MS - Morgan Stanley

NYSE - Nasdaq Real-time price. Currency in USD
+1.67 (+4.25%)
As of 11:03AM EDT. Market open.
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Previous close39.37
Bid41.59 x 900
Ask41.60 x 1100
Day's range40.26 - 41.69
52-week range27.20 - 57.57
Avg. volume19,097,960
Market cap64.668B
Beta (5Y monthly)1.48
PE ratio (TTM)7.91
Earnings dateN/A
Forward dividend & yield1.40 (3.56%)
Ex-dividend date29 Jan 2020
1y target estN/A
  • Fauci Sees Far Fewer U.S. Deaths; More Fed Aid: Virus Update

    Fauci Sees Far Fewer U.S. Deaths; More Fed Aid: Virus Update

    (Bloomberg) -- Anthony Fauci, the top U.S. infectious-disease expert, said the final death toll from the virus may be lower than earlier estimated. As fatalities now slow in parts of Europe, they are still accelerating in the U.S., which is on track to overtake Italy.Stocks rallied after the Federal Reserve took steps to provide as much as $2.3 trillion in additional aid, even as Americans applied for jobless benefits in huge numbers again. Morgan Stanley Chief Executive Officer James Gorman said he had coronavirus and has recovered.Spain reported fewer virus-related deaths and is poised to extend a nationwide lockdown. Curbs are also likely to remain in Britain, where Prime Minister Boris Johnson continues to improve in intensive care. Tighter measures in Germany probably won’t be necessary, Chancellor Angela Merkel said.Key Developments:Global cases top 1.5 million; deaths pass 89,900: Johns HopkinsSpain, Italy to extend lockdowns amid persistent rise in casesCostly CT scans filling virus testing void for U.S. doctorsUBS, Credit Suisse will split payouts for 2019 into two installmentsSouth Korea’s CDC says virus may “reactivate” in cured patientsAfrica Has Chance to Contain Outbreak: WHO (10:40 a.m. NY)Much of the African continent still has a chance to contain the coronavirus pandemic, the World Health Organization said at its weekly Africa briefing. While a few African countries are experiencing a rapid increase in local transmissions, more than 30 nations can still prevent a larger outbreak by testing, contact tracing and isolating patients, the WHO said. Merkel Says Tighter Measures Likely Unnecessary (9:56 a.m. NY)Tighter measures to contain the coronavirus in Germany probably won’t be necessary as the slowing spread of the disease gives grounds for “cautious hope,” Merkel told reporters in Berlin on Thursday after a cabinet meeting.GE Sees Cash Flow Keeping Pace Despite Hit to Earnings (9:28 a.m. NY)General Electric Co. said its first-quarter cash flow will be in line with expectations even as the outbreak brings profit “materially below” its prior projection. GE withdrew its forecast for the full year.Canada’s Curve May Be Flattening (9:17 a.m. NY)Three weeks after the governments of Canada’s three most populous provinces told their 28.4 million residents to stay home, the measures appear to be working. The provinces, which have three-quarters of Canada’s people, have recorded just 1.2 deaths from Covid-19 per 100,000 residents. That compares with 32 for New York, 10 for Michigan and 6 for Washington.Canada’s coronavirus case count has been increasing slower than most countries, said Theresa Tam, the nation’s chief public health officer. The number doubles every three to five days. The government expects between 22,580 to 31,850 cases by April 16, which could mean 500 to 700 total deaths, Tam said.Morgan Stanley’s CEO Says He Had Virus, Now Recovered (9:10 a.m. NY)Gorman told staff he contracted coronavirus and has since recovered. He had flu-like symptoms last month and tested positive, he said in a message to the bank’s employees. Gorman was never hospitalized, self-isolated in his home and has been cleared by his doctor.Fed Announces Plan for Muni, Business Aid; Jobless Claims (8:43 a.m. NY)The steps announced include starting programs to aid small and mid-sized businesses, as well as state and local governments.A total of 6.61 million Americans filed jobless claims in the week ended April 4, according to Labor Department figures released Thursday. That exceeded a median forecast of 5.5 million.Deaths in Sweden Increase Amid Relatively Relaxed Stance (8:41 a.m. NY)Sweden reported 106 more virus-related deaths on Thursday, taking the total to 793, on par with the daily gains reported in the past week. The Nordic country is under scrutiny as it continues to experiment with a laxer policy response compared with the rest of Europe. Restaurants, shopping centers and primary schools all remain open in Scandinavia’s biggest economy. Deaths in Sweden continue to outpace its Nordic neighbors, which implemented stricter measures to curb the spread early on, and are now discussing how to lift them.U.S. Virus Fatalities Looking More Like 60,000, Fauci Says (8:10 a.m. NY)“I believe we are going to see a downturn” and projections look “more like the 60,000 than the 100,000 to 200,000,” National Institutes of Allergy and Infectious Diseases chief Anthony Fauci said in response to an NBC interview question about virus fatality models. Fauci said he thinks the U.S. is starting to see a flattening of the curve in New York. “I don’t want to jump the gun on that but I think that is the case,” he said.Pfizer to Develop Vaccine by Year-End (8 a.m. NY)Pfizer and BioNTech said they will jointly develop a vaccine for Covid-19, potentially supplying millions of doses by the end of 2020. The two companies plan to jointly conduct the first clinical trials as early as the end of April, assuming regulatory clearance. Clinical trials for the vaccine candidates will initially be in the U.S. and Europe across multiple sites.Earlier, IBio jumped 25% in pre-market trading after reaching an agreement with the Infectious Disease Research Institute to support development of a vaccine for Covid-19. And Biohaven Pharmaceutical Holding got an FDA “may proceed” letter to begin a Phase 2 trial of intranasal vazegepant to treat lung inflammation after COVID-19 infection.U.K. PM Johnson Continues to Improve (7:58 a.m. NY)“The prime minister had a good night and continues to improve in intensive care in St Thomas’ Hospital,” Boris Johnson’s spokesman James Slack told reporters. Johnson is “receiving standard oxygen treatment,” Slack said. U.K. officials are drawing up plans to extend the lockdown and Foreign Secretary Dominic Raab will chair a meeting of the government’s emergency committee at 3:30 p.m.World Hunger Could Double (7:56 a.m. NY)The number of people going hungry around the world could double in just a