News > Capital Markets

NY Fed president William Dudley said to say that it's too early to raise rates
Capital Markets
<p>From Reuters:<br /> It is too early to consider an interest rate rise in the United States due to concerns about global economic growth, New York Federal Reserve Bank President William Dudley was quoted as saying by an Italian newspaper on Monday.</p> <p>"The situation changed over the last few months," Dudley told CorrierEconomia last Thursday on the sidelines of a conference at the Brookings Institutions in Washington.<br /> Last week, Dudley said in a speech at the Brookings Institute that a rate hike was not off the table for 2015 if the economy continued to expand as expected.<br /> Photo: Michael Dadino</p>
Morgan Stanley slumps after earnings miss
Capital Markets
<p> <br /> Morgan Stanley released its third quarter earnings report before opening bell this morning, posting a wide miss of 34 cents per share in adjusted earnings and adjusted revenue of $7.33 billion. Analysts had been expecting earnings of 63 cents per share and revenue of $8.54 billion. In last year’s third quarter, the firm reported earnings of 64 cents per share.</p> <p>Reported earnings were 48 cents per share, compared to last year’s 83 cents per share. Including accounting adjustments, Morgan Stanley (NYSE:MS)’s revenue was $7.77 billion, compared to last year’s $8.91 billion.</p> <p>The firm’s Institutional Securities business saw net revenues excluding DVA fall from $4.3 billion to $3.5 billion this year. Management said they continued to see strength in Equity sales and trading. Advisory revenues rose from $392 million to $557 million, while Equity sales and trading net revenues were flat at $1.8 billion.</p> <p>The Wealth Management business saw net revenues fall from $3.8 billion to $3.6 billion. Asset management fee revenue ticked upward from $2.1 billion last year to $2.2 billion this year. Transactional revenues fell from $912 million to $652 million.</p> <p>Read more at ValueWalk.<br /> Photo: Insider Monkey</p>
Google stands out amid low earnings expectations
Capital Markets
<p>&nbsp;</p> <p> Overall, Wall Street expectations are muted for this week's earnings reports.</p> <p> Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL) will buck that trend with strong results, if forecasts are accurate.<br /> Expectations are also high for earnings from American Airlines Group Inc (NASDAQ:AAL), Eli Lilly and Co (NYSE: LLY), General Motors Company (NYSE: GM) and Verizon Communications Inc. (NYSE: VZ).</p> <p>&nbsp;</p> <p>The heart of the third-quarter earnings reporting season has arrived, and results will come fast and furious this week. But overall, expectations are fairly muted.</p> <p>Consensus forecasts from Wall Street analysts call for declining earnings from many of the most prominent companies reporting this week. However, expectations are high for the results from Alphabet Inc, still more commonly known as Google.</p> <p>Strong earnings growth is also predicted for Eli Lilly and Verizon, accompanied by at least some growth in revenues.</p> <p>Some of the strongest year-over-year growth on the bottom line is anticipated this week from General Motors Company and American Airlines. Yet, in both cases, the top line is expected to have shrunk marginally.</p> <p>Below is a quick look at what is expected from these and a peek at some of the week's other most prominent reports.<br /> Alphabet<br /> The company formerly known as Google will post earnings of $7.34 per share for its third quarter, if Estimize's consensus forecast is accurate. That would be up ...</p> <p>Full story available on Benzinga.com<br /> Photo: Carlos Luna </p>
Why ‘Abenomics’ keeps missing the mark
Capital Markets
Japan Continues to Struggle under ‘Abenomics’. Standard &amp; Poor’s recently cut its long-term credit rating of Japan one level, down to A+, and markets do not seem to have reacted much, if at all. A key reason is that many Japanese bonds are owned by Japanese banks and other Japanese institutions, “which are not going to sell in large numbers,”
The 'age' age
Capital Markets
<p>As I mentioned in last week’s letter, I traveled to San Francisco last Monday with my friend Patrick Cox, who writes our Transformational Technology Alert newsletter. We had dinner with Dr. Mike West of Biotime and then spent the next morning at the Buck Institute for Research on Aging. Pat and I decided we would jointly report on what we learned. He has already written his part, which was published last week. I am going to reproduce portions of that letter, which highlight the conversation with Brian Kennedy and his team at the Buck Institute, and then add my own thoughts about our conversation with Mike West the previous night.</p> <p>(Note that I am excerpting Patrick’s paid letter, which includes comments on companies in his portfolio, rather than his free weekly Transformational Technologies Tech Digest service. We agreed that it was important to do so in this one case, given the huge significance of the research involved and the Buck Institute’s relationship to it.)