Anonymous ID: d4af7d Jan. 17, 2019, 5:23 a.m. No.4789760   🗄️.is 🔗kun

Morgan Stanley Tumbles Following Huge Revenue, FICC Miss

 

After 5 out of 5 big investment banks reported disappointing FICC revenue results, hopes that Morgan Stanley would break the trend when it reported Q4 earnings this morning were subdued at best, and for good reason: moments ago the bank reported Q4 FICC revenue of just $564MM, a huge miss to the $823MM consensus expectation and a whopping 30% drop Y/Y which was also the biggest fixed income revenue drop on Wall Street.

 

The result was so bad, one has to go back to 2015 to find a lower fixed income print.

Had that been all, the bank may have scraped through unscathed like so many of its peers, but whereas other banks managed to cover up for FICC disappointment with the outperformance of other groups, Morgan Stanley did not, and as a result Q4 revenue printed at just $8.55BN, far below the $9.35BN expected and in fact below the lowest estimate in the range of forecasts of $8.97BN to $10.17BN.

 

This also resulted in a painful EPS miss, with the company reported 73 cents in Q4 EPS (thanks to a 16.2% effective tax rate), far below the 89 cents expected, a number which excluded a 7 cent per share tax benefit. And while net income more than doubled to $1.53 billion from $643 million a year earlier, that is because the firm took a $1 billion charge related to the U.S. tax overhaul last year.

 

So alas whereas other banks could at least pretend the core business is doing well, MS had no such luxury, especially since equity sales and trading revenue of $1.93BN also missed expectations of $2.01BN; the number was "essentially unchanged from a year ago reflecting higher revenues in the financing business, partially offset by lower results in execution services." As for the FICC plunge, the bank said that this is due to "unfavorable market making conditions that resulted from significant credit spread widening and volatile rate movements."

 

The company's key Wealth Management group also disappointed, reporting pre-tax income from continuing operations of $1.0 billion compared with $1.2 billion a year ago. Net revenues for the current quarter were $4.1 billion compared with $4.4 billion a year ago principally driven by losses related to investments associated with certain employee deferred compensation plans. Even so, total client assets were $2.3 trillion and client assets in fee-based accounts were $1.0 trillion at the end of the quarter.

 

There was a silver lining in the bank's investment banking revenue of $1.49BN which while unchanged from a year ago, was better than the $1.35BN expected.

 

Advisory revenues of $734 million increased from $522 million a year ago on higher levels of completed M&A activity across all regions.

Equity underwriting revenues of $323 million decreased from $416 million a year ago reflecting lower revenues primarily on IPOs.

Fixed income underwriting revenues of $360 million decreased from $499 million a year ago driven by lower bond and loan issuances.

 

Alas, this was not enough to offset the broader gloom. To be sure, the bank tried to make up for the drop in revenue by slashing expenses, as compensation costs of $3.8 billion decreased from $4.3 billion a year ago on lower net revenues, partially offset by

a reduction in the portion of discretionary incentive compensation subject to deferral (non-compensation expenses of $2.9 billion increased from $2.8 billion a year ago).

 

Of course, CEO James Gorman was optimistic, saying that "In 2018 we achieved record revenues and earnings, and growth across each of our business segments – despite a challenging fourth quarter. We delivered higher annual returns, producing an ROE of 11.8% and ROTCE of 13.5%, as we continued to invest in our businesses. While the global environment remains uncertain, our franchise is strong and we are well positioned to pursue growth opportunities and serve our clients."

 

Yet after the first truly dreadful bank results of the earnings season the market disagreed, and MS stock, which is a 0.2% contributors to the S&P, tumbled 5% and sent US equity futures near session lows and in danger of breaching 2,600 - the new key support - in the S&P500.

 

_______

They got this shoved out the door early. Absolute pile of steaming crap here.

t does not get much worse than this. Fixed income dropped by 30%. Moar credit loss fuckery too. This one should have been suicided in 2008 as it was worse off than most even then.