few months as the pandemic wreaks havoc on food supplies and hurts incomes, according to a group of major food companies, industry bodies and academics. The number of those suffering from chronic hunger may surge from about 800 million.Charity group Oxfam had earlier warned the economic hit from coronavirus threatens to put more than half a billion people into poverty unless countries take action to cushion the blow.Netherlands Reports Slowest Hospital Intake (7:50 a.m. NY)The Netherlands recorded 237 new hospital intakes, a 3% increase and marking the lowest daily gain since the outbreak began. Confirmed cases rose 6% to 21,762, while fatalities advanced 7% to a total of 2,396.London Delays Pollution Controls for Trucks (7:40 a.m. NY)London delayed the start of stricter pollution controls for trucks in the capital, because the pandemic has put too much pressure on supply chains. New minimum standards for freight are due to come into force in October with fines of as much as 550 pounds ($683) per day. Enforcement will be delayed for at least four months, Transport for London said. It’s already suspended other pollution and congestion charges for cars and van, to ensure deliveries can take place and for key workers to travel.Irish Unemployment Soars (7:20 a.m. NY)Irish unemployment may have risen to its highest level since 1988, in the latest sign of the impact of the coronavirus on the economy. Unemployment rose to 16.5% last month if it is adjusted to include people receiving government support because of the coronavirus crisis, the Central Statistics Office said in a statement. The adjusted rate “should be considered as the upper bound for the true rate of unemployment,” it said.U.S. Poised to Pass Italy With Deadliest Outbreak (7:07 a.m. NY)The U.S. is on track for a grim milestone in the coming days -- passing Italy as the world’s epicenter of Covid-19 mortality. Deaths from the virus were at about 14,800 in the U.S. as of Thursday morning and still accelerating, while Italy had more than 17,600 fatalities and the pace was beginning to slow, according to data compiled by Bloomberg. The U.S. has logged about 2,000 deaths each of the past two days, while in Italy, the number has hovered around 550 daily deaths.German Study Finds Virus in 15% of Hard-Hit Town (6 a.m. NY)The coronavirus probably infected 15% of people in Gangelt, a small town in the hard-hit rural German region of Heinsberg, researchers said in preliminary results after using antibody tests to sample a random portion of the population. On that basis, the case mortality rate in the town so far would be 0.37%, less than one-fifth of the mortality rate based on confirmed positive tests in Germany as a whole, the researchers said.The difference is because the antibody test picked up mild cases of the virus that had previously gone unnoticed. The researchers didn’t disclose how many lab-confirmed cases of the virus had previously been found in the 12,500-person town. In the Heinsberg region as a whole, less than 1% of the population has tested positive for the virus, and 44 patients have died, according to the Robert Koch Institute.Infections and Deaths in Spain Slow (6 a.m. NY)Spain reported fewer coronavirus deaths and new cases on Thursday in Europe’s second-most deadly outbreak of the disease. There were 5,756 new infections in the 24 hours through Thursday, pushing the total above 150,000, according to Health Ministry data. The death toll rose by 683 to 15,238, a smaller gain than Wednesday’s 757.Iran also reported a decline in cases and fatalities. The health ministry reported 1,634 new cases, down from 1,997, and 117 deaths, down from 121. That brings the country’s total to 66,220 cases and 4,110 fatalities.India Steps Up Stringent Lockdown Measures (5:54 p.m. HK)India has further tightened lockdown measures and enhanced surveillance at hundreds of areas designated as virus hotspots, as Prime Minister Narendra Modi described the epidemic as a “social emergency.” Authorities have sealed settlements, lanes and apartment complexes in the financial capital Mumbai, as well as in Delhi and the neighboring state of Uttar Pradesh, allowing in only medical services, surveillance workers and those delivering food and other essential items.Botswana Quarantines Lawmakers (5:35 p.m. HK)Botswana is placing its entire cabinet and members of parliament in quarantine after a health worker screening lawmakers for coronavirus was found to be infected. All lawmakers, as well as President Mokgweetsi Masisi, will go into quarantine on Thursday.KLM, Philips Set Up China Airlink (5:20 p.m. HK)Air France-KLM will start a temporary airlink to China with support from Royal Philips NV and the Dutch government to increase the transport capacity of medical equipment and other supplies between China, Europe, and the U.S. KLM will temporarily return two Boeing 747s which it phased out last month to operate five weekly flights to Beijing and Shanghai from its base at Amsterdam Schiphol.The first flight is set to take of on April 13, and add to the “skeleton operation” Air France-KLM announced earlier today, which includes regular cargo flights to destinations around the world, including the U.S. The operations are expected to remain in place for six to eight weeks.Indonesia Reports Highest One-Day Virus Deaths (5:10 p.m. HK)Indonesia reported the largest number of deaths in a single day since the outbreak and new confirmed cases continued to climb in the world’s fourth-most populous nation. The death toll jumped to 280 with 40 more fatalities reported in the past 24 hours, while the number of new cases surged by 337, the highest since the country reported its first case in early March, taking total infections to 3,293.Italian Cabinet Meets (4:45 p.m. HK)Italian Prime Minister Giuseppe Conte was set to hold a cabinet meeting at 11 a.m. in Rome. La Stampa reported earlier that the government plans to extend its lockdown by two weeks as scientists warn Conte that it’s too early to relax confinement measures,. The government will approve a decree on Friday to extend the closures beyond the current April 13 expiration date, the newspaper said.Conte told BBC the country may start easing the lockdown by the end of the month. If scientists confirm that Italy can start a gradual return to activity, “we might begin to relax some measures by the end of this month,” he said. Italian steelmakers are in talks with the government to restart at reduced capacity in the coming weeks.For 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.

