|Bid||13.46 x 1000|
|Ask||23.76 x 1200|
|Day's range||23.66 - 23.90|
|52-week range||19.27 - 23.95|
|Beta (5Y monthly)||1.34|
|PE ratio (TTM)||4.56|
|Forward dividend & yield||1.01 (4.24%)|
|Ex-dividend date||29 Dec 2019|
|1y target est||N/A|
(Bloomberg) -- U.S. equity futures edged lower and European stocks fell as investors pored over fresh reports on the spread of the coronavirus beyond China and the latest batch of corporate earnings. The dollar jumped.Contracts on the three major American stock gauges turned lower after Japan reported two deaths from the virus, and South Korea confirmed its first fatality from the disease shortly after. In company news, ViacomCBS Inc. slipped in the premarket after quarterly revenue missed estimates, while Morgan Stanley dropped after agreeing to buy E*Trade Financial Corp. for $13 billion. Disappointing results from AXA SA and Telefonica SA weighed on the Stoxx Europe 600 Index. Asia stocks traded mixed.The yen extended its slump, weakening past 112 per dollar, with market participants ascribing reasons including disappointing economic news and early positioning before the fiscal year-end next month. Treasuries climbed and gold jumped to a seven-year high.While the number of new coronavirus cases in China is slowing, doubts about the reliability of the data are emerging as the infection continues to expand beyond the mainland. Earnings misses are adding to the gloom, alongside fresh warnings from companies on the pathogen’s impact. The world’s largest container shipping firm A.P. Moller-Maersk A/S said 2020 will be marred by “considerable uncertainties” due to the outbreak’s impact on global trade. Giant carrier Air France-KLM guided earnings lower.Here are some key events coming up:Earnings season rolls on, with results from Deere & Co. set for Friday.Euro-area PMI and inflation data are also due Friday.Group of 20 finance ministers and central bank chiefs are due to meet Feb. 22-23 in Riyadh, Saudi Arabia, and are expected to discuss efforts to support growth amid the coronavirus threat.These are the main moves in markets:StocksThe Stoxx Europe 600 Index fell 0.3% as of 8:32 a.m. New York time.Futures on the S&P 500 Index dipped 0.2%.Nasdaq 100 Index futures dipped 0.2%.The MSCI Asia Pacific Index sank 0.6%.The MSCI World Index of developed countries decreased 0.1%.CurrenciesThe Bloomberg Dollar Spot Index jumped 0.4%.The euro decreased 0.1% to $1.0792.The Japanese yen weakened 0.5% to 111.95 per dollar.The South Korean Won weakened 0.8% to 1,198.37 per dollar.BondsThe yield on 10-year Treasuries sank three basis points to 1.54%.Germany’s 10-year yield declined two basis points to -0.44%.Britain’s 10-year yield dipped two basis points to 0.581%.Japan’s 10-year yield climbed one basis point to -0.039%.CommoditiesWest Texas Intermediate crude gained 0.8% to $53.73 a barrel.Gold strengthened 0.3% to $1,617.03 an ounce.LME aluminum dipped 0.5% to $1,712 per metric ton.Iron ore rose 2.3% to $89.10 per metric ton.\--With assistance from Cormac Mullen and Adam Haigh.To contact the reporter on this story: Todd White in Madrid at firstname.lastname@example.orgTo contact the editors responsible for this story: Christopher Anstey at email@example.com, Yakob PeterseilFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Morgan Stanley agreed to buy discount brokerage E*Trade Financial Corp. for $13 billion, pushing further into the retail market in the biggest acquisition by a Wall Street firm since the financial crisis.The all-stock takeover adds E*Trade’s $360 billion of client assets to Morgan Stanley’s $2.7 trillion, the companies said Thursday in a statement. Morgan Stanley also gets E*Trade’s direct-to-consumer and digital capabilities to complement its full-service, advisory-focused brokerage.“Our clients increasingly want digital access and digital banking, and their clients want wealth-management advice,” Chief Executive James Gorman said in an interview. “It’s the continuing evolution of Morgan Stanley into a stable, well-diversified business.”In reshaping the firm since the financial crisis, Gorman has been emphasizing Morgan Stanley’s wealth-management powerhouse. Purchasing E*Trade helps him add clients who are less wealthy than its traditional customers. The New York-based company has lost some business to the retail brokerages in recent years as those firms invested heavily in their web platforms.“Wall Street banks continue to covet Main Street customers,” Greg McBride, an analyst at Bankrate.com, said in an email. The acquisition “gives them access to brokerage customers, employees with company stock, and the lifeblood of financial services -- low cost retail bank deposits.”The retail-brokerage industry is being reshaped by price wars and consolidation. In early October, Charles Schwab Corp. eliminated commissions for U.S. stock trading, forcing other brokerages to follow suit and sweeping away an important revenue stream.The following month, Schwab agreed to buy rival TD Ameritrade Holding Corp. for about $26 billion and create a mega-firm with $5 trillion in assets, forcing smaller brokerages like E*Trade to contend with a much more formidable competitor.‘Hefty Price’“It’s a pretty hefty price,” said Alison Williams, an analyst at Bloomberg Intelligence. The deal is consistent with Morgan Stanley’s strategy to dive deeper into the mass-affluent market, she said.Shares of Morgan Stanley slumped 4.9% to $53.54 at 8:59 a.m. in early trading in New York. E*Trade surged 24% to $55.50. Gorman said he expect the shares to rebound once investors start valuing the stock at a higher multiple over the long term.For Morgan Stanley, the deal “deepens the ‘safe’ wealth-management franchise -- rich in fees and stability,” credit analyst David Havens at Imperial Capital wrote in a note to clients. “It reduces reliance on the more mercurial trading and markets businesses.”Stockholders in E*Trade, which posted worse-than-expected earnings last month, will receive 1.0432 Morgan Stanley shares for each of their shares, valued at $58.74 based on Wednesday’s closing price.E*Trade, founded in 1982, was one of the early players in the discount-brokerage industry. Its reach with self-guided traders online gives Morgan Stanley access to a broader customer base, including customers who may have less to invest than its current clients.Long seen as a potential takeover target for the likes of TD Ameritrade, E*Trade was left looking for ways to reinvent its image and lure more customers in the wake of its rival’s merger with Schwab. In a signal that it was on the hunt for acquirers, a January filing boosted compensation for executives in the event of a change in control.(Updates with Gorman’s comments starting in third paragraph.)\--With assistance from Annie Massa, Lananh Nguyen and Elizabeth Fournier.To contact the reporter on this story: Sridhar Natarajan in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Michael J. Moore at email@example.com, Steve Dickson, Daniel TaubFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Morgan Stanley has agreed a $13bn all-stock deal to buy online trading platform ETrade, in a sharp escalation of the battle for middle America’s wealth management market. ETrade has more than 5.2m client accounts and more than $360bn of retail client assets, which Morgan Stanley will add to the $2.7tn of assets it manages for 3m wealthy clients. James Gorman, the US bank’s chief executive, called the deal “an extraordinary growth opportunity for our wealth management business and a leap forward in our wealth management strategy”.