 

https://www.zerohedge.com/news/2019-01-17/morgan-stanley-tumbles-following-huge-revenue-ficc-miss

Anonymous ID: d4af7d Jan. 17, 2019, 5:28 a.m. No.4789783   🗄️.is 🔗kun

Here is what is on Tap for today earnings wise

 

Many regional banks

American Express

Insteel

JB Hunt

Morgan Stanley-already shit bed

Netflix

among others.

Anonymous ID: d4af7d Jan. 17, 2019, 5:32 a.m. No.4789805   🗄️.is 🔗kun

US Futures are showing gap down on open.

 

Morgan Stanley (MS)

42.45 -2.04 (-4.59%)

Pre-Market

Thin markets and this is already down big. Watch out below

 

European stock index's all down

Anonymous ID: d4af7d Jan. 17, 2019, 5:54 a.m. No.4789923   🗄️.is 🔗kun

Extending Loss from the last attempt at trying to breakout out over $52.50. Did not even get another shot at it before it dropped. $51.50 should be overhead resistance for it now.

Anonymous ID: d4af7d Jan. 17, 2019, 6:05 a.m. No.4789991   🗄️.is 🔗kun

For weeks I’ve been telling my subscribers that something changed in the gold market. Since Donald Trump’s election there was a pretty clear pair trade between the U.S. dollar and gold.

 

Euro-Gold Ratio Is A Canary In The Monetary Coalmine

 

For weeks I’ve been telling my subscribers that something changed in the gold market. Since Donald Trump’s election there was a pretty clear pair trade between the U.S. dollar and gold.

 

And that trade was most manifested in the price of gold in euros.

 

During last summer gold experienced its worse (in terms of time) downtrend of the seven-year bear market.

 

But since bottoming in October it has rallied, albeit weakly. It is still mired in that bear market, gamely trying to push through the $1300 barrier. The important zone is the $1365-75 post-Brexit vote area.

 

And with Brexit very much up in the air at this point, despite the best efforts to project otherwise by The Davos Crowd and their political/media quislings, gold’s relative weakness is a real worry for long-suffering gold bulls.

 

While the currently monthly chart is a mildly-bullish uptrend, and has been since December 2015, it is a counter-trend withing a broader bear market that has not finished.

 

But, we know all this. Nothing about gold has been interesting for months. Newmont Minng (NYSE:NEM) and Goldcorp (NYSE:GG) announced a huge merger the other day, funds are scrubbing gold from both their names and their portfolios, investors have lost all interest.

 

That is because the real story is not what’s happening in the U.S., and consequently the dollar, it is Europe.

 

And this is reflected in the euro.

 

As I said at the beginning, the election of Donald Trump created a very strong pair trade between the euro and gold. Since the October

 

This is a far more bullish move than we saw in dollars. And it says that the breakdown in gold last summer may very well be the false move to get everyone on the wrong side of the trade.

 

New bull or bear markets happen only when a significant majority of actors are betting with the current trend which has played out. Once everyone is a bull there are no more buyers and vice versa.

 

It also screams that investors are now looking at gold as a safe-haven play again and it is not purely trading as a currency pair. There is a new dynamic at play that hasn’t been there, frankly, since the run up to Brexit.

 

Moreover, it has been plainly obvious watching the day-to-day trading of both gold and the euro that there is a concerted effort to manage this price level.

 

Gold isn’t breaking out in Japanese Yen or Swiss Francs, at this point only the euro and the British pound.

 

_____

As stated in article canary in the coal mine

 

https://www.zerohedge.com/news/2019-01-17/euro-gold-ratio-canary-monetary-coalmine

Anonymous ID: d4af7d Jan. 17, 2019, 6:19 a.m. No.4790127   🗄️.is 🔗kun

US 10 year Treasury

 

Some bonage here. This not a big % move but heading up and over recent resistance.

As mentioned yesterday rates really have nowhere to go but up. Yields will rise when there is moar demand for 'safety'. Safety is a relative term. Moar safe than equity's in this case.

Anonymous ID: d4af7d Jan. 17, 2019, 6:31 a.m. No.4790220   🗄️.is 🔗kun

US Markets open

 

Watch the financial stocks.

Morgan Stanley 'earnings' could not have been any worse imo. It's share price reaction is a different matter. Easily juiced or dropped based on market maker ability to manipulate.