  • Read This Before Selling Morgan Stanley (NYSE:MS) Shares
    Simply Wall St.

    Read This Before Selling Morgan Stanley (NYSE:MS) Shares

    It is not uncommon to see companies perform well in the years after insiders buy shares. The flip side of that is that...

  • Morgan Stanley CEO James Gorman recovers from COVID-19

    Morgan Stanley CEO James Gorman recovers from COVID-19

    Gorman released the 10-minute video to staff by email in which he said he had tested positive for coronavirus and had been fully cleared by doctors more than a week ago. Gorman is currently undergoing self-isolation at home and working remotely, according to the video. A Morgan Stanley spokesman confirmed the contents of the video, adding the development was not considered to be material because Gorman was not incapacitated at any time.

  • Analysts Estimate Morgan Stanley (MS) to Report a Decline in Earnings: What to Look Out for

    Analysts Estimate Morgan Stanley (MS) to Report a Decline in Earnings: What to Look Out for

    Morgan Stanley (MS) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

  • Morgan Stanley, Credit Suisse Among Lenders to Luckin Boss

    Morgan Stanley, Credit Suisse Among Lenders to Luckin Boss

    (Bloomberg) -- Morgan Stanley, Credit Suisse Group AG and Haitong International Securities Group were among the biggest participants in a series of margin loans to Luckin Coffee Inc.’s founder before accounting fraud allegations at the Chinese company triggered a collapse in the stock and caused him to default, a person with knowledge of the matter said.The banks were part of a group that extended margin debt to Luckin Chairman Lu Zhengyao across three funding rounds, said the person, who asked not to be identified as the matter is private. Haitong put up $140 million, while Morgan Stanley and Credit Suisse lent about $100 million each, the person said. Barclays Plc, Goldman Sachs Group Inc. and China International Capital Corp. also had smaller exposures, the person said, adding that a portion of the loans were repaid before the default.Goldman Sachs said in a statement on Monday that an entity controlled by Lu’s family trust reneged on $518 million of margin debt and that lenders had seized as many as 76.4 million Luckin shares. The stake was worth about $335 million based on the closing price Monday, down from more than $2 billion before the scandal emerged. It’s unclear whether the banks have sold the shares or whether they’ll be forced to book losses on their loans. Goldman, which didn’t elaborate on individual banks’ exposures, was given the role of handling the share disposal.Barclays’ and Goldman’s exposure to the margin loan was about $70 million each, people familiar with the matter said.Haitong International didn’t respond to emailed questions from Bloomberg News, while the rest of the banks declined to comment.Luckin, the biggest challenger to Starbucks Corp. in China, has lost $5.5 billion of market value since last week after saying its chief operating officer and some of its employees may have fabricated billions of yuan in sales, upending what was supposed to be one of the country’s best growth stories.The episode has dealt another blow to banks that worked closely with Luckin on its expansion over the past years, including arranging its initial public offering. Credit Suisse, which also led a group raising convertible debt for the coffee chain, has been sued over its role in Luckin’s U.S. share sale.Shares of CICC and Haitong International, which also helped underwrite Luckin’s IPO, fell more than 4% in Hong Kong on Tuesday. Trading in Luckin’s stock was suspended in New York.Goldman Sachs said lenders have full recourse to claim money back from Lu and his spouse, but it’s unclear whether the couple still has enough assets to make up for any potential shortfall. The scandal has erased most of Lu’s wealth, knocking him out of the ranks of China’s billionaires.(Adds exposure of Goldman in fourth paragraph.)For 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.

  • Airbnb in Talks to Raise More Debt Amid Global Crisis

    Airbnb in Talks to Raise More Debt Amid Global Crisis

    (Bloomberg) -- Airbnb Inc. is in talks with investors to take on as much as $1 billion in additional debt after announcing a $1 billion debt and equity deal Monday, according to people familiar with the matter.The travel platform company announced Monday that it was raising $1 billion in debt and equity from Silver Lake and Sixth Street Partners. The company has held discussions about raising $500 million to $1 billion more by either issuing first-lien debt, which would give its holders priority in case of a default, or a convertible note or selling an equity stake, said the people, who asked not to be identified because the information wasn’t public.The additional funds would give Airbnb an extra financial cushion as prospects dim for an initial public offering this year. The money could help Airbnb weather the economic crisis brought on by the coronavirus pandemic without going public, and could also allow the company to make acquisitions, a strategy it has been weighing, people with knowledge of the matter told Bloomberg last month.Airbnb hasn’t disclosed the terms of its deal with Silver Lake and Sixth Street Partners. People familiar with the matter have said that the transaction was comprised of second lien debt, along with warrants for about 1% of the company’s equity. The warrants give Airbnb an $18 billion valuation, one of the people said. That compares with a value earlier of $31 billion.In March the world’s biggest home-sharing company posted a fourth-quarter loss of $276.4 million excluding interest, taxes, depreciation and amortization, compared with a loss of $143.7 million a year earlier, according to a person familiar with the company’s accounts.Monday’s deal carried an 11% to 12% interest rate, the people said. The investment doesn’t entitle the investors to a seat on Airbnb’s board of directors, one of the people said.Raising second lien debt, means that Airbnb has room to take on more senior debt, which it is considering. The company could also raise a convertible note or equity instead, the people said.As the home-sharing company raises debt, it is canceling a $1 billion credit facility with several banks that is administered by Bank of America Corp. Those banks include Morgan Stanley and Goldman Sachs Group Inc., both of which advised on the Silver Lake-Sixth Street transaction, one of the people said. A representative for Bank of America declined to comment.The deal announced Monday was meant to help the home-sharing company make it through the pandemic that is devastating the global travel industry, Airbnb said in a statement.“The new resources will support Airbnb’s ongoing work to invest over the long term in its community of hosts who share their homes and experiences, as well as the work to serve all stakeholders in the Airbnb community,” the company said.(Updates with details about fundraising talks starting in fifth paragraph.)For 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.

  • Airbnb Raises $1 Billion, With Public Offering Uncertain

    Airbnb Raises $1 Billion, With Public Offering Uncertain

    (Bloomberg) -- Airbnb Inc. is raising $1 billion in debt and equity securities from investors Silver Lake and Sixth Street Partners. The funding is an effort by Airbnb to shore up its finances after its business was devastated by the coronavirus pandemic that slammed the global travel industry.Airbnb is likely not in immediate need of cash. Before the fundraising round, the company had more than $2 billion in the bank, along with a $1 billion credit facility, Bloomberg has reported. Now, though, the company’s plans to go public this year look uncertain. “Given new debt and likely deep losses until the market improves, I would be surprised if the company completes an IPO this year,” said PitchBook analyst Paul Condra.The money could help Airbnb weather the economic crisis without going public, and could also allow the company to make acquisitions, one strategy it has been weighing, people with knowledge of the matter told Bloomberg last month.“The new resources will support Airbnb’s ongoing work to invest over the long term in its community of hosts who share their homes and experiences, as well as the work to serve all stakeholders in the Airbnb community,” the company said in a statement.Bloomberg reported last week that the company was in talks to raise money from investors as it weighed its options in response to the pandemic. Morgan Stanley worked as a financial adviser to Airbnb, according to a person familiar with the matter who asked not to be identified discussing private information.Even before the pandemic, Airbnb wasn’t consistently turning a profit. In the fourth quarter of last year, the company reported a loss of $276 million excluding interest, taxes, depreciation and amortization. That’s compared with a loss of $144 million a year earlier, Bloomberg has reported. Revenue increased 32% in the fourth quarter of 2019 to $1.1 billion.The home-sharing company has struggled to appease guests and hosts amid the crisis. At first, the company resisted forcing hosts to issue refunds for guests traveling in the U.S. until after the World Health Organization declared Covid-19 to be a pandemic. Then, hosts complained that Airbnb was exacerbating an already painful financial situation for them. So Airbnb created a $250 million fund to help hosts who lost money from coronavirus-related cancellations.(Updates with quote from analyst in second paragraph.)For 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.