Morgan Stanley (NYSE: MS) and E*TRADE Financial Corporation (NASDAQ: ETFC) have entered into a definitive agreement under which Morgan Stanley will acquire E*TRADE, a leading financial services company and pioneer in the online brokerage industry, in an all-stock transaction valued at approximately $13 billion. Under the terms of the agreement, E*TRADE stockholders will receive 1.0432 Morgan Stanley shares for each E*TRADE share, which represents per share consideration of $58.74 based on the closing price of Morgan Stanley common stock on February 19, 2020.
(Bloomberg) -- Telefonica SA reported profit that missed estimates, highlighting that a plan to reinvent itself globally is nevertheless vulnerable to increased competition in Spain, its biggest market.The phone company reported operating income before depreciation and amortization of 3.67 billion euros ($3.96 billion euros) in the fourth quarter, falling short of the 4.18 billion euros forecast by analysts. Impairments from Mexican and Argentine operations, along with staff cuts and other restructuring measures, were a drag on earnings.The carrier, based in Madrid, is pledging to maintain sales growth and cut debt as it undergoes a shift to focus mainly on four key markets. Investors have been punishing the company, with its shares down about 15% over the past year compared to a 7.3% increase for the Stoxx 600 Telecommunications index. The slide prompted Chairman Jose Maria Alvarez-Pallete to announce in November a new strategy to focus on Spain, Brazil, the U.K. and Germany, which generate the bulk of sales, and place other Latin America activities into a separate division.Telefonica shares fell 4.9% to 6.22 euros at 10:09 a.m. in Madrid. Thursday’s report flagged the difficulties the company has in the region, an area once seen as a potential engine of expansion. Oibda in the quarter was hit by a combined 445 million euros of impairments from Mexico and Argentina. A further 266 million euros of impairments came from staff cuts and other restructuring measures, part of the broader move to streamline the company.Performance in Spain raised some points of concern for analysts including Nawar Cristini at Morgan Stanley and Michael Bishop at Goldman Sachs Group Inc. Growth in average revenue per user slowed to 0.2% from 1.6%, while revenue from the consumer division dropped 1.2%.The company faces increased competition from Orange SA and attacks from Vodafone Group PLC and Masmovil Ibercom SA at the lower end of the market. Revenue growth in the country gained 0.4% overall, helped by business sales.On Thursday it forecast stable earnings and revenue for this year after reporting a mixed result for 2019: profit gained 1.9% while sales increased 3.2%; the company had guided for growth of about 2% in both cases.A bright spot in the quarterly report was the decline in net debt for an 11th straight quarter, to 37.74 billion euros, indicating that Pallete is continuing a push to lower leverage with cash generation.(Updates share price in fifth paragraph, adds details on Spain in eighth.)To contact the reporter on this story: Rodrigo Orihuela in Madrid at firstname.lastname@example.orgTo contact the editor responsible for this story: Jennifer Ryan at email@example.comFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- There hasn’t been much balance in the overheated debate around the post-Brexit trade settlement between Britain and the European Union. So it was a welcome surprise to see former Morgan Stanley President Colm Kelleher describe Europe’s capital markets as “not fit for purpose” recently. It’s good to see an acknowledgement that maybe the EU doesn’t hold all the cards as the two sides wrangle over how the financial services industry will operate after Britain’s departure. European capital markets are “neither large nor deep enough to support economic growth or to buffer it in hard times,” Kelleher said in a pre-dinner speech reported by the Financial Times.Morgan Stanley’s former second-in-command recognizes that Europe’s fragmentation is a major impediment when it comes to financial services, with the bulk of the industry’s expertise and capital centered in London. As such, a hard break between the U.K. and the EU will damage the bloc by starving it of liquidity.I’d go further and say maybe Europe needs the City more than the City needs Europe. For sure, both sides would lose if they failed to reach an amicable agreement, but can Europe really countenance its financing drying up with nothing to replace it in time?The solution for Europe, as Kelleher and many others acknowledge, is a proper capital markets union for EU members with a single over-arching regulator and rulebook. But that’s not going to be resolved this year — or probably even this decade.As such, the EU’s chief Brexit negotiator, Michel Barnier, should resist those on his side who are fighting yesterday's battles. It’s unfortunate that he’s already dismissed British requests for concessions on the idea of regulatory “equivalence” for financial services (where London’s finance firms would have access to the EU so long as the U.K.’s rules are similar to those of the bloc). The City is worried that Brussels can revoke equivalence whenever it likes, but Barnier’s team is refusing to budge on offering a longer notice period.Comments from the French foreign minister, Jean-Yves Le Drian, that the two sides will “rip each other apart” raise an alarming prospect, especially if it means we reach the end of 2020 with no agreement. Shutting off U.K.-based entities from participation in European banking and corporate business — be it lending, advisory work, trade facilitation or deposit-taking — would hurt the City, but it would be an act of European self-harm, barricading off a vast resource of well-capitalized and well-governed market infrastructure.Could Europe’s banks take on everything the City does? Absolutely not by the Dec. 31 deadline for trade talks. Risk appetite is borderline non-existent among the continent’s lenders, and particularly not beyond national boundaries. Yet trillions of euros of debt comes due every year.And that’s before you get to the detailed stuff: legal advice for English law (which governs many bonds and loans), derivatives clearing, London’s exchanges, commodities trading, the list goes on. The City’s real edge is in innovation: putting together cross-border and multi-product deals that can’t be done in small European nations.Absolutely, the EU should try to get its act together and build a proper financial infrastructure. But its record is poor. The story of the MiFID II regulatory reforms has been an unhappy one. The European Securities and Markets Authority seems to be a regulator that wants to overreach. Its ill-advised decision to deny equivalence to Swiss stock exchanges and a demand for oversight over European equity trading of the largest U.K. companies post-Brexit are worrying.On London’s side, the EU’s markets are still a significant business. Not having open access to a huge market on its doorstep would imperil its role as the world’s financial center. That’s why the row over equivalence is so troubling. Surely the U.K. Financial Conduct Authority can be treated as a gold-plated regulator for overseeing European-related finance.The EU should look through its single market purity for its own — and the greater — good and come up with a workable arrangement with a neighboring regulator it has relied on for decades. This will buy it the time to build its own capital markets. Eventually , the EU may rely less on the City — just not yet.To contact the author of this story: Marcus Ashworth at firstname.lastname@example.orgTo contact the editor responsible for this story: James Boxell at email@example.comThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Marcus Ashworth is a Bloomberg Opinion columnist covering European markets. He spent three decades in the banking industry, most recently as chief markets strategist at Haitong Securities in London.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Dividends are one of the best benefits to being a shareholder, but finding a great dividend stock is no easy task. Does Morgan Stanley (MS) have what it takes? Let's find out.
