Morgan Stanley crushes

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ReutersMorgan Stanley CEO James Gorman.

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Morgan Stanley on Tuesday reported fourth-quarter earnings that beat on the top and bottom lines.

The firm reported diluted earnings per share of $0.43 onrevenue of $7.86 billion, excluding accounting adjustments.

Analysts were expecting adjusted earnings per share of $0.32 on revenue of $7.63 billion, according to Bloomberg.

"A strong overall performance in the first half of the year was impacted by difficult market conditions in the second half that dampened trading activity," CEO James Gorman said in a statement.

"In the fourth quarter we took action to meaningfully restructure our Fixed Income business on a capital and expense basis. We enter 2016 with a continued focus on managing expenses across the Firm and driving up returns for our shareholders."

Here's the breakdown by division:

• Total trading revenue came in at $2.27 billion ($2.29 billion expected), up from $2.03 billion a year ago.
• Equity trading revenue was $1.8 billion ($1.7 billion expected), up from $1.6 billion a year ago.
• FICC trading revenue came in at $550 million ($593 million expected), down from $599 million a year ago.
• Investment-banking revenue was $1.31 billion ($1.15 billion expected), down from $1.46 billion a year ago.

Wealth-management revenue, meanwhile, came in at $3.75 billion.

In the same quarter last year, Morgan Stanley missed expectations, reporting earnings of $0.40 per share ($0.49 expected) on revenue of $7.8 billion ($8.14 expected).

The bank missed in the third quarter, too, reporting earnings per share of $0.34 ($0.64 expected) on revenue of $7.8 billion ($8.6 expected). Bond-trading revenue was down 42% year-on-year in the third quarter.

JPMorgan, Citigroup, and Wells Fargo reported fourth-quarter earnings last week, and all of them were a beat. Bank of America also reports earnings on Tuesday morning, while Goldman Sachs will report on Wednesday.

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Morgan Stanley posts fourth-quarter profit

• Reuters

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Thomson ReutersThe corporate logo of financial firm Morgan Stanley is pictured on the company's world headquarters in the Manhattan borough of New York City

(Reuters) - Morgan Stanley reported a fourth-quarter profit, compared with a year-earlier loss, as its legal costs plunged and compensation expenses fell.

The Wall Street bank reported earnings of $753 million, or 39 cents per share, applicable to common shareholders compared with a loss of $1.75 billion, or 91 cents per share, a year earlier.

Excluding an accounting adjustment, the bank earned 43 cents per share.

Analysts on average had estimated earnings of 33 cents per share, according to Thomson Reuters I/B/E/S. It was not immediately clear if the reported figures were comparable.

(Reporting by Richa Naidu and Olivia Oran; Editing by Kirti Pandey)

Read the original article on Reuters. Copyright 2016. Follow Reuters on Twitter.

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ZEW Indicator of Economic Sentiment - Subdued Economic Outlook

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19.01.2016 – ZEW (jrr/dre/jpr)

Tags: Business Cycle, Short-term forecast, ZEW Indicator of Economic Sentiment, Cyclical indicator, Germany, Business survey

ZEW Indicator of Economic Sentiment - Subdued Economic Outlook

ZEW Indicator of Economic Sentiment January 2016

The ZEW Indicator of Economic Sentiment for Germany has declined in January 2016. The index has decreased by 5.9 points compared to the previous month, now standing at 10.2 points (long-term average: 24.7 points). The indicator has declined for the first time following two consecutive increases.

"The beginning of the new year is characterised by capital market turmoil in China, which has also led to significant share price declines in Germany. As in the previous year, weak economic growth in China and other important emerging markets puts a strain on Germany's economic outlook," says Professor Sascha Steffen, head of the "International Finance and Financial Management" Research Department at ZEW.

The assessment of the current situation in Germany, in contrast, has slightly improved. Growing by 4.7 points, the index now stands at 59.7 points.

Financial market experts' sentiment concerning the economic development of the Eurozone has weakened. ZEW’s Indicator of Economic Sentiment for the Eurozone has decreased by 11.2 points to a reading of 22.7 points. Gaining 2.1 points in January 2016, the indicator for the current situation in the euro area has climbed to a value of minus 7.5 points.