  • Dollar Squeeze Worsens in Lebanon as Government Asks for Aid

    Dollar Squeeze Worsens in Lebanon as Government Asks for Aid

    (Bloomberg) -- Lebanon’s foreign-exchange crisis is intensifying, prompting another appeal by the government for financial aid after its debt default last month.Local banks have reduced the amount of dollars customers can withdraw from their accounts and even forced them to accept conversions into the local currency in some instances. Two of the largest have almost stopped dispensing foreign exchange entirely, while the central bank has greatly cut its supply, said senior bankers, who didn’t want to be named.The shortages of hard currency have already led to a deep recession and crippled many businesses as they struggle to import essential goods. The coronavirus pandemic and a nationwide lockdown to stop its spread are adding to the problems, with Lebanese lenders having closed most of their branches.The country has suffered net capital outflows every month since July, according to government data, as the large diaspora that used to prop up the banking system stops sending remittances. Some lenders’ correspondent banks are cutting back on services as dollars run dry, according to the bankers.The central bank didn’t respond to a request for comment.Lebanon’s default on $31 billion of Eurobonds removed one of the last remaining sources of foreign exchange for local banks. Many of them relied on the interest and principal from those to service their clients’ dollar demands.The government has yet to begin formal restructuring talks with creditors. It decided against repaying a $1.2 billion bond last month to save what’s left of its reserves for imports such as food, medicine and fuel.Lebanon’s president and prime minister said on Monday external financing was vital for economic reforms.“Our reform program needs external financial aid, especially from the friendly countries and from the International Support Group to help our balance of payments and develop our vital sectors,” President Michel Aoun said. The ISG is a United Nations-led grouping that includes the U.S. and France.Pound UnpeggedThe Lebanese pound has plunged almost 25% on the black market this year to 2,800 per dollar, according to, a local website. It’s now 46% weaker than the official rate of around 1,510, which has been pegged for decades.That’s causing inflation to accelerate and it could reach 25% this year, the government said in a presentation last month. The economy may contract by 12% from 2019, it said.While the central bank hasn’t said whether the peg will be formally removed, it instructed lenders last week to pay depositors with up to $3,000 in pounds at a so-called market rate, rather than the official one. The Association of Banks in Lebanon will decide on the market rate Monday.Lebanese politicians have long said the peg helps guarantee social stability by allowing the country to import food and other goods cheaply. Anti-government protesters took to the streets en masse in October, partly because of falling living standards and rising prices. They forced the resignation of then-Prime Minister Saad Hariri.“An official devaluation looks increasingly likely,” said Carla Slim, a Standard Chartered economist for the Middle East, North Africa and Turkey. “Restructured debt would be assessed in the context of the new” exchange rate, she said.Positive MoveThe new rule for small dollar deposits is positive as it will reduce banks’ foreign-currency liabilities, according to Morgan Stanley.“Measures on de-dollarisation on small deposits at the market rate, as opposed to the official rate, indicate that the authorities will embrace a weaker FX rate,” said Jaiparan Khurana, a Morgan Stanley strategist in London. “If larger deposits are also de-dollarised, but at around the official rate, significant fiscal savings can be achieved.”The government has asked the International Monetary Fund for technical advice. But most senior politicians are against a loan from the Washington-based lender, given that Lebanon would probably be required to raise taxes and cut subsidies.Without some form of external funding, the ability of Lebanese banks to meet their foreign-currency obligations “is in serious doubt,” according to Fitch Ratings.(Updates from first paragraph with government appeal.)For 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 (MS) Stock Moves -0.18%: What You Should Know

    Morgan Stanley (MS) Stock Moves -0.18%: What You Should Know

    Morgan Stanley (MS) closed at $33.84 in the latest trading session, marking a -0.18% move from the prior day.

  • Morgan Stanley plans to hold annual meeting in person

    Morgan Stanley plans to hold annual meeting in person

    The company said in the event it is not possible or advisable to hold the meeting at its Westchester headquarters in New York, it will announce alternative arrangements which may include holding a virtual meeting.

  • LBO Deadlines Are Here, Leaving Bankers on the Hook for Billions

    LBO Deadlines Are Here, Leaving Bankers on the Hook for Billions

    (Bloomberg) -- Banks that agreed to help finance leveraged buyouts are starting to feel the pain from a freeze in the market for risky corporate debt.Lenders including Morgan Stanley, Bank of Ireland Group Plc and Citizens Financial Group Inc. have been forced to self-fund at least $1 billion of loans in recent weeks to ensure private-equity led acquisitions close as planned, according to people with knowledge of the matter.Unable to syndicate the debt to institutional investors, the banks have become unintentional holders of speculative-grade loans to a filtered-water company, a pet-food manufacturer and a U.K.-based maker of audio mixing consoles for DJs, said the people, who asked not to be named because the details are private.The loans represent only a small slice of over $30 billion in junk-rated debt that lenders may be forced to take onto their balance sheets this quarter if the market remains fragile. And while the exposure is a fraction of the commitments they held heading into the 2008 financial crisis, it nonetheless risks consuming precious capital just when banks need it most.While the high-yield bond market is starting to show signs of thawing, the cost of borrowing has soared. That could erode the fees banks are due depending on the terms of lending commitments they agreed to before the sell-off, and expose them to losses if they’re eventually forced to offload the debt at a steep discount.Read more: Wall Street is quietly telling companies not to draw their loansA group of lenders led by Morgan Stanley were forced to come up with $350 million at the end of March to allow Culligan NV, a filtered-water company owned by buyout firm Advent International, to close its takeover of AquaVenture Holdings Ltd., according to the people. The funded loan was smaller than the $500 million the banks had initially agreed to underwrite because AquaVenture sold its water-treatment unit to Morgan Stanley Infrastructure Partners, one of the people said.Just a couple weeks earlier, Citizens Financial had to fund a $285 million leveraged loan it agreed to provide J.H. Whitney Capital Partners-owned C.J. Foods Inc. for its acquisition of American Nutrition Inc. In Europe, a group led by Bank of Ireland got stuck with around $400 million of debt for private equity firm Ardian’s acquisition of Audiotonix Ltd., a U.K.-based maker of mixing consoles used in music and broadcasting, according to people with knowledge of the deal.Representatives for Morgan Stanley, Bank of Ireland, Advent and Ardian declined to comment, while Citizens Financial and J.H. Whitney didn’t respond to requests for comment.The leveraged loan market has been shut for roughly three weeks now. While smaller financings aren’t especially painful for banks to hold, they can become difficult to offload in the broadly-syndicated market even when conditions improve, given competition from bigger, more liquid transactions.For 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, Goldman Get Nod for Majority Stakes in China JV

    Morgan Stanley, Goldman Get Nod for Majority Stakes in China JV

    With the approval of increasing their stake in respective securities JV, Morgan Stanley (MS) and Goldman (GS) are set to further diversify their revenues.