(Bloomberg) -- Tencent Music Entertainment Group received a string of rating downgrades recently as analysts see a stricter regulatory environment hurting the Chinese music entertainment service.“We believe regulatory headwinds and competition will continue to weigh on TME’s (social entertainment) and see risk to the new model despite a material reset,” KeyBanc Capital analyst Hans Chung said.KeyBanc and two other firms, BOCOM International and CCB International Securities, issued downgrades. Analysts anticipate that a government restriction on the use of “lucky draws” -- a popular marketing strategy -- will hurt revenue in the social entertainment division next year. The company is slated to post fourth-quarter results next month.Tencent Music ADRs fell as much as 3%, and are poised to extend their losing streak to three days and further pare this year’s gains.Here’s what analysts are saying:KeyBanc, Hans ChungThe Chinese government’s recently imposed ban on lucky draw activities on livestreaming platforms could result in “materially lower 1Q20 revenue,” as it was “one of the most popular and monetizable features” for the company’s social entertainment platforms.The firm sees continued risk “given uncertainty around the re-introduction of the lucky draw type of features and ongoing competition from short video, which has impacted user growth and engagement.”“Given structurally lower growth prospects and ongoing challenges in the near to mid-term, we think our prior targeted valuation is difficult to justify.”Cut rating to sector weight from overweight.Jefferies, Thomas ChongSees the first-quarter social entertainment revenue growth hurt by the removal of lucky draw features toward end of January to the middle of February. Some features are back online after product adjustments.However, TME is “on track” in music subscriptions with paying users targeting to reach 50 million in the fourth quarter of 2020. The firm estimates subscription revenue under online music services to grow 49% year-over-year, driven by the “continued acceleration in paying subscribers.”The firm sees monetization models through QQ livestreaming and advertising becoming the next drivers.Morgan Stanley, Alex PoonThe firm cut its 2020 and 2021 earnings estimates “because of the weak livestreaming outlook.”Removal of the lucky draw feature will hurt livestreaming platforms, including Tencent Music’s. Meanwhile, Tencent Music doesn’t have an aggressive target for its QQ Music livestreaming business ramp, so “we don’t think this will be very meaningful.”Rates the stock equal weight. Cut price target by 6% to $15.To contact the reporter on this story: Andres Guerra Luz in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Catherine Larkin at email@example.com, Will DaleyFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Tesla Inc. shares resumed their steep ascent on Tuesday, after two prominent Wall Street analysts raised their price targets on the electric vehicle maker, and the company resumed deliveries of its China-built model 3 sedans after a pause due to the coronavirus outbreak.The company’s potential to become a key battery supplier for electric vehicles prompted Morgan Stanley’s Adam Jonas to nearly double his bull case for the shares.Jonas increased his most optimistic projection for Tesla to $1,200 a share from $650. That’s about 50% above the U.S. company’s $800.03 closing price Friday and would give Tesla a market capitalization of $220 billion. Jonas raised his base case target to $500 a share from $360 but reiterated his sell-equivalent recommendation.The new bull scenario is based on an “aggressive assumption” that Tesla could win 30% of the global electric-vehicle market, Jonas wrote in a report to clients. This would include 4 million car deliveries by 2030 plus the potential for Tesla to supply powertrains, including batteries and electric motors, to other auto manufacturers. In 2019, the company handed over 367,500 vehicles to customers.Separately, Sanford C Bernstein analyst Toni Sacconaghi raised his price target to $730 from $325, saying that while it is difficult to justify the company’s current share price, investors now feel much better about its ability to be sustainably profitable. The analyst also noted that Tesla’s Model 3 demand remained healthy, gross margin and operating expense were both poised to materially improve, competition was sputtering and product and production pipelines were robust.“Tesla is the ultimate ‘possibility’ stock,” Sacconaghi wrote in a note to clients, adding that the company’s core addressable market was likely to grow more than 30-times over the next 20 years, implying that even if Tesla’s current market share gets cut by half, it would still grow 15-times during the period. The analyst maintained his hold-equivalent rating.Tesla shares have had a wild ride this year. The stock is up 91% in 2020, a jump variously attributed to good results, a short squeeze, the opening of a key new factory in China or an extreme case of investor FOMO -- or all of the above. The surge cooled before the Palo Alto, California-based company undertook a $2 billion share offering Friday, priced at the steepest discount the carmaker has ever given to its investors.Analysts either have yet to adjust to the gain or remain highly skeptical. The average share-price target among analysts tracked by Bloomberg is $489.47.Morgan Stanley’s bear case for the stock is now $220. While that’s a 91% improvement from the broker’s most recent worst-price scenario, Jonas is sticking to his recommendation against buying the stock, saying the risk-reward balance on the manufacturer continues to be “unfavorable.”Tesla shares gained as much as 7.3% in New York, to touch $858.(Updates stock move.)\--With assistance from Lisa Pham and Catherine Larkin.To contact the reporters on this story: Sam Unsted in London at firstname.lastname@example.org;Esha Dey in New York at email@example.comTo contact the editors responsible for this story: Beth Mellor at firstname.lastname@example.org, Tom Lavell, Scott SchnipperFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Hong Kong’s home prices have proved resilient to months of protests and now the coronavirus epidemic, a one-two punch that the city’s finance chief likened over the weekend to “tsunami-like” shocks. While a hit is probably coming, the world’s least affordable housing market still looks a better place to be than in Hong Kong office or retail property.Home prices have dropped just 6.1% from their record high in June, as measured by the Centa-City Leading Index compiled by Centaline Property Agency. The index has risen for four weeks in a row through Feb. 9, the latest data, even as the virus shut down swathes of the Chinese economy, slowed Hong Kong tourist arrivals to a trickle and forced many of the city’s financial employees to work from home.A number of factors undergird the outlook for housing: the dominance of a small number of family-controlled companies that can influence supply; low interest rates; and limited leverage among home owners. Developers completed 14,000 units last year, 33% lower than 2018, according to Morgan Stanley analyst Praveen Choudhary. By contrast, 31,000 units were built in 2002, just