For more information please contact

Dominik Rehse, Phone +49(0)621/1235-378, E-mail rehse@zew.de

Jesper Riedler, Phone +49(0)621/1235-379, E-mail riedler@zew.de

More information and studies on the ZEW Indicator of Economic Sentiment and the release dates 2016 (as PDF file, 28 KB).

Detailed Results for the January 2016 Survey

UK inflation just hit an 11-month high — but it's still only at 0.2%

• Oscar Williams-Grut
 
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REUTERS/Andrew YatesA giant inflated beach ball sits on the sand at Blackpool Beach in Blackpool, northern England August 15, 2014. The ball was inflated to a height of 16.6 meters on Friday, beating the previous world record of 15.8 meters.

UK inflation came in at 0.2% for December, according to official figures released on Tuesday.

The Office for National Statistics says the consumer price index — the key measure of inflation — increased by 0.2% in December, compared to the same figure last year. That was bang in line with economists' forecasts.

The consumer price index rose by 0.1% compared to November, against estimates of a 0.1% rise. Both the year-on-year and month-on-month figures were an acceleration. Year-on-year inflation was just 0.1% in November and flat on the prior month.

The year-on-year figure, the most watched measure, represents a 11-month high. Inflation has been between -0.1% and 0.1% for the last 10 months due to a collapse in oil prices and a supermarket price war that has led to slashed prices.

Interestingly, the ONS says "Movements in transport costs, particularly air fares and to a lesser extent motor fuels, were the main contributors to the rise in the rate" in December.

But this is less to do with the price of oil than seasonal changes by airlines in their prices. The ONS says:

December typically sees a high monthly increase in air fares, coinciding with the Christmas holiday period. The November to December 2015 increase of 46% was the highest since 2002, and considerably higher than the 19% increase last year. This has resulted in air fares being the largest contributor to the increase in the inflation rate between November and December.

It is important to bear in mind that air fare prices are highly variable, both between years and between months in the same year. In fact, a November to December increase of over 40% is not unusual, and was seen in each year from 2009 to 2011.

The ONS says inflation faced downward pressure due to falling tobacco and alcohol prices. Supermarkets typically slash the price of alcohol in December to coincide with the Christmas period, knowing they can move greater volumes then.

Despite the acceleration in inflation in December, it remains well below the Bank of England's 2% target.

France's Hollande sets out plan to tackle 'economic emergency'

• Bertille Woisard, AFP

• 23h
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© Pool/AFP Yoan ValatFrench President Francois Hollande unveiled details of his job creation scheme at the Economic, Social and Environemental Council in Paris, on January 18, 2016

Paris (AFP) - President Francois Hollande pledged Monday to spend more than 2.0 billion euros ($2.2 billion) on tackling France's "state of economic emergency".

Hollande said he would pump in funding to address the stubbornly high unemployment that has dogged his four years in power, and promised it would not come from tax rises.

The opposition greeted the plan with scorn because Hollande has linked his ability to cut the joblessness to his bid to win re-election in 2017, but the president dismissed suggestions that the measures were "artificial".

"These two billion euros will not be financed through extra taxes of any kind. They will be financed by savings," Hollande said in a New Year's speech to business leaders.

He said one billion euros would be spent on training schemes for unemployed people.

Joblessness, which stands at around 10 percent or 3.57 million people in the eurozone's second-largest economy, was the "only issue that ranks above security for the French people", the president said.

After several years of sluggish growth, the French economy took another blow with the jihadist attacks in November that killed 130 people, which slowed activity in the fourth quarter.

- 'Just camouflage' -

Hollande, a Socialist, said France needs to "increase the pace of reforms", adding that innovation is "key" to getting people back to work.

"France must also increase training, education and the level of qualifications of its workers," he said.

The president said he would "go the extra mile" to bring in reforms and insisted he would do so "above and beyond any electoral event", in a clear reference to the presidential election.

Under the new measures to stimulate recruitment, companies employing fewer than 250 people will receive a 2,000 euro bonus for each new employee with a contract of more than six months, under certain conditions.

The right-wing Republicans of former president Nicolas Sarkozy poured scorn on that measure.

"What planet are Francois Hollande and his government living on if they think it is enough to write a cheque of 1,000 or 2,000 euros to a company that takes someone on?" said the party's Guillaume Larrive.

A leading member of the Republicans, Christian Estrosi, said the measures were "unfortunately just a way of camouflaging the failure of the government's policy, which since 2012 has demonstrated its ineffectiveness".