  • Bloomberg

    Morgan Stanley, Goldman Win China Nod to Control Ventures

    (Bloomberg) -- Morgan Stanley and Goldman Sachs Group Inc. were granted approvals to take control of their securities joint ventures in China as policy makers push ahead with the opening of the nation’s $45 trillion finance industry even as they fight to contain the coronavirus outbreak.Morgan Stanley plans to boost its stake to 51% from 49% with the approval from the China Securities Regulatory Commission, the New York-based bank said in a statement Friday. Goldman said it also won approval to control its partnership, lifting the stake from 33%.The move comes as China pledges to further open its investment banking and asset management industries on April 1 by allowing foreign banks to apply for full ownership of their partnerships, or start their own ventures. Global banks are rushing in to capture an estimated $9 billion in annual profits in commercial and investment banking alone. China has also swung the door open wider for insurers.“Good news for foreign capital under the virus situation with lots of uncertainties and prospects of global recessionary economic situations, where China assets and interest rates could be relatively attractive,” said Lou Jian,Shanghai-based partner at consulting firm Roland Berger. “It shows China’s commitment to openness in capital markets and foreign participation.”The finance industry opening, which was sped up in the January trade deal with the U.S., is designed to draw in foreign investment to support economic growth. The world’s second-largest economy is now in the midst of what could be the slowest expansion in more than four decades as large parts were shuttered because of the virus outbreak that’s now spreading around the world.Goldman Sachs has said it will seek full ownership of its joint venture, going beyond the 51% controlling stake for which it filed for approval last August. The New York-based bank is embarking on a five-year expansion plan that includes doubling its workforce in the country to 600, ramping up businesses including asset and wealth management.“We will be seeking to move towards 100% ownership at the earliest opportunity,” Todd Leland, co-president of Asia Pacific ex-Japan, said in the statement.Read more: China Is Dismantling Its Great Financial Wall: A Guide to 2020UBS Group AG , JPMorgan Chase & Co. and Nomura Holdings Inc. have already taken majority control of their local joint ventures. JPMorgan Securities (China) Co., in which the U.S. bank holds a 51% stake, has opened and started brokerage, investment advisory and underwriting businesses earlier this month, according to an emailed statement.Even with the massive potential of the Chinese market, foreign firms face a bevy of hurdles to win market share. China is home to the world’s four largest banks by assets, the biggest global fintech company and other formidable competitors. Its tightly-controlled system is opaque and arbitrary when it comes to licenses, and the regulatory burden is heavy. Recruiting talent has already proved tricky with experienced local executives often preferring state-backed companies.(Adds Goldman comment in seventh paragraph)For 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.

  • Goldman, Morgan Stanley receive approvals for majority stakes in China ventures

    Goldman, Morgan Stanley receive approvals for majority stakes in China ventures

    BEIJING/HONG KONG (Reuters) - Goldman Sachs and Morgan Stanley said on Friday they had received the final regulatory approvals to take majority stakes in their China securities joint ventures, as Beijing continues to open its financial sector to foreigners. Goldman and Morgan Stanley received the nods from the China Securities Regulatory Commission to raise their stakes in Goldman Sachs Gao Hua Securities and Morgan Stanley Huaxin Securities from 33% to 51% and 49% to 51%, respectively, the two Wall Street banks said in separate statements.

  • Morgan Stanley promises no job cuts in 2020 as coronavirus crisis grows

    Morgan Stanley promises no job cuts in 2020 as coronavirus crisis grows

    The contents of the memo were confirmed by a Morgan Stanley spokesman. "While long term we can't be sure how this will play out, we want to commit to you that there will not be a reduction in force at Morgan Stanley in 2020," Chief Executive Officer James Gorman said in the note. Gorman also spoke about the Federal Reserve's "extraordinary" actions, calling them necessary.

  • Big banks reassure staff about potential job cuts

    Big banks reassure staff about potential job cuts

    Morgan Stanley , Goldman Sachs Group Inc , Wells Fargo & Co , Deutsche Bank AG , HSBC Holdings PLC and Citigroup Inc were among those on Thursday reassuring staff privately or through public statements that job cuts are not on the table. "At the end of this year, we will know what we are dealing with, and hopefully the economy will be on the mend by then," Gorman said in a memo to all 57,000 employees on Thursday.

  • Bloomberg

    Singapore's 10% Hit Is Pretty Standard for a Crisis

    (Bloomberg Opinion) -- A tiny country that’s long been the barometer of global commerce is sending up distress flares. How big a blow the Covid-19 pandemic inflicts on Singapore’s economy will depend much on events outside its control.Gross domestic product fell an annualized 10.6% in the first quarter, the Singapore government reported Thursday in an advance reading. That's worse than many economists — already bracing for a bad number — had forecast. Officials project a contraction of 1% to 4% for the year; GDP hasn’t hit that lower boundary since Singapore split from Malaysia five decades ago.As grim as all this sounds, Singapore's economic performance since January has echoes in the swings of global and regional capitalism. The city-state took a big hit during the Asian financial crisis, the aftermath of the Sept. 11 terrorist attacks (which also constrained international travel) and in the Great Recession. Growth shrank 10% in the first quarter of 1998 as regional markets cratered and neighboring Indonesia seethed with political upheaval. It contracted 10% from April to June in 2001 and 8.6% the following quarter. In the first quarter of 2009, the economy declined 9.9%. Singapore pulled through, as did the world, despite what many called “unprecedented” crises.To be sure, Thursday’s numbers are inauspicious, particularly in a landscape cluttered with downgrades. Few economists anticipate the pandemic causing anything less than a global recession. Morgan Stanley tips a drop of 30.1% in U.S. GDP during the second quarter; Goldman Sachs Group Inc. expects a dip of 1% for the world in 2020.But there’s plenty Singapore is doing to stave off the worst of outcomes. The government, praised at home and abroad for its response to the virus, has been frank with its citizens, and has responded with ample fiscal stimulus and the promise of more to come. An easing by the central bank appears all but certain next week. The mix of fiscal and monetary policy is correct.For a city reliant on tourism, Singapore’s steps to curb the flow of people also shows seriousness. Short-term visitors have been barred while citizens and residents returning are required to self-isolate. Bars and cinemas will close. Yet schools remain open and there's no lockdown or state of emergency resembling that in Malaysia, the Philippines or parts of Indonesia. Authorities are trying to thread the needle. To its credit, the death toll is among the lowest in the Asia region.Since its inception, Singapore has been a locus of capital flows, trade and international labor markets. What happens to the world's major commercial powers is often reflected in its economic data. With much of the global economy powering down, it will be tough for Singapore to push ahead.This downturn is unique in that the world's major economies have all been dented at more or less the same time. China and Japan, two of Singapore’s biggest trading partners, are trying to restart after effectively grinding to a halt. Whether the U.S. is open for business next month or next quarter, America will be slower to restart than Asian powers.In the past, bounces in the U.S. and China’s unstoppable growth trajectory helped Singapore regain its footing. With China in a long-term slowdown before the virus outbreak, that will be difficult to replicate. But, in time, both poles will revive, albeit with scars. The tides of global economics have buffeted the city-state before. For signs of eventual recovery, look here first.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Daniel Moss is a Bloomberg Opinion columnist covering Asian economies. Previously he was executive editor of Bloomberg News for global economics, and has led teams in Asia, Europe and North America.For more articles like this, please visit us at now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Is Vince McMahon Ready to Tap Out?