before the outbreak of severe acute respiratory syndrome. That was 35% more than the year before. High equity levels mean there’s little pressure for home owners to sell, as I noted in November. The loan-to-value ratio for new mortgages dropped to 46% in September, from a peak of 69% in 2002, according to the Hong Kong Monetary Authority. Meanwhile, Hong Kong’s one-month interbank rate, against which most mortgages are priced, has fallen back below 2% this month.To be sure, a drastic worsening of the economy would change the calculation. Hong Kong’s unemployment rate is estimated to have climbed for a fourth month to 3.4% in January. That’s still far short of the 8.5% peak reached during SARS. Having risen more than fivefold from their 2003 low, Hong Kong housing prices have attained a Teflon-like response to bad news. That resilience is far less evident in commercial property, a sector that tends to move more in line with the state of the underlying economy. Once beloved by private equity firms for stable returns in a low-yield world, Hong Kong’s office and retail real estate is losing appeal as companies reduce space and shoppers desert malls.The total transaction value of office and retail properties slumped 12.9% last year to HK$49.6 billion ($6.4 billion), according to Bloomberg Intelligence analyst Patrick Wong. Grade-A offices recorded a 6% vacancy rate in December, the highest level since April 2010, when the number was the same, figures from real estate broker Jones Lang LaSalle Inc. show. Chinese companies, which have become increasingly important in the commercial property market, reduced their take-up of new office space by almost 40%. WeWork, the office-sharing company that scrapped its IPO last year, gave up some space.With Hong Kong’s gross domestic product shrinking 1.2% last year, empty workplaces became a common sight even before the coronavirus outbreak forced people to work from home. By the fourth quarter, office prices had reached the lowest since the second quarter of 2018, according to JLL.Retail landlords, meanwhile, started slashing rents by 60% this month for tenants that are trying to cope with the dearth of shoppers. The fourth-quarter vacancy rate of of 9% in core shopping areas was the highest in five years, JLL’s figures show. Average rents of prime street shops in the city fell 21% from a year earlier at the end of 2019, according to Bloomberg Intelligence.Tourism, particularly from mainland China, is far more important to Hong Kong’s economy than during SARS and has been hit hard by both the protests and the coronavirus. Preliminary visitor arrivals data for February from the Hong Kong Tourism Board show average daily traffic has plummeted almost 99% to fewer than 3,000 people.The retail sector was already facing a secular downturn. China has cut luxury taxes, reducing the incentive for mainland shoppers to buy in Hong Kong. Local consumption, barring panic-buying of toilet paper and face masks, is also suffering and will take time to recover.For real estate investors, the best place to shelter may be in cash-rich Hong Kong developers such as Sun Hung Kai Properties Ltd. and Li Ka-shing’s CK Asset Holdings Ltd. that have a higher exposure to housing. These look better placed to ride out the slump than rivals such as Wharf Real Estate Investment Co., owner of the Times Square mall in the prime Causeway Bay shopping district, or Hongkong Land Holdings Ltd., the biggest office landlord in the central business district.In a testing environment, homes can be a refuge in more ways than one. To contact the author of this story: Nisha Gopalan at email@example.comTo contact the editor responsible for this story: Matthew Brooker at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Nisha Gopalan is a Bloomberg Opinion columnist covering deals and banking. She previously worked for the Wall Street Journal and Dow Jones as an editor and a reporter.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Morgan Stanley (MS) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.
(Bloomberg) -- Morgan Stanley, the Wall Street lender overhauling its currency-trading business after losses and an internal probe, named new co-heads for the unit.The New York-based bank said Samer Oweida, global head of FX sales, and Craig Abruzzo, who leads futures and derivatives clearing in Morgan Stanley’s equities business, would now lead the division, according to an internal memorandum obtained by Bloomberg News. Both will report to Jakob Horder, head of the macro division that houses FX trading, the memo shows.Mark Lake, a spokesman for the lender, confirmed the contents of the memo.The promotions come at a time of tumult for the business. Officials are reviewing a batch of option trades tied to the Turkish lira, and examining whether traders improperly valued the transactions and concealed losses, Bloomberg News reported. The bank last month appointed new co-heads of the FX options business that has been linked to those transactions.Morgan Stanley’s currency business hasn’t had a global head since the departure a year ago of Senad Prusac, who oversaw it as leader of the macro division. Although the unit has historically been one of Wall Street’s smaller players in the $6.6-trillion-per-day foreign-exchange market, the firm has surged into the world of FX options, esoteric securities that can be lucrative to trade yet hard to value, Bloomberg has reported.Read More: Morgan Stanley Soared in Currency Derivatives Before Lira Mess(Adds detail on previous leadership in fifth paragraph.)To contact the reporter on this story: Donal Griffin in London at email@example.comTo contact the editors responsible for this story: Ambereen Choudhury at firstname.lastname@example.org, Marion Dakers, Vernon WesselsFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.Commerzbank AG Chief Executive Officer Martin Zielke plansfurther cost cuts after boosting revenue and capital buffers as he seeks to accelerate the German lender’s turnaround.The bank will disclose the details of a new cost plan when it reports second-quarter earnings, Chief Financial Officer Bettina Orlopp said on a conference call on Thursday, without providing details. The shares jumped as much as 6.1%, spiking after Orlopp’s comments.Commerzbank in September unveiled a new strategy the lender described as “soberingly realistic” because of its low growth targets for revenue and profitability. Several large shareholders privately lambasted the plan as insufficient, people familiar with the matter have said.Revenue at the German lender beat estimates with a 6.8% increase in the fourth quarter as income from its core lending business grew. That led to an increase in operating profit, Commerzbank said Thursday. The bank’s key CET1 capital ratio also improved more than expected.