</p> <p>Essentially, we looked at two aspects of aging. The Buck Institute is focused on how to slow down the aging process and reduce the symptoms (such as chronic diseases) that come with aging. Dr. Mike West and his colleagues, as well as a few other firms and researchers, are focused on using our own pluripotent stem cells in ways that would allow us to repair organs in our bodies, thus giving us the opportunity to “grow younger” again. (It’s not quite that simple, as I’ll try to explain later.)</p> <p>The very good news is that progress is being made. The bad news is that the regulatory environment is impeding progress, as the regulators don’t quite know what to do about the advances that are coming; but even there things may be changing. I recognize this letter will be a little far afield from my usual scribblings on economics and finance, but aging and health are things that concern us all. And if there are a few things you can do to increase your healthspan (not just your lifespan), then the attention you pay to optimizing your health will make all the work you do on your investments even more important and useful. So let’s turn to Pat’s letter, and because I can’t resist, I will insert personal comments in brackets until we get to the end of his letter.</p> <p>Read more at Advisor Perspectives</p> <p>&nbsp;</p> <p>&nbsp;</p>
Daily Scan: China dips on glum outlook; Europe creeps up
Capital Markets
<p>Updated throughout the day.</p> <p>Good evening. China’s growth data was better than many analysts expected, but the overall picture is still glum with China growing at its slowest pace since the global financial crisis -- the markets have reacted accordingly. The Shanghai composite index closed down 0.14% while Hong Kong’s Hang Seng index showed little change -- up slightly at 0.04%. Elsewhere in Asia markets have seen little change, the most pronounced drop was seen in Japan where the Nikkei 225 was down 0.88%.</p> <p>In Europe, markets opened flat but soon started tracking upwards with the pan-European STOXX 600 up 0.6%. One of the noticeable winners in early trading was Deutsche Bank which saw its stock climb 3.1% after it announced restructuring plans earlier Monday. </p> <p>Here’s what else you need to know:</p> <p>China 3Q GDP 6.9%, a six-year low. The number is slightly better than expected. But underlying data signalled underlying weakness especially industrial production, which expanded 5.7%, below expectations of 6.0%.  Makes ya' wonder what it would have been without all the stimulus the government launched this past year. The Guardian</p> <p>Britain rolls out the red carpet for President Xi and everyone wonders why. Says one advisor:  "(It's) the only place where China is truly influential right now because they are so desperate for Chinese investment." Ouch. Financial Times (payall)</p> <p>Japan Post subsidiaries priced at top of market range. Shares in the banking and insurance units of Japan Post have been priced at the top end of their proposed price ranges ahead of their November IPO. It's the country’s largest privatisation since the 1980s. Financial Times (paywall)</p> <p>Heads roll as Deutsche Bank splits its investment bank. Deutsche Bank’s new head John Cryan has launched a radical overhaul of the bank’s senior management and structure, parting ways with several top executives and splitting its powerful investment banking unit in two. The Financial Times (paywall)</p> <p>UK to treat Islamic extremists ‘like paedophiles’. Hate preachers will be treated like paedophiles and banned from all contact with children, UK PM David Cameron is to announce today as part of the government’s counter-terrorism strategy. The Telegraph. </p> <p>Goldman Sachs chief economist says December rate hike likely. Jan Hatzius says his confidence level is about 60%, twice that of the Street. Calculated Risk</p> <p>Wildfire kill 7 Indonesia hikers. Seven hikers were killed and two others suffered severe burns after a wildfire broke out on a mountain on Indonesia's main island of Java.The group was climbing</p>
Weekend Scan: Deutsche Bank in major revamp; China GDP slows in 3Q to 6.9%
Capital Markets
<p>&nbsp;</p> <p>Good evening.</p> <p>Earnings madness continues apace this week. Monday, look for earnings from IBM and Morgan Stanley. The big q for Big Blue: Will earnings continue to decline? Morgan Stanley may get a lift from its wealth management business. Also on Monday: Richmond Federal Reserve President Jeffrey Lacker speaks at noon. Housing starts are the next big economic indicator to keep an eye on, Tuesday at 8:30 a.m. ET.