    Is Vince McMahon Ready to Tap Out?

    (Bloomberg Opinion) -- Vince McMahon was once tossed into a grave and almost buried alive by the Undertaker. But that’s nowhere near as bad as the year he’s having now. The burial, of course, was staged, while the agony of 2020 is very real. The coronavirus pandemic has temporarily taken down the business of live sports — both real and fake. That’s left McMahon’s World Wrestling Entertainment Inc. to hold matches in empty arenas, making the spectacle feel even more theatrical than sports-like, with dramatic monologues delivered directly to the camera instead of to the shouting fans that normally line the stands. Meanwhile, McMahon’s XFL football league, which he rebooted earlier this year, had to cancel the rest of its season. XFL is privately held by McMahon; however, shares of WWE have plunged more than 40% since December.McMahon, the 74-year-old chairman and CEO of WWE, is now looking to free up funds without relinquishing his control over the wrestling empire. On Tuesday, the company disclosed that McMahon entered into a prepaid variable forward contract, which essentially functions as a cash advance from a bank. The way it works is, McMahon agrees to eventually sell some of his shares at some future date — March 2024, in this case — receiving the money now, but without having to actually turn over the stock or pay taxes on the sale yet.According to Bloomberg News’s Drew Singer, the bank was Morgan Stanley and the deal priced 2.26 million shares at $38 apiece, representing more than $80 million in freed-up liquidity. In the meantime, McMahon gets to collect the usual dividends on those shares, and he can keep the holdings by settling the contract for cash. The agreement also doesn’t affect McMahon’s other 25 million or so class B shares, which represent just over 70% of the company’s total voting power.Even before the coronavirus began sweeping through the U.S., WWE was having a tough year, amid a shrinking number of subscribers to its streaming-TV service, WWE Network, and setbacks with international distribution deals. After the latest earnings disappointment, McMahon fired co-presidents George Barrios and Michelle Wilson, citing “different views” on how to achieve the company’s strategic goals, in what came as a disconcerting sign to investors. McMahon, as revered as he is by wrestling fans — his own ring persona, Mr. McMahon, is based on the real him — he has faced some criticism lately for not keeping the franchise fresh enough. He also came under fire last year following John Oliver’s scathing “Last Week Tonight” segment on the health and treatment of WWE’s wrestlers. Notably, while other sports leagues aren’t having their teams play to protect them from the spread of the virus, WWE’s cast is still having to work — and in close contact, too. WrestleMania, the company’s biggest annual event, is still being held April 4-5 — though without any fans allowed to attend in person, it will lose out on important ticket and merchandise sales. Viewers can watch on the $10-a-month WWE Network app or on pay-per-view. (Walt Disney Co.’s ESPN, struggling to fill its own programming schedule, has been airing WrestleMania classics.)In bringing back the XFL, which played just one season in 2001, McMahon was hoping to inject some of the WWE flavor into a sport that he sees as dull under the National Football League’s rules and style. When he announced the XFL would return in February 2020, news stories questioned whether it would work this time, giving McMahon something to prove. Now both his babies are hurting, and his wealth is tied up in them. For years, WWE has been considered an attractive takeover candidate for media giants and live-events companies. It holds a ton of valuable intellectual property in its characters and story lines, which in theory leaves open a realm of possibilities for a buyer with Disney-like ingenuity, building on WWE the way Disney has with the Marvel comic books. Likewise, WWE might appeal to those looking to invest more in sports, as Fox Corp. has stated it’s doing. Media companies are also paying big sums for content with which to stock their new streaming services, such as the Peacock app being introduced next month by Comcast Corp.’s NBCUniversal. McMahon has long been opposed to selling the company, wanting it to stay in the family. His daughter Stephanie McMahon manages the brand, and her husband Paul “Triple H” Levesque oversees talent and live events — both are wrestlers. The PVF contract helps protect that ownership. It may also help to have Donald Trump connections: McMahon's wife, Linda McMahon, runs the pro-Trump super PAC called America First Action, after stepping down as the president's head of the Small Business Administration last year.That said, with money tight, the outlook for traditional cable networks souring and McMahon’s XFL passion project meeting an untimely finish once again, now may be the time for any interested buyers to take their shot. This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Tara Lachapelle is a Bloomberg Opinion columnist covering the business of entertainment and telecommunications, as well as broader deals. She previously wrote an M&A column for Bloomberg News.For more articles like this, please visit us at now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Nike’s Workout App Beats the Coronavirus Blues