“We will take advantage of the extra leeway” provided by the improvements in profit and capital, Zielke said in the statement. “I’m more optimistic about our return expectations than I was last autumn.”The CEO said later that the bank’s outlook for returns four years from now has improved. He has previously promised a return on tangible equity of more than 4% in 2023.Commerzbank rose to the highest since Aug. 1 in Frankfurt trading and was up 5.6% as of 12:39 p.m. The stock has gained 23% in the last six months.Dividend CutNot everything was positive. The bank reduced its dividend on 2019 earnings to 15 cents from 20 cents a year earlier, which “sends a negative signal,” Morgan Stanley analyst Magdalena Stoklosa wrote. Citigroup analysts called the bank’s 2020 outlook “worse than expected” and said it implies a 15% cut to the consensus for operating profit.Zielke’s strategy to aggressively add new clients has helped the bank to drive up net interest income, blunting the effect of negative rates on lending margins. But the initiative partly explains why the bank has needed to raise its cost targets several times. Commerzbank on Thursday said it added 200 million euros of expected IT expenditure to its 2020 cost target.Unexpected CostsThere are more challenges ahead for Zielke. His decision to take full control of online lender Comdirect Bank AG cost more than planned and the expected sale of the mBank unit in Poland has been met with muted interest from potential buyers.CFO Orlopp said Commerzbank is sticking to its plan to dispose of the Polish lender but only “if the conditions are the right ones and, specifically, if we get the right price.” Zielke added that Commerzbank’s improving capital buffer gives it more leeway on a sale and, as the lender further strenghtens its equity cushion, he’s not sure the bank needs the transaction to fund his strategic plan.As in the preceding years, the bank in 2019 failed to produce a return that covers its cost of capital or delivers returns investors would typically expect from an investment in an asset seen as similarly risky. Zielke has vowed to achieve a return on tangible equity -- a common measure of profitability -- of 2% to 4% over the next few years. The cost of capital for European banks is typically estimated to be 8% to 10%.(Adds CEO comments on profitability in 6th paragraph)To contact the reporter on this story: Steven Arons in Frankfurt at email@example.comTo contact the editors responsible for this story: Dale Crofts at firstname.lastname@example.org, Ross Larsen, Daniel SchaeferFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- How cheap would you like your natural gas today? Is zero low enough? OK, how about we pay you to take it off our hands?That's what’s happening in the middle of the U.S. shale patch at the moment — and it’s a symptom of a glut that could reshape energy markets across the world in the coming years.Gas prices at the Waha hub in Texas’s Permian basin fell to minus 26.8 cents per million British thermal units this week. They’re heading in an even more “aggressively negative” direction, commodities broker OTC Global Holdings told Bloomberg News, as a shortage of pipeline capacity makes producers jostle for a place in the queue.Selling a commodity for a negative price isn’t quite as crazy as it sounds. Indeed, it’s a relatively common occurrence. Fuel oil — the gloopy fraction of crude used by boilers in ships, buildings and power stations — has hardly ever earned positive margins for refiners. Instead, they aim to make their money on gasoline and diesel, treating fuel oil as a waste product from which they can extract a few extra dollars.That's the current situation with natural gas in the U.S. A growing proportion of output is produced not for its own sake but as a byproduct from shale oil fields, where operators don’t care about the price of gas as long as it doesn’t stop them earning a positive margin on their crude production.Output of this so-called associated gas has increased nearly fourfold from 4.3 billion cubic feet per day in 2006 to 15 billion in 2018, according to the Energy Information Administration, making up about 37% of shale gas production and 12% of total U.S. gas output. With this super-cheap gas meeting the first leg of demand, the price at which the entire gas market clears is being driven lower. Thanks in part to an unusually mild winter, the Henry Hub U.S. gas benchmark has fallen by more than a third since its usual early-winter peak at the start of November, hitting its lowest level since 2016 this week.Even this effect would have been a strictly local issue a few years ago — but as the global liquefied natural gas industry grows up, that’s changing, too. Traditionally gas prices in different regions had little relationship with each other, but the situation is giving way to one where the cost of U.S. exports, plus a margin for transport and conversion to and from LNG, is increasingly setting a unified global price.That's likely to shake up many long-standing assumptions about the market. Asia has been mostly immune to the switch of coal-fired generation to gas which, along with the headlong growth of renewables, has caused the rapid shutdown of coal fleets in the U.S. and Europe.Without the significant domestic gas reserves seen in those regions, prices in Asia simply haven’t been competitive enough. Except for brief periods in summer when gas demand is low, the Japan-Korea Marker gas benchmark has historically mostly priced its energy content at about twice what you'd pay for the same heating value of coal at China’s Qinhuangdao port. That’s flipped so dramatically in recent months that even imported gas is now cheaper than coal on a heating value basis. When you take into account the greater efficiency with which most gas plants convert the energy in their fuel into electricity, the discount is even more pronounced. Any utilities expecting current low prices to be sustained ought to be looking hard at switching away from solid to gaseous carbon for any generation that renewables can’t easily supply.There’s good reason to think this glut isn’t going away. China, a major driver of Asian gas demand in recent years, may be coming off the boil. Slowing industrial demand and a shift toward electricity rather than gas for replacing coal in centralized heating will push down demand, Morgan Stanley analysts wrote last month. Prices in Europe and Asia will potentially fall below $3 per million British thermal units, they wrote, approaching North American levels.Add in the impact of coronavirus and Wood Mackenzie estimates demand this year will come to between 316 billion cubic meters and 324 billion, as much as 19% below the Chinese National Energy Administration’s estimates of 350 billion cubic meters to 390 billion.LNG will take a smaller share of that shrinking pie, thanks both to rising domestic gas production and imports from Russia’s 38 billion-cubic meter Power of Siberia pipeline, which opened in December.These conditions should cause producers to slow down — but if anything, things are going in the opposite direction. A record 71 million tons a year of LNG export capacity was commissioned in 2019, adding about 97 billion cubic meters to the global market, according to Morgan Stanley.That pace will surely decelerate, with projects such as Exxon Mobil Corp.’s P’nyang looking increasingly unlikely to be developed. Still, should we see more success from the faltering crackdowns on flaring — the wasteful practice of burning off associated gas from oilfields — there's another 140 billion cubic meters of gas supply out there that's currently being vented into the atmosphere.Rock-bottom prices for gas, wind and solar swept through the energy sector in the western hemisphere over the past decade. To date, only renewables have really made an impact in Asia. With a flood of new gas supply approaching, that dam could be about to break.To contact the author of this story: David Fickling at email@example.comTo contact the editor responsible for this story: Rachel Rosenthal at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Oil held gains as investors weighed hopes for a decision by Russia to accept an OPEC+ proposal for production cuts against an increase in American crude stockpiles.Futures were little changed in New York on Tuesday after the American Petroleum Institute reported that U.S. crude inventories rose 6 million barrels last week, according to people familiar with the data. Energy Minister Alexander Novak said that Moscow is “studying” the OPEC+ output-cut plan after days of hesitation, calling the situation “extremely unstable.” Novak is set to meet with Russia’s oil companies on Wednesday.