Create More CO2 Than They Save

    For all the funds out there looking to fill their portfolio with “environmentally conscious” companies working diligently to avert an inevitable global warming catastrophe that will result in the extinction of the human race, we guess in lieu of their actual fiduciary duties to simply make money for their investors, Morgan Stanley has compiled a list of how you can get the most ‘environmental healing’ per dollar invested.
    As MarketWatch points out, it’s not terribly surprising that of the 39 publicly-traded stocks analyzed, the solar and wind generation companies landed at the very top of Morgan Stanley’s environmentally friendly the list.
    Morgan Stanley identified 39 stocks that generate at least half their revenue ‘from the provision of solutions to climate change,’ something it said was a central component of investing to make a difference, as opposed to just a making a buck. ‘In our view, impact investing needs to begin with companies whose products and services have a notable positive environmental or social impact,’ wrote Jessica Alsford, an equity strategist at the investment bank.
    Not surprisingly, alternative-energy companies ranked the highest in terms of their positive impact, and the ‘top five climate-change impact stocks’ were all manufacturers of solar and wind energy: Canadian Solar, China High Speed Transmission, GCL-Poly, Daqo New Energy, and Jinko Solar.

    This post was published at Zero Hedge on Aug 18, 2017.