    Nike’s Workout App Beats the Coronavirus Blues

    (Bloomberg Opinion) -- As consumer groups grapple with how to cope with the unprecedented impact of Covid-19, Nike Inc., one of the world’s most successful brands, has given a useful road map.Unlike Britain’s Next Plc last week, Nike didn’t quantify the financial hit as the pandemic spreads. But it did give some helpful operational pointers, using its experience in China to identify four phases of the outbreak’s impact that retailers can expect to see on both sides of the Atlantic: The first is containment, characterized by large scale stores closures. The second is recovery, when brick and mortar outlets gradually begin to reopen. That is then followed by a return to normal conditions, and finally, sales growth.Nike estimates that China has now progressed through its recovery phase and is returning to normal, with the maker of  the Air Jordan and Flyknit sneakers expecting sales growth to come roaring back in early 2021. Clearly, Europe and much of the U.S. is still in the containment phase. Based on the experiences in China, Japan and South Korea, this could last five to six weeks, Nike said.The retailer weathered the China store closures far better than expected — with sales in China down 4% excluding currency movements in the third quarter —  and its strategy in the face of the coronavirus offers some interesting lessons for other retail brands in how to cope with an extended shutdown.While stores were closed, Nike fired up online operations effectively. It also activated other digital ways of connecting with customers, such as home fitness apps offered for free. It worked. Weekly active users rose 80% in China over the course of the third quarter, as people were confined to their homes. That in turn drove them to purchase new workout gear, boosting digital sales by more than 30%.It also helps that fitness equipment is still in demand when people are stuck at home. The same can’t be said for many products, such as glam dresses.As the number of Covid-19 cases spreads in other markets, it’s of course not a given that every company can soldier on as seemingly seamlessly as Nike, which has been doing well for a long time. The company generated a better-than-expected $10.1 billion of revenue in the third quarter, even with the impact from China. Nike has a strong balance sheet and is highly cash generative. Even so, inventories rose 7% in the third quarter to $5.8 billion, partially reflecting the drop-off in demand from China. Retailers across the board will be scrambling with how to deal with a surfeit of stock.Nike’s success has enabled it to invest heavily in its digital offering. Its fitness apps, which have come into their own in this crisis, are a case in point. Not all groups have been — or have the resources to be — so proactive. So it’s fair to expect that the companies with strong balance sheets, well-known brands and developed digital offerings should be able to navigate the crisis. Spain’s Inditex SA, owner of the Zara chain, fits the bill here.By contrast, those companies that were already struggling, or burdened with large borrowings, will be particularly challenged by the first phase of containment.As I have noted, the U.S. department stores look particularly susceptible to shuttered stores and shell-shocked shoppers. On Monday, Bloomberg News reported that Neiman Marcus Group Inc., the luxury retailer that has been struggling to ease its $4.3 billion debt load, was mulling options that could include a bankruptcy filing. And another Bloomberg report said J. Crew Group Inc. is suspending the initial public offering of Madewell, its most popular brand, a move necessary to cut its borrowings.Elsewhere, taking into account store leases, as well as other forms of financial obligations and upcoming debt maturities, analysts at Morgan Stanley have identified companies including L Brands Inc., Macy’s Inc., The Gap Inc. and Michael Kors owner Capri Holdings Ltd. as having particularly high levels of leverage, making them potentially less resilient in the current downturn.So while Nike can just do it, some laggards may truly struggle to get through this crisis.This 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 now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • A Rent Wipeout Could Ignite a Mortgage Crisis

    A Rent Wipeout Could Ignite a Mortgage Crisis

    (Bloomberg Opinion) -- The rent is too high. And that’s causing consternation across Wall Street desks still traumatized by the 2008 financial crisis.As the days go by in an unprecedented shutdown of the U.S. economy to slow the coronavirus outbreak, any amount of rent looks increasingly difficult to cover for a wide swath of Americans, from recently fired service workers to local small-business owners. Unfortunately for those most affected, these payments can’t simply be wiped out — at least, not without dire repercussions. My Bloomberg Opinion colleague Noah Smith wrote a column this week arguing that people need a break on all sorts of debts. But when it comes to rent, there’s pretty much no way around people eventually paying what they owe, ideally with the help of the U.S. government, or else risk “turning a health crisis into a banking crisis.”This, more or less, is the catastrophic “domino effect” that real-estate investor Tom Barrack, chief executive officer of Colony Capital Inc., warned about this week. Simply put, if commercial tenants don’t pay rent because of a lack of cash, then property owners might be squeezed and default on their mortgage payments. The same goes for homeowners. That could bring the problem squarely onto the balance sheets of large U.S. banks, which will suffer steep losses on their loans.At first, it might have seemed as if Barrack was simply talking his book. But as more details emerged about the carnage across the $16 trillion U.S. mortgage market, it’s clear that the complex web of financial obligations tied to real estate could again be the flashpoint that leads to a financial crisis without some sort of intervention.Part of the reason that mortgages are again veering into crisis mode is because the modern market has so many moving parts. My Bloomberg Opinion colleague Matt Levine laid it out in a five-part list, which you can (and should) read here. Suffice it to say, if money is being lent twice-over in the repo market, the players are highly leveraged and vulnerable to an unexpected shock. The coronavirus outbreak certainly qualifies as such — some 47,000 U.S. chain stores temporary closed in the span of a week, Bloomberg News reported Tuesday. The median estimate for initial jobless claims on Thursday is 1.5 million, up from 281,000 previously.This mortgage-market meltdown is happening largely because everyone in the money chain is anxious and wants to cash out at the same time. But it also comes back to rent. It’s anyone’s guess when the American economy will be up and running again and what sort of assistance the federal government will provide to those companies forced to close and those individuals suddenly out of a job. It’s hard to blame banks for not wanting to wait around for answers and instead issue margin calls on mortgage real estate investment trusts.Those jitters caused emergency sales from the REITs, including relatively safe (and more liquid) agency debt. But that can’t last forever. On Tuesday, Invesco Mortgage Capital Inc. said it could longer fund margin calls, following in the footsteps of AG Mortgage Investment Trust Inc., which said it failed to meet some margin calls on Friday and doesn’t expect to meet them in the future, and TPG RE Finance Trust Inc., which is seeking flexibility from lenders. They’re almost certainly not the only ones.For now, there’s only so much the Federal Reserve can do to address these strains. It announced open-ended purchases of both U.S. Treasuries and agency mortgage-backed securities on Monday. The central bank is wasting no time flexing its muscle: It’s targeting $250 billion of agency MBS purchases this week after buying $67 billion last week. The previous record was $33 billion in March 2009, according to Morgan Stanley. Many observers are confident that the Fed’s “whatever it takes” model will restore order to the agency MBS market in no time.For non-agency securities, there’s not yet a dedicated lifeline. My Bloomberg Opinion colleague Marcus Ashworth suggests these assets may be the next order of business for the Fed. It’s hard to argue with that, given the central bank’s already unprecedented moves into the corporate and municipal markets.Before the Fed launches yet another emergency facility, though, central bankers should assess the fiscal stimulus package from Congress. If lawmakers provide enough relief for the most affected Americans to get through these next few months and cover their rent, lease and mortgage payments, it might be enough to prevent the first domino from falling in Barrack’s example.The coronavirus outbreak has suddenly halted cash flows of all kinds. Washington needs to keep the spigot open.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Gold Investors Are Betting That It’s 2008 All Over Again