“OPEC+ needs to balance production with the demand trajectory, which looks down,” Frances Hudson, global thematic strategist at Aberdeen Standard Investments, writes in an email. “If a decision is not taken until the next scheduled meeting in March, I would expect this to limit the scope for what can be achieved.”The Organization of Petroleum Exporting Countries and its allies have signaled a desire to stabilize the oil market that has tumbled over 18% since the beginning of the year as the coronavirus outbreak inflicts severe economic disruption in China.Impact from the virus has intensified concerns of weak crude demand hitting the second largest economy in the world, prompting technical experts from the coalition to propose deepening the current supply cuts by 600,000 barrels a day to relieve excess inventories.The Energy Information Administration cut its global petroleum demand growth outlook by 23% to 1.03 million barrels a day, citing partial effects from the coronavirus in its monthly Short-Term Energy Outlook.The exact impact of the virus has been difficult to quantify, so analysts have narrowed in on other demand indicators for clues. Morgan Stanley cut its oil demand growth forecast for 2020 by 15% amid plunging passenger transport volumes. Chinese refined product demand is seen down around 1.2 million barrels a day in the first quarter compared with same quarter last year, according to IHS Markit.The API report also showed distillate supplies fell by 2.33 million barrels last week, while gasoline stockpiles increased by 1.08 million barrels.West Texas Intermediate crude for March delivery traded at $50.00 a barrel at 4:44 p.m. after ending the session at at $49.94 on the New York Mercantile Exchange.Brent crude for April settlement rose 74 cents to settle as $54.01 a barrel on the ICE Futures Europe exchange in London, putting its premium over WTI at $3.84, the smallest spread between the two contracts since early 2018.“There’s a new calculus for importers, particularly Mediterranean and Asian buyers who were happy to take U.S. barrels when they were $6 dollars cheaper. Now it’s only $3 less,” said Bob Yawger, futures director at Mizuho Securities USA.OPEC’s response could face another hurdle if Libya’s United Nations-led peace talks result in a resumption of oil exports that halted after a blockade by supporters of commander Khalifa Haftar. Libyan economic experts are weighing the distribution of oil revenue in an effort to end the conflict between the internationally recognized government in Tripoli and Haftar.\--With assistance from Serene Cheong, James Thornhill and Elizabeth Low.To contact the reporter on this story: Jackie Davalos in New York at email@example.comTo contact the editors responsible for this story: James Herron at firstname.lastname@example.org, Mike Jeffers, Catherine TraywickFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- With the death toll from the coronavirus rising, the fate of high-end handbag sales still seems of minor consequence. But the $300 billion luxury industry’s over-dependence on Chinese spending was underlined again on Friday when British fashion house Burberry Group Plc said it could no longer stand by its previous financial forecast because of the spread of the illness.Just two weeks ago, the company shrugged off disruption in Hong Kong to lift its outlook for sales growth excluding currency movements to a percentage in the low single digits, while anticipating that the operating margin would be broadly stable in the year to March 2020. Analysts at Morgan Stanley said Friday’s warning could imply a 5% cut to 2020 earnings.Burberry is particularly exposed to the epidemic. It generates about 40% of its sales from Chinese consumers at home and abroad. That’s above the 35% for the industry as a whole, according to Bain & Co. and Altagamma. So shutting some shops on the mainland and reducing hours at others has an out-sized effect.It’s too early to know what the end result will be for Burberry and the industry as a whole, but one key lesson is coming into sharp relief: While Chinese shoppers are a powerful force for the industry, no brand should neglect their customers closer to home, or stop trying to drum up demand in other corners of the world. When the Chinese market slumped in 2015 and 2016 because of a government crackdown on extravagance and gyrating stock markets, luxury houses all pivoted toward shoppers in Europe and the U.S. They have lost sight of the need to foster these markets since.For Burberry, it’s a particularly sensitive time to face such uncertainty in its biggest market. The group is in the midst of trying to revive its brand, best known for its black, white, tan and red check. While new iterations, such as the TB Monogram, are gaining traction, Burberry is having to prioritize. It’s now unclear whether a fashion show in Shanghai in April, will go ahead. The first Chinese showcase under new designer Riccardo Tisci will have specially created merchandise, clearly a way to build Burberry’s profile amid its rejuvenation efforts.Given these characteristics — high Chinese exposure plus a turnaround strategy — Prada SpA also looks to be at risk, and the Italian maker of the iconic nylon bag has already closed some stores in mainland China and Macau. The list of other luxury companies that are very dependent on China and Hong Kong is long. Swatch Group AG and Richemont are the most exposed, according to analysts at Bernstein. And Gucci, which accounts for 60% of French parent Kering SA’s sales and 80% of its operating profit, has been a hit with Chinese shoppers over the past three years. Anyone who has witnessed the proliferation of Gucci T-shirts, not all the real thing, in cities from Shanghai to Beijing would attest to its popularity.By contrast, Bernard Arnault’s LVMH looks to be better prepared to handle such a shock. With brands including Moet & Chandon champagne, pop star Rihanna’s beauty line and soon Tiffany & Co. jewelry, it has broad diversification by both geography and product range. Last year, for example, 24% of its sales from the U.S.But given the whole industry’s reliance on Chinese big spenders, no luxury or consumer brand with exposure to the them, wherever