Posts Tagged ‘Morgan Stanley’


FragileThanks to months of speculation that the Fed would taper its bond-buying program (it eventually did in December), 2013 was a tough year for emerging markets. While many analysts are predicting emerging markets will rebound over the next few months, there's one potential risk that is particularly unique to 2014: a vibrant electoral cycle.

Is democracy alive and well in countries across the asset class? Not exactly. However, elections in five important emerging markets, which together represent around 7 percent of the world’s economy, might make it tricky for investors trying to navigate political risks after a rocky 2013.

Dubbed the 'Fragile Five' by investment bank Morgan Stanley, the countries are Indonesia, South Africa, Brazil, Turkey and India. The 'Fragile Five' will all hold hotly contested general elections in 2014, spread out from April through October. Even more intriguing, aside from South Africa, no candidates have shown a clear lead in opinion polls.

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The Week Unpeeled

The week saw President Obama continue to nominate new members to his cabinet while banks and Wall Street dealt with layoffs. Chief among Obama’s nominees was Jacob J Lew, of whom we all learned about his curly-cue signature, as Treasury Secretary.

Elsewhere:

  • Morgan Stanley announced plans to lay off 1,600;
  • American Express also plans to cut 5,400 jobs, mostly in the travel group;
  • Apple will release a lower-priced iPhone;
  • Jerry Seinfeld and Sony will re-sign for a second season its Web series, “Comedians in Cars Getting Coffee”; that’s so post Leap Year move;
  • Ada Louise Huxtable, the former Pulitzer Prize winning New York Times architecture critic and most recently with The Wall Street Journal, died at 91;
  • Downton Abbey premiered its third season in the US at 7.2 million viewers, one of the highest PBS shows in more than 20 years;
  • The official portrait of the Duchess of Cambridge was unveiled to pretty bad reviews as “old and dowdy”; and
  • The Dow ended the week slightly higher and is up 2.98 percent at 13,488. End of Story

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The Week Unpeeled

US media were captivated by the horrific one-man shooting spree at an Aurora, Colo., 12-midnight showing of Batman’s “Dark Night Rises,” where 12 died and some 50 were injured. In fact, CNN seemed to cover the story almost nonstop since Friday.

Elsewhere:

  • Fighting intensified in Syria, with rebels killing key military leaders and the regime staging new attacks that sent refugees fleeing the capital;
  • Google’s profits rose 11 percent in the quarter, while Microsoft recorded a rare loss based on a charge for its Internet business;
  • Marissa Mayer from Google was named chief of Yahoo, reportedly awarded as much as $60 million, making her one of if not the largest paid female executive;
  • The New York Times named Margaret M. Sullivan from the Buffalo News as its public editor, fifth in a line and first woman in the role;
  • Morgan Stanley saw its second-quarter profit slide 54 percent as trading revenues slumped amid a downgrade;
  • Barton Biggs, a well-known market guru and former Morgan Stanley money-management executive, died;
  • UK inflation reached its lowest level since November 2009 as the wettest June on record deterred many shoppers forcing retailers to slash prices;
  • An official report for the G20 warned that it is likely motorists have been overcharged for petrol because banks and other traders may have manipulated oil prices in the same way they rigged interest rates;
  • And with less than one week until the London 2012 Olympics Opening Ceremony, a few interesting fact:
    • Up to 5,500 border guards are set to strike next Thursday on the eve of the Olympics in a dispute over job cuts and pay, causing disruption for nearly 130,000 passengers;
    • Some train drivers are also planning a three-day strike during the Games which will affect people travelling into London;
    • Olympic traffic restrictions have come into effect in parts of London, resulting in queues and delays for motorists and thousands of drivers are facing a fine of GBP130 after being caught in a newly-activated Olympic Games lane; and
  • “Brand police” have been deployed across Britain to protect sponsors from firms using “ambush marketing” or illegally associating themselves with the Olympics at the expense of official sponsors. End of Story

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The Week Unpeeled

It became than more than lonely at the top of the financial world last week; it became a “cesspit” (Paul Tucker, depy gov of BoE on rate-rigging mess.)  Liborgate claimed more bonuses as accusations mounted and talk increased of lawsuits from pension funds, hedge funds and municipalities.  This will be big no doubt.  Francesco Guerrera in The Wall Street Journal last week outlined potential scenarios in “Libor Drama Isn’t Over Yet: Watch for 5 Aftershocks,” Tuesday, July 10. (“The probe will claim more bank chiefs” and “Regulators should shoulder some blame,” among others.)