    Gold Investors Are Betting That It’s 2008 All Over Again

    (Bloomberg) -- Gold’s haven reputation took a serious beating, with prices tumbling as investors sought to free up cash amid a broad and devastating market rout.Sound familiar?Sure, it’s the story of gold for much of this month. But that’s only half the answer. It’s also a scenario that played out in the depths of the 2008 global financial crisis, right before gold started a years-long rally that culminated in the 2011 price record still in place today.For many analysts and investors, the parallels with 2008 suggest there’s a good chance that gold will bounce back strongly after this month’s pummeling.“If its price trajectory proves similar to 2008, we could see the precious metal’s benefits resurging as market stress continues to assert itself,” said Catherine Doyle, an investment specialist in the real-return team at Newton Investment Management. “We continue to have significant exposure for this very reason.”Spot gold rose 1.4% on Tuesday, after the Federal Reserve announced a massive second wave of initiatives to support a shuttered U.S. economy. Prices have still dropped about 7.5% from a peak on March 9, amid wild price swings. In late 2008, gold lost more than 20% over a month to bottom out near $700 in November, before haven buying returned.While there’s concern that the impact on the global economy from the coronavirus could be worse than the last global financial crisis, many also expect a bigger policy response.Another similarity with 2008 is that, while gold has fallen in recent weeks, the drop has been far outpaced by declines in equity markets and other commodities, so its relative purchasing power has risen, said Matthew McLennan, head of the global value team at First Eagle Investment Management, which manages about $101 billion in assets.“When the Fed progressively removes liquidity fears, provides forward guidance on rates, and when it possibly even controls the yield curve, and the economic softening is observable across the whole economy, the potential hedge value of gold can reassert itself powerfully,” he said.And while inflation expectations are plunging, fiscal authorities are likely to act aggressively, McLennan said.“The world at large has little appetite for deflation,” he said.Central banks from the Asia Pacific to Europe have already pledged to spend billions of dollars and implemented new policy steps. The U.S. has drawn up plans for a $2 trillion stimulus, although the process stumbled after Senate Democrats voted to reject the latest version of the legislation.Still, gold may have further to fall before it’s ready to rebound, assuming macro markets follow the playbook from the global financial crisis, Citigroup Inc. analysts said in a report Monday. They see the potential for the metal to touch fresh nominal highs above $2,000 an ounce in 2021.“But for now, many market participants may be repeating the mantra of ‘cash is king,’ and in particular the King Dollar.”For 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 Unleashes Unprecedented Measures to Shore Up Reeling Economy

    Fed Unleashes Unprecedented Measures to Shore Up Reeling Economy

    (Bloomberg) -- The Federal Reserve, racing again to contain mounting economic and financial-market fallout from the coronavirus, unveiled a sweeping series of measures that pushed the 106-year old central bank deeper into uncharted territory.In a surprise announcement Monday before markets opened in New York, the U.S. central bank said it will buy unlimited amounts of Treasury bonds and mortgage-backed securities to keep borrowing costs at rock-bottom levels -- and to help ensure chaotic markets function properly. It also set up programs to ensure credit flows to corporations as well as state and local governments.The Fed’s latest steps landed as investors wait for U.S. lawmakers to deliver a multi-trillion dollar package of coronavirus support, which failed to come together Sunday when Democrats objected that it did not do enough for average Americans.Following a string of emergency measures last week, the moves also increasingly push the central bank into new territory by providing direct support to U.S. employers, municipalities and households, which would traditionally be viewed as fiscal policy.“Wow, just wow,” George Rusnak, head of investment management at Wells Fargo Private Bank, said on Bloomberg Television. “Hopefully you’ll come out of this with some fiscal stimulus as well, and you’ll be set with good growth opportunities in the long run.”In a sign, however, of just how unnerved investors are by the pandemic, the Fed’s moves failed to spark anything beyond a brief rally in stocks and corporate bonds Monday after weeks of staggering losses.Stocks fell 4.5% in New York. Yields on 10-year U.S. Treasuries initially sank below 0.69% as investors digested the news before pushing back to around 0.74%.Some pockets of the market reacted positively to the Fed moves. Signs of stress in the corporate debt sector eased, with the CDX Investment Grade index spread tightening. Bond ETFs eligible for central-bank purchases rallied and the dollar retreated versus major peers.Economic ShutdownMonday’s Fed action followed an already-dizzying number of steps taken by Chairman Jerome Powell in the past three weeks that would have been unthinkable just months ago. They represent a dramatic reaction to the sudden stop inflicted on the economy by the contagion and by the subsequent panic among investors.Group of 20 finance ministers and central bank chiefs separately joined an emergency call to work on a joint response to the economic blow dealt by the pandemic.The U.S. economy is reeling as cases rise and the death toll mounts. Federal Reserve Bank of St. Louis President James Bullard predicted the U.S. unemployment rate may hit 30% in the second quarter, along with a 50% drop in gross domestic product. Morgan Stanley expects the U.S. economy to plummet 30% in the second quarter.The package included several unprecedented steps for the Fed, including intervention in the corporate bond market, purchases of commercial asset-backed mortgages and exchange-traded funds, and, if Congress clears the way, a significant Main Street lending program directly aimed at aiding small businesses.Not a ‘Slush Fund’“This is not a slush-fund,” U.S. Treasury Secretary Steven Mnuchin told Fox Business earlier on Monday. “It’s a mechanism we can use working with the Federal Reserve to provide another $4 trillion of liquidity into the market. That’s on top of the Fed’s balance sheet. This is a massive liquidity program.”Beyond the unlimited quantitative easing program, the new emergency facilities will employ a total of $300 billion, backed by $30 billion from the Treasury’s Exchange Stabilization Fund.Roberto Perli, a former Fed economist and partner at Cornerstone Macro LLC in Washington, said he expects those facilities to grow substantially if Congress moves ahead with plans to pump more money into the ESF.The draft of an economic aid bill currently being hashed out on Capitol Hill included $425 billion for the ESF to support Fed actions.The Fed’s new credit facilities carry limits on paying dividends and making stock buybacks for firms that defer interest payments, but have no explicit restrictions preventing beneficiaries from laying off workers.The Fed said a week ago it would buy at least $500 billion of Treasuries and $200 billion of agency MBS. The Fed will now make those purchases unlimited and will take on a slew of new efforts, many aimed at directly aiding employers and households, as well as cities and states.“This is a great step forward,” said Julia Coronado the president of MacroPolicy Perspectives. “Getting to the corporate bond market was critical. A lot of people needed to be clear the QE was unconstrained.”Other HighlightsTwo more programs were created to support large employers -- a Primary Market Corporate Credit Facility for new bond and loan issuance, and a Secondary Market Corporate Credit Facility to provide liquidity for outstanding corporate bonds.Yet another program, a Term Asset-Backed Securities Loan Facility, will “enable the issuance of asset-backed securities backed by student loans, auto loans, credit card loans, loans guaranteed by the Small Business Administration and certain other assets.”The central bank also said it would expand the existing Money Market Mutual Fund Liquidity Facility to include a wider range of securities, including municipal variable-rate demand notesFinally, the Fed said it would expand the existing Commercial Paper Funding Facility to also include high-quality municipal debt, another move to help cash-strapped states and cities.“The Fed’s latest moves signal a resounding ‘whatever it takes’ approach from the central bank, and dispel any notion that monetary policy makers are either sparing ammunition or running out of unconventional tools,” Andrew Husby and Carl Riccadonna, of Bloomberg Economics, wrote in a note to clients.(Updates with outlook for more actions in sixth paragraph, plus markets in ninth.)For 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.

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