they shop, will be immune. Burberry said spending in Europe and other tourist destinations was less affected by the outbreak, but it expected conditions here to worsen too. This week, Coach owner Tapestry Inc., Michael Kors and Versace parent Capri Holdings Ltd. and Estee Lauder Cos. all lowered earnings guidance, citing the virus. Even luxury parka maker Canada Goose Holdings Inc., which has a strong following in the U.S. and Europe, has felt the impact of the outbreak. On Friday it lowered its full-year sales and profit guidance.Global luxury sales could expand by just 1% this year, according to analysts at Jefferies, after what they now expect to be a brutal 20% decline in Chinese demand in the first half. Before the outbreak, they were expecting the industry’s sales to grow by 5% in 2020. While luxury shares have fallen over the past three weeks, valuations remain close to 10-year highs. As I have noted, the stocks have proved remarkably resilient in the face of everything from trade skirmishes to protests in Hong Kong.Burberry’s warning is a stark reminder that that could be about to change.To contact the author of this story: Andrea Felsted at email@example.comTo contact the editor responsible for this story: Melissa Pozsgay at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Some foreign holders of Lebanon’s Eurobonds are expressing support for a government debt restructuring as the clamor grows among local politicians to skip a payment due in weeks.At a private meeting days ago with government representatives, a number of foreign funds that own Lebanese sovereign bonds, including a $1.2 billion note due March 9, argued that the crisis-ridden country would be better off restructuring rather than paying its debt, said a person familiar with the matter, declining to identify the investors.In a suggestion that the fallout can be contained, they said Lebanon’s bonds were already discounted on their balance sheets, according to the person, who asked not to be named because the information isn’t public.Most of Lebanon’s bonds maturing beyond this year trade at between 35 and 40 cents on the dollar. The March notes fell around 2 cents to 87 on Thursday, still above their low of 76 on Jan. 29.Central bank Governor Riad Salameh has told officials including the new prime minister, Hassan Diab, that he is willing to pay the debt if instructed by the government, people familiar with the talks said. He’s already helped repay nearly $5 billion of bonds in the past year.While Diab is in favor of meeting Lebanon’s debt obligations this year, according to a local media report, he hasn’t yet made a final decision.The decision will come down to a choice of who should bear the cost of easing one of the world’s biggest debt burdens, estimated at over 150% of gross domestic product last year, as hardships mount after months of protests. Lebanon is enduring its worst financial crisis in decades, with the central bank rationing dollars and nationwide unrest over what many fear could be an imminent collapse.Despite a spotless record of servicing international debt, consensus is fraying in Lebanon as almost $3.5 billion in Eurobond principal and interest payments come due by June.Payment OptionsBankers say local lenders, which hold most of the country’s Eurobonds, favor a repayment to avoid blowing a hole in their balance sheets. The most recent payment of $1.5 billion, made by the central bank in November, was criticized by some local politicians who said Lebanon should instead use what’s left of its reserves on buying much-needed imports.A group of lawmakers aligned with a majority in parliament is lobbying the government to seek technical assistance from international institutions before making a final decision. They’re trying to convince the premier and others that Lebanon risks a crisis and violence similar to Venezuela, which defaulted on its debts in 2017.Legislators present at a committee meeting last week almost unanimously agreed -- albeit in private conversation -- that the government shouldn’t pay, a lawmaker said.The debate is playing out against a dire backdrop, with Lebanon’s reserves stretched thin and the economy succumbing to a recession as currency shortages worsen.An ex-economy minister, Nasser Saidi, has called for a restructuring of public debt, while also saying Lebanon would need a bailout of as much as $25 billion that could require support of the International Monetary Fund. Former Minister of State for Information Technology Adel Afiouni has said paying off the March bond would be “wrong.”The decision rests with the government, formed last month with the backing of Lebanon’s most powerful military force, the pro-Iranian Hezbollah, and its allies.“The issue should be finalized next week,” a Hezbollah Member of Parliament, Ali Fayyad, said in an interview in Beirut. “We need to look at all the options and study their impact and there should be a conclusive plan that doesn’t only focus on paying or not paying but also a larger plan.”The central bank’s net foreign-currency holdings are sufficient to pay for the near-term import bill and debt redemptions, while local lenders have enough in reserve to cover deposit outflows, according to Morgan Stanley.“What is more important to watch is the political sentiment on the trade-off of using reserves to cover debt servicing versus imports,” Jaiparan Khurana, a London-based strategist at Morgan Stanley, said in a report. “Market focus should remain on the cabinet decision.”A repayment of Eurobonds may entail a controversial proposal by the central bank to get local holders of the March notes to swap into longer-dated instruments and pay foreign creditors. Salameh has told bankers that a foreign fund was interested in buying the bonds coming due next month if Lebanon proceeds with the swap.Around a third of Lebanon’s roughly $30 billion of Eurobonds are held by outside investors, with the rest owned by the central bank and local lenders, according to Oxford Economics. Foreigners owned about 40% of the March bond in early December.Lebanese banks also have billions of dollars of foreign-currency deposits tied up at the central bank.Lebanese lenders and the government have already agreed on a plan to relieve some of the debt this year. Bankers who met with the new finance minister earlier this week agreed to lower interest rates they get on local-currency sovereign bonds, a person who attended the meeting said.The central bank also said it would waive interest payments on the government’s local debt this year. Authorities want to use the saved funds, amounting to about 2.9 trillion pounds ($1.9 billion), to reduce the budget deficit. A plan to impose a one-time tax on banks’ profit to generate $400 million fell through.(Updates fourth paragraph with bond prices)\--With assistance from Robert Brand.To contact the reporter on this story: Dana Khraiche in Beirut at email@example.comTo contact the editors responsible for this story: Paul Abelsky at firstname.lastname@example.org, Paul WallaceFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Fed Vice Chairman Randal Quarles said he is "optimistic" about the economic outlook despite Coronavirus risks. He also floated possible bank changes to bank rules.