Hollande's Socialist Party hit back, saying the measures would bring "more vitality and confidence" to the economy.

France came out of three years of economic stagnation last year with growth of more than 1.0 percent.

But 650,000 people have been added to the jobless total since Hollande became president in 2012.

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Iran will get $32 billion of unfrozen assets after sanctions end

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© AFP Atta KenareIranians shop in Tehran's ancient Grand Bazaar on January 16, 2016

Tehran (AFP) - Iran will receive $32 billion of unfrozen assets after the lifting of sanctions as part of a deal with world powers over its nuclear programme, Iranian central bank chief Valiollah Seif said Tuesday.

Seif was quoted by state television as saying that $28 billion (25.8 billion euros) would go to the central bank and $4 billion "will be transferred to the state treasury as the share of the government". 

The unfreezing of assets comes after the UN atomic watchdog confirmed at the weekend that Iran had complied with measures imposed by the deal with global powers reached in Vienna in July.

The assets can be used "to buy and import goods, as the entry of such an amount of currency in to the country is not logical," Seif said.

The central bank plans to keep the funds "in centralised and safe accounts" abroad, he added. 

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China hits GDP target, but other data shows its economy is weakening

• David Scutt, Business Insider Australia
 

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Chinese GDP is out, and it’s right in line with expectations at 6.8% annualized for the December quarter.

Despite meeting forecasts, it was the slowest growth rate since the first quarter of 2009.

Business Insider Australia

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Full-year growth was 6.9%, roughly in line with the government’s target of 7.0% for the year. It was the slowest annual expansion recorded since 1990.

According to China’s National Bureau of Statistics, the preliminary estimate for GDP was 67,670.8 billion yuan, or around $10,300 billion, for the year.

Growth across China’s tertiary industries – predominantly services – increased by 8.3% to 34,156.7 billion yuan, outpacing growth in secondary (27,427.8 billion yuan) and primary industries (6,086.3 billion yuan) of 6.0% and 3.9% respectively.

The breakdown suggests that China’s economic transformation away from industrial, trade and investment-led growth to that powered by services and consumption is, on face value, continuing as planned.

“In 2015, faced with complicated international environment and increasing downward pressure on the economy, the Central Party Committee and the State Council have maintained the strategic focus, comprehensively arranged both domestic and international tasks, adhered to the general work guideline of making progress while maintaining stability, actively adapted to and led the new normal, guided new practices with new theories, strived for new development with new strategies, innovated macro-regulation, deepened the structural reform and pushed forward mass entrepreneurship and innovation,” wrote the NBS.

“As a result, the economy has achieved moderate but stable and sound development.”

While the GDP figure was bang on expectation, industrial production, retail sales and urban fixed asset investment growth – released alongside the GDP report – all missed to the downside in December.

From a year earlier industrial production grew by 5.9%, down on the 6.2% pace of November and expectations for a moderation to 6.0%.

Retail sales growth also decelerated, coming in at an annual rate of 11.1% against expectations for an increase of 11.3%. It was the first month since July 2015 that the annual rate was slower than the month before.

Rounding off the trifecta of monthly misses, urban fixed asset investment slowed to an annual pace of 10.0%. The figure, below the 10.2% pace of November, marks the slowest annual increase since the early 2000s.

Business Insider Australia

Whether due to the disappointing monthly data, or simply that a GDP figure is almost always around expectation leading to a “buy the rumor, sell the fact” scenario, risk assets have given back earlier gains following the data dump.

Currencies such as the Australian and New Zealand dollars – those closely aligned with the performance of China’s economy – are both trading lower while stocks across the region are mixed.

Chinese stocks are fluctuating around the flatline while offshore trade yuan, or USD/CNH, is moderately higher at 6.5951.

Here’s the full Asia market scoreboard as at 1.35pm AEDT.