Other Related News and Other Gaze-Worthy Stories

  • Bob Diamond gave up bonuses worth up to £20m after resigning from Barclays amid the bank Libor scandal; however, he will still receive his salary and benefits worth in excess of £2m. Diamond is claiming it is “terribly unfair” and “unfounded” claims that he misled the committee over Libor rigging;
  • Tucker denied that ministers, officials or the BoE sanctioned the fixing of bank borrowing costs at the height of the financial crisis at  a Treasury Select Committee hearing;
  • According to Morgan Stanley, 12 global banks linked to the Libor scandal face as much as $22bn in combined regulatory penalties and damages to investors and counter parties;
  • HSBC could face a fine of up to $1bn (£645m) in the US for failing to combat money laundering;
  • JPMorgan Chase announced second-quarter losses of $4.4bn and that the “whale” losses hit as much as $5.8bln;
  • Moody's cut Italy's credit rating by two notches overnight, to Baa2 - just two notches above junk status;
  • Peregrine’s CEO confessed to fraud in a suicide (failed) note where he claimed to have been bilking customers more than $100m over a 20-year period;
  • China’s growth fell to 7.6 percent in the second quarter, its lowest rate since depths of financial crisis in 2009;
  • The Dow ended a six-day losing streak Friday by closing up 203 points to close at 12,777;
  • The British government is racing to resolve a major security blunder two weeks before the London Olympics and is calling in up  to 3,500 extra military troops;
  • The banking scandals headlines seemed to overshadow any scoops last week out of Allen and Co.’s annual media/tech/money mash up in Sun Valley, Idaho;
  • Financier Leon Black was unmasked as the mystery buyer of “Scream,” for which he paid $120m for the pastel. (BoE officials screaming, too, right?);
  • And the Rolling Stones as a band turned 50 last week!!!  Amen to that. End of Story

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The Week Unpeeled

Financial news was dominated by Facebook’s launch last week and its apparent blemished opening (“glitched-filled market session, New York Times) with commentators placing blame with Nasdaq and the underwriter, Morgan Stanley. It’s kind of ironic that stories before the launch focused on concerns about whether a young and inexperienced CEO could run a $100-billion-plus company and not whether established institutions could handle a listing. Who should be wearing the hoodies now?)

The headlines did not nudge out JP Morgan’s trading problems, which seemed to grow in size and seemed to make almost certain a big Wall Street/Beltway Volcker Rule shoot out.  Maybe, as Floyd Norris noted on Friday, there will be a thing as “too big to hedge.”

(By the way, interesting read in Friday’s WSJ called “Inside JP Morgan’s Blunder,” which reads at times like a thriller – “He barked, throwing down the papers, ‘I want to see the positions.’”  The themes of too big and too complacent throughout the article and even a tie to Facebook.)

Elsewhere:

  • Hewlett-Packard plans to cut 30,000 jobs;
  • Warren Buffett bought 63 newspapers from Media General (good sign for print?), adding to his media presence, with The Wall Street Journal printing a very appropriate headline: “Call It Berkshire Hathaway Ink.”);
  • European stock markets fell after the credit rating agency Moody's downgraded 16 Spanish banks along with Santander's UK arm;
  • Greece’s exit from the eurozone, dubbed the “Grexit” looks more likely as it was rumored that European officials have began drawing up emergency plans to safeguard the euro;
  • The Olympic flame arrived in the UK on Friday evening, ready for the start of the London 2012 torch relay;
  • Rebekah Brooks, former executive under Rupert Murdoch, was charged over allegations that she tried to conceal evidence from detectives investigating phone hacking and alleged bribes to public officials; and
  • Queen of Disco and Hot Stuff and Bad Girls Donna Summer dies and deservedly earns front-page NYT obit. CJP

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