(Bloomberg) -- Qualcomm Inc. fell as much as 5.2%, the biggest intraday drop in six months, after a weak forecast for sales growth and renewed European Union scrutiny on whether it broke antitrust rules.Wall Street analysts shrugged off the weakness and continue to be optimistic about the chipmaker’s longer-term outlook with the rollout of 5G networks.Once again Qualcomm posted a “confusing report” that showed “the Street had mismodeled seasonality,” Raymond James Chris Caso said. Wednesday night’s earnings helped validate the company’s claim that new handsets will eventually spur growth, Caso said.Citi’s Christopher Danely told investors that the stock weakness and tamped-down expectations from coronavirus-fueled disruption “will be temporary.” Morgan Stanley offered a more tempered view, pointing to a “gradual transition” to 5G.Raymond James, Chris Caso“March quarter guidance was well ahead” of what Qualcomm indicated last quarter, Caso wrote, citing the 5G flagship rollout and a “significant 36% rise in content, driven from both 5G modems and new RF content.”While the June quarter outlook missed expectations, “the upside in March was more than the downside in June.”Caso sees higher volume offset by lower-content per device and 5G “moves downscale.” He has a strong buy rating on the stock.Citi, Christopher DanelyQualcomm should be able to shake off the stock weakness as the chipmaker is “one of the largest beneficiaries” of the roll-out of 5G networks. Buy rating reiterated.Citi raised its fiscal 2020 sales estimate to $21.7 billion from $21.2 billion and 2020 earnings per share estimate to $3.19 from $3.07. The bank kept its 12-month price target at $108.00.Morgan Stanley, Joseph Moore“Indications that the June quarter will be flat are modestly disappointing vs. consensus, but consistent with historic seasonality.” Qualcomm likely will meet estimates in 2020.“We are probably less enamored than consensus around the 5G theme for 2020, given relatively slow deployments of 5G infrastructure, and an end user experience that will not be dramatically different than 4G until higher spectrum is deployed.”“We are unlikely to see an accelerated move to 5G - more of a gradual transition, in line with the company’s targets.” That leaves Morgan Stanley with an equal-weight rating.To contact the reporter on this story: Cristin Flanagan in New York at email@example.comTo contact the editors responsible for this story: Catherine Larkin at firstname.lastname@example.org, Steven FrommFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- For years, analysts had to guess blindly at YouTube’s size. When the official numbers finally emerged this week, they were underwhelming. Now Google must persuade Wall Street it has a viable plan to keep YouTube growing.On Monday, Google parent Alphabet Inc. disclosed YouTube sales for the first time. At $15.1 billion last year, that was well below most analysts’ projections, even including extra subscription revenue. Needham & Co., in an October report, put it at $30 billion.“We believe buy-side estimates for YouTube ad revenue were higher than ours,” Jason Bazinet, an analyst at Citigroup, wrote in a research note. He thought the video service generated about $19 billion in sales last year. YouTube’s figures fell 30% short of Morgan Stanley’s estimates. Google “must continue to innovate to drive engagement and monetization,“ Morgan Stanley analyst Brian Nowak wrote.While most other stocks jumped on Tuesday, Alphabet shares dropped more than 3%, partly on disappointment with YouTube’s results.The world’s largest online video service has been considered one of Google’s most exciting growth stories for years, giving the internet giant exposure to the buzzy trends of social media, user-generated content and TV cord-cutting.However, YouTube has spent the past three years struggling to limit the spread of toxic videos upsetting to regulators and advertisers, which has often meant restricting commercial messages. Unlike Google search, YouTube has a more complex business model, sharing more than half its ad sales with video creators. In social media, Instagram now rivals YouTube, with $15 billion in 2019 ad revenue, according to a recent estimate from research firm EMarketer. And the Facebook Inc. service is half a decade younger than YouTube.“We were too optimistic on our YouTube revenue estimates,” Mark Shmulik, an analyst at Sanford C. Bernstein, wrote in a research note Tuesday. “We must ask some tough questions – especially given that the 31% 4Q growth rate is lower than the annual revenue growth rate of 36%.”YouTube’s average revenue per user, a closely followed metric across the internet industry, is only about a third of Facebook’s, and is also lower than other competitors, Shmulik noted.During a conference call late Monday, some analysts asked how Google will improve YouTube’s results. Executives gave a strong hint -- and it’s a departure from the current approach.“Try searching for Puma shoes review on YouTube,” Sundar Pichai, chief executive officer of Alphabet and Google, said. He outlined a strategy to turn YouTube into an e-commerce hub where video creators hawk merchandise and advertisers entice viewers into more valuable activities than just clicking.“People can now easily buy products in YouTube’s home feed and in search results making it possible for advertisers to reach even more audiences,” Pichai said. “With all the related content on YouTube like unboxing and beauty videos -- this is a format people love and it delivers a simple in video buying experience.”A search for “Puma shoes review” inside YouTube’s mobile app late Monday showed a swipe-able carousel of 40 ads with photos, prices and “Shop Now” buttons that linked to Puma’s website and other merchant sites.These types of ads aim to get people to download an app, purchase a ticket or buy something else. In the past, YouTube has mostly relied on more general branding-style commercials from the traditional TV industry.Ruth Porat, Alphabet’s chief financial officer, said the new formats are growing at a “very substantial” rate, without sharing specific numbers.That gave some analysts hope that YouTube can still turn its giant audience into an equally huge business. “When you see that YouTube is only a $15 billion revenue business -- despite touching over 2 billion users globally each month that collectively watch over a billion minutes daily -- you realize just how large the long-term opportunity is,” said Richard Greenfield, an analyst at Lightshed Partners.Wall Street has been so starved of real statistics to crunch from Google over the years, that many analysts were simply happy to have any new numbers at all.“Delighted they disclosed for the first time!” Needham analyst Laura Martin wrote in an email.(Updates with ARPU estimates in eighth paragraph.)\--With assistance from Lucas Shaw, Sarah Frier and Gerrit De Vynck.To contact the reporter on this story: Mark Bergen in San Francisco at email@example.comTo contact the editors responsible for this story: Alistair Barr at firstname.lastname@example.org, Molly SchuetzFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Morgan Stanley (NYSE:MS) today announced the establishment of the Morgan Stanley Alliance for Children’s Mental Health (the "Alliance"). The Alliance, which brings together key leaders in the children’s mental health space, will combine the resources and reach of Morgan Stanley and its Foundation with the knowledge and experience of its distinguished nonprofit partner organizations. The Alliance will help address strategically children’s mental health concerns and the far-reaching challenges of stress, anxiety, and depression.