Stocks

• ASX 200 4883.60 , 24.90 , 0.51%
• Nikkei 225 16834.13 , -121.44 , -0.72%
• Shanghai Composite 2915.04 , 1.21 , 0.04%
• Hang Seng 19307.62 , 70.17 , 0.36%
• KOSPI 1869.90 , -8.55 , -0.46%
• Straits Times 2600.76 , 7.76 , 0.30%
• S&P 500 Futures 1883.75 , 8.75 , 0.47%

Forex

• USD/JPY 117.27 , -0.04 , -0.03%
• USD/CNH 6.5966 , 0.0149 , 0.23%
• AUD/USD 0.6842 , -0.0021 , -0.31%
• NZD/USD 0.6423 , -0.0022 , -0.34%
• AUD/JPY 80.24 , -0.27 , -0.34%
• EUR/USD 1.0898 , 0.0008 , 0.07%
• GBP/USD 1.4239 , -0.0002 , -0.01%
• USD INDEX 99.108 , 0.1520 , 0.15%

Commodities

• Gold $1,089.31 , $0.71 , 0.07%
• Silver $13.94 , $0.01 , 0.04%
• WTI Futures $29.04 , -$0.38 , -1.29%
• Copper Futures ¥35,040 , ¥150 0.43%
• Iron Ore Futures ¥318.00 , ¥0.50 , 0.16%

10-Year Bond Yields

• Australia 2.695%
• New Zealand 3.330%
• Japan 0.201%
• Germany 0.478%
• UK 1.693%
• US 2.042%

Read the original article on Business Insider Australia. Copyright 2016.

China just passed a milestone in the transformation of its economy

• David Scutt, Business Insider Australia
 

• 8h
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REUTERS/Jerry Lampen/FilesChina's national flag is raised during the opening ceremony of the Beijing 2008 Olympic Games.

Chinese economic growth yet again managed to come in around expectations for the December quarter of 2015, just  as it has done for last five quarters.

At 6.8%, the annualised quarterly growth rate was right on expectations. The annual growth rate, at 6.9%, was also close to the 7% level targeted by the government.

Its stability — and accuracy — would put Swiss watchmakers to shame.

While to many the unerring accuracy points to the data being flimsy – a case of the government simply starting with the final GDP figure and working back – the internals of the report suggest that China’s new growth engine – services and consumption – continued to perform strongly, managing to offset a slowdown in heavy industry, investment and trade, the areas that once powered China’s economy.

According to the NBS, the nation’s tertiary industry – largely encompassing services – accounted for 50.5% of GDP in 2015, an acceleration of 2.4 percentage points on a year earlier and some 10.0 percentage points above secondary industries, the sector that up until recently was the largest component of China’s economy.

This means the services-heavy tertiary sector is now more than half of the economy.

There was also strong data on the other great hope for China’s economic rebalancing – consumption.

Over the year, total retail sales of consumer goods hit 30,093.1 billion yuan according to the government, a nominal annual increase of 10.7%. After adjusting for price movements, that equates to an annual growth rate of 10.6%.

Sales in urban areas surged by 10.5%, outpaced by an even faster acceleration in rural areas of 11.7%.

Demonstrating the growing clout of online consumers, the NBS reported that online retail sales grew to 3,877.3 billion yuan, an increase of 33.3% on 2014. Sales of non-physical goods – essentially service – grew even faster, jumping by 42.4%.

These are mammoth changes in anyone’s language, and ones that are likely to prove highly-lucrative to firms that manage to crack the market.

Helping to drive the uplift in consumer spending was continued growth in household incomes.

The NBS noted that the national per capita disposable income of residents was 21,966 yuan in 2015, representing nominal growth of 8.9% or a real increase of 7.4% after factoring price movements.

In real terms, per capita disposable incomes of urban households grew by 6.6% to 31,195 yuan, outpaced by rural residents whose disposable incomes grew by 7.5% to 11,422 yuan.

As evidence of the growing size of China’s middle class, the median national disposal income was 19,281 yuan, up 9.7% year-on-year in nominal terms.

Although tiny in comparison to those in advanced economies – an average disposable income of US$3,340 wouldn’t get you far in a city such as London, New York, Tokyo or Sydney – the growth seen last year, following similar increases in recent years, will see consumption balloon even further should the economy continue to evolve as policymakers currently predict.

However, that opportunity is also perceived to be a threat among many in financial markets. A threat that with China’s industrial and investment sectors already weakening, an unexpected economic mishap, derailing activity in the services sector, could lead to a so-called “hard landing” for the Chinese economy in the years ahead.

While markets continue to grapple with than conundrum – something that looks certain to persist for many years to come – on the backward-looking data received today, China’s economic rebalancing looks solid, at the very least, for now. 

Read the original article on Business Insider Australia. Copyright 2016.

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