</p> <p>Here's what else you need to know:</p> <p>It's official. Even China says it's growth is under 7%. Make that 6.9% to be precise in the last quarter, a six-year low. Makes ya' wonder what it would have been without all the stimulus the government launched this past year. The Guardian</p> <p>Deutsche Bank in major revamp. The bank is splitting its investment bank into two units -- one focused on M&amp;A  and the other on corporate finance and trading. Its former head, Colin Fan, is resigning. The board has been reorganized in an effort to make the bank more competitive after a series of legal and financial missteps. Wall Street Journal (paywall)</p> <p>Goldman Sachs chief economist says December rate hike likely. Jan Hatzius says his confidence level is about 60%, twice that of the Street. Calculated Risk</p> <p>Britain rolls out the red carpet for President Xi and everyone wonders why. Says one advisor:  "(It's) the only place where China is truly influential right now because they are so desperate for Chinese investment." Ouch. Financial Times (payall)</p> <p>10,000 more North Sea oil workers likely to lose jobs. The prediction from two major independent oil producers comes after the sector has already lost 5,500 jobs, 15% of the work force. Financial Times (paywall)</p> <p>Pentagon says Qaeda leader killed in airstrike in Syria. In a statement, the Pentagon said Sanafi al-Nasr, a Saudi national, was the cell he led was involved in planning terrorist attacks in the U.S. and Europe. The New York Times (paywall)</p> <p>Gripping read: "The Lonely Death of George Bell." The story of a man who died alone and the people who piece together a life gone off the rails. The New York Times (paywall)<br /> You won't believe this:<br /> Don't even think about sitting down. A Bronx elementary school principal ordered the custodians in her school to haul all th</p>
Deflation watch: Consumers anticipate price cuts, wait to buy
Capital Markets
<p>Halloween is almost here -- which means one thing:  Time to start thinking about Christmas sales, the make-or-break time of year for retailers.</p> <p>The early drumbeat is worrisome. Sunday, Business Insider reviewed all the ways that retailers are playing to the consumers who figure that they can bide their time and buy once the markdowns come rolling in. Some sellers just simply cut to the chase and begin with low prices: Everlane promises high quality, well-priced items compared to department stores. The online retailer along with e-tailer Oliver Cabell share the gory details of their costs and how they price things so much more fairly than those big mean retailers who actually have brick and mortar overhead.</p> <p>The Consumer Price Index tells the story: Apparel prices are down 1.4% from September 2014. Car prices are also down 1.7%.  The huge drop in energy prices -- down 18.4% -- doesn't seem to be encouraging consumers to go and spend their savings. What? Why would they if prices are likely to drop further?<br /> Photo: Eli Christman</p>
Goldman Sachs chief economist sees 60% chance that Fed will raise rates in December
Capital Markets
<p>Bill McBride at Calculated Risk snagged a copy of recent commentary from Jan Hatzius, chief economist at Goldman Sachs. In the research piece, Hatzius says the Federal Reserve is likely to raise rates in December -- despite weak recent numbers. Hatzius says "we are only about 60% confident." The wildcards, of course, are the data.</p> <p>That "only about 60%" confident level is about twice as confident as the rest of the market.</p> <p>Read the full excerpt here.<br /> Photo: Rich Mitchell</p>
Who would you trust for existing home sales estimates: The trade group or this guy?
Capital Markets
<p>You decide: Calculated Risk has tabulated the monthly existing home sales estimates of the National Association of Realtors vs the estimates of economist Tom Lawler vs the reported data for the past five years. Which ones would you trust? The report for September is due on Thursday.</p> <p>&nbsp;</p> <p>Existing Home Sales, Forecasts and NAR Report<br /> millions, seasonally adjusted annual rate basis (SAAR)</p> <p>Month<br /> Consensus<br /> Lawler<br /> NAR reported1</p> <p>May-10<br /> 6.20<br /> 5.83<br /> 5.66</p> <p>Jun-10<br /> 5.30<br /> 5.30<br /> 5.37</p> <p>Jul-10<br /> 4.66<br /> 3.95<br /> 3.83</p> <p>Aug-10<br /> 4.10<br /> 4.10<br /> 4.13</p> <p>Sep-10<br /> 4.30<br /> 4.50<br /> 4.53</p> <p>Oct-10<br /> 4.50<br /> 4.46<br /> 4.43</p> <p>Nov-10<br /> 4.85<br /> 4.61<br /> 4.68</p> <p>Dec-10<br /> 4.90<br /> 5.13<br /> 5.28</p> <p>Jan-11<br /> 5.20<br /> 5.17<br /> 5.36</p> <p>Feb-11<br /> 5.15<br /> 5.00<br /> 4.88</p> <p>Mar-11<br /> 5.00<br /> 5.08<br /> 5.10</p> <p>Apr-11<br /> 5.20<br /> 5.15<br /> 5.05</p> <p>May-11<br /> 4.75<br /> 4.80<br /> 4.81</p> <p>Jun-11<br /> 4.90<br /> 4.71<br /> 4.77</p> <p>Jul-11<br /> 4.92<br /> 4.69<br /> 4.67</p> <p>Aug-11<br /> 4.75<br /> 4.92<br /> 5.03</p> <p>Sep-11<br /> 4.93<br /> 4.83<br /> 4.91</p> <p>Oct-11<br /> 4.80<br /> 4.86<br /> 4.97</p> <p>Nov-11<br /> 5.08<br /> 4.40<br /> 4.42</p> <p>Dec-11<br /> 4.60<br /> 4.64<br /> 4.61</p> <p>Jan-12<br /> 4.69<br /> 4.66<br /> 4.57</p> <p>Feb-12<br /> 4.61<br /> 4.63<br /> 4.59</p> <p>Mar-12<br /> 4.62<br /> 4.59<br /> 4.48</p> <p>Apr-12<br /> 4.66<br /> 4.53<br /> 4.62</p> <p>May-12<br /> 4.57<br /> 4.66<br /> 4.55</p> <p>Jun-12<br /> 4.65<br /> 4.56<br /> 4.37</p> <p>Jul-12<br /> 4.50<br /> 4.47<br /> 4.47</p> <p>Aug-12<br /> 4.55<br /> 4.87<br /> 4.82</p> <p>Sep-12<br /> 4.75<br /> 4.70<br /> 4.75</p> <p>Oct-12</p>