Displaying items by tag: Morgan Stanley

(New York)

Investors have gotten so used to low inflation that it is sometimes hard to imagine seeing it rise. However, Morgan Stanley is warning that inflation is rising across the globe and investors need to keep an eye on it. In Europe, Asia, and the US, inflation has risen from 1.1% to 1.4%, and it is bound to move higher, according to Morgan Stanley’s chief global economist. Interestingly, MS argues that the Euro area and Japan will see a higher rise in inflation than the US.

FINSUM: If inflation rises more strongly in other developed markets than the US, will that lead to even more foreign buying of US bonds because yields in those locations are so much lower? In other words, will there be even more demand for US bonds?

(New York)

Morgan Stanley has just put out a warning, or perhaps better stated, a notice to investors. The bank is reminding the market that this year will likely have the lowest returns in a decade. The bank’s strategists say that “2018 is on track to have the lowest share of positive returns adjusted for inflation across 17 major asset classes since 2008”. The poor returns have been particularly true for those holding globally diversified portfolios. What’s worse, Morgan Stanley thinks returns are going to get worse because of rising rates. According to the bank “We’re big believers that real rates matter most for risk markets, as it’s the rate over and above inflation that matters most for discounting future cash flows … As ‘invincible’ as the U.S. equity market has been, it hasn’t had to confront a different rate regime”.

FINSUM: If you look internationally, this has been a terrible year for markets, and it does seem true that rising rates won’t help anything in the coming year.

(New York)

Since the end of the Broker Protocol, it seems that many firms have shied away from recruiting. Especially at the senior level, but even at the junior level, firms have not been investing as much in recruiting. But that may be starting to change, as recent reports of increased recruiting activity have emerged, such as word today that Edward Jones is ramping it up. Edward Jones says it aims to hire 250 senior advisors from other firms this year. Additionally, there is some news out that Morgan Stanley and Merrill Lynch may be working on a so-called Broker Protocol 2.0.

FINSUM: This seems an encouraging sign on the recruiting front after a rough year. FYI Edward Jones is not part of the Broker Protocol.

(New York)

Morgan Stanley disclosed this week that it has upped its holdings in two small stocks to above 5%. While one can get a lot of info (however biased) from equity research divisions, there is nothing like seeing what banks are actually buying themselves. In this case, the two stocks are Electronics for Imaging, and Turtle Beach. The former is a digital imaging firm whose shares have been rising this year, and the latter is a gaming headset maker who shares have risen 15x this year, but is still only worth $392m.

FINSUM: Gaming headsets seem like a good growth area at the moment, but are probably outside the skillset of most investors to judge.

(New York)

In what seems like a series of warnings out of Morgan Stanley, the bank has put out another today on a critical sector. MS says that the market darling chip sector, often referred to as semi-conductors, are in for a rough road. The bank says the sector has the poorest risk-reward ratio in years. “Cyclical indicators are flashing red … Elevated inventory and stretched lead times leave no margin for error as any lead time adjustment or demand slowdown could drive a meaningful correction”, says the bank.

FINSUM: Gains of semiconductors have greatly outpaced the market over the last three years, and MS thinks it is all about to come crashing down.