Citadel Bought Morgan Stanley's Options Market Making Unit in July

In July, Citadel bought Morgan Stanley's equity options market making team, and took on their positions.

Morgan Stanley was the last major bank in the market making business now occupied by HFT firms. 

Jim Esposito, President of Citadel Securities, said "we are maniacally focused on being the best market maker" and also identified what Citadel is not - "we are not a bank".

Musk Hires Ex-Morgan Stanley banker as CFO of xAI

Anthony Armstrong has been hired as CFO of xAI, purveyors of Grok, signalling commitment to scaling operations and financial strategy during a critical growth period for the company.

Sale of Kantar Media Completes

Kantar Media has been sold to HIG Capital in a deal estimated to be around $1bn. 

HIG was advised by Morgan Stanley, ING and Simpson Thacher & Bartlett. 

Kantar Media is media data business, with activities including audience measurement, consumer profiling and advertising intelligence. Kantar Media is based in London and active in 60 markets worldwide and has been operationally independent from Kantar since 2023. 

Monzo Reportedly Hires Morgan Stanley to Prepare IPO

The UK digital bank, approaching its 10th anniversary, is preparing to pitch to investors in the build up to a potential IPO, believed to be targeted at the £6-£7bn mark for a listing in London or New York. Key customer metrics include: 11 million personal customers and 600,000 business customers.

Palantir Stock is Too High

This is the view of Morgan Stanley analyst Sanjit Singh and the stock price seems to be support this. Palantir has a platform called Foundry for big data analytics.

Activist Investor Defence at Disney - Gorman Appointment

Morgan Stanley boss James Gorman is one of two executives nominated for appointment to Disney's board to shore up strength to defend against activist shareholder, to take effect February 2024.This was done after a "lengthy and comprehensive search". Former Group CEO of Sky, Jeremy Darroch, is the other nominee.

So-called "Gamma Hammer" Fund Bets on Dampening Coronavirus Volatility

The fund nicknamed "Gamma Hammer" from Parametric (owned by Morgan Stanley following its acquisition of Eaton Vance) has been selling options in the wake of US stimulus and vaccine-driven expectations of a dampening in volatility.

Big Block Trades Signal Sell-Off Linked to Family Office Archegos run by Bill Hwang

An approximate $30bn of block trades executed through GS, MS and Deutsche Bank is believed to be linked to family office of Bill Hwang. Tencent, Baidu and GSX (Chinese EdTech) were among the names sold. Bill previously founded and managed Tiger Asia Management in 2001 converting his fund into a family office in 2013, following insider trading charges in 2012.

America's Distaste of Wall Street's Involvement with Physical Commodities

Summary of the Senate's Findings

November 20, 2014: Report and Member Statements has been published on hsgac.senate.gov ending a two year investigation into Wall Street involvement in trading physical commodities.

Jacques Gabillon was one of the witnesses who gave testimony.

 Much of the discussion revolved around aluminium warehousing and so-called "merry go round" transactions. There was also discussion of so-called "BCR" or bid cost recovery payments.

Focus on Aluminium and Alleged Inflation of the "Midwest Premium"

Discontent among market participants (represented by the Aluminium Users Group, which includes Coca Cola) in the aluminium sector centred around the inflation of the "Midwest Premium" (similar concerns had been raised by industry consumers earlier to the European Commission) and also around extended time to take delivery from physical contracts due to queues at warehouses, created by "merry go round" transactions.

Goldman Sachs entered into a number of these deals with Red Kite (which is said to also hold more than half of the LME's copper inventories).

The Global ETF Market & Focus: From Super-Cheap SCHX to Innovative EG Shares

Awesome Size of the Global ETF Market

The Global ETF Market, as reported by London's Financial Times newspaper, has invested in it a sum greater than 2 trillion dollars. It also states that nearly 70% of that figure is held by Blackrock's iShares (acquired from Barclays in 2009), State Street and Vanguard. In Europe, Lyxor, owned by Societe Generale, is also pretty big.

ETFGI is a company focused on ETF research, started by staff from Morgan Stanley, involved in investment research and strategies.

How does an investor compare ETFs?

Metrics for Comparison

One metric is the EXPENSE RATIO. One of the cheapest ETFs is the Charles Schwab US Large Cap ETF  (SCHX) which has an expense ratio of 0.04%. It is non-leveraged and holds assets of $1bn (about 18% of holdings are in the IT sector).

Morningstar is a company that gives ratings to ETFs,based on performance, adjusted for cost, and adjusted for risk.

ETF "Categories"

They also assign special categories to ETFs, depending on the asset class. For example, a US stock ETF might be classified as "Large Growth", "Large Value" or "Large Blend" or sector-based e.g. "Real Estate", "Utilities", "Technology". In the area of Alternatives they have categories like "Managed Futures", "Volatility", "Equity Precious Metals" or "Inverse Equity".

What does the "Equity Precious Metals" category consist of?

These funds invest in equities connected with precious metals, such as gold mining companies.

ETF Exchanges

NYSE ARCA has a whole range of tradable ETFs, searchable by issuer. For example, iShares have 10 ETFs on ARCA.

Indian ETFs

EG Shares has developed Indian ETFs. Once such, is NYSE:INXX, an Indian Infrastructure ETF. It has an expense ratio of 85bps. The investment is done via equities, ADRs and GDRs. The companies purchased must have a market cap of at least $200m at time of purchase.

EG Shares also produce Brazil and China infrastructure ETFs. CEO Marten Hoekstra was formely the CEO of UBS Wealth Management Americas.

Qatar mulls Morgan Stanley's Commodities Business

Qatari Prime Minister Sheikh Hamad bin Jassim Al Thani (Prime Minister since April 2007) is contemplating a potential stake in Morgan Stanley's Commodities Business, which could benefit both parties in terms of information sharing.The business is run by Colin Bryce (who started his career at the British National Oil Corporation, bought by BP in 1988) and Simon Greenshields (who has specialized in gas and power).

Qatar Holding LLC is an investment arm of the QIA, which has an interest in investing in commodities (which owned 12% of Xstrata, run by CEO Mick Davis, as of end August 2012). Mick honed his financial and board-leading skills as CFO of Billiton PLC.

MS Debt More Risky than Bank of America, says CDS

495 basis points is the highest level it's been in 2.5 years, implying a cost of $495,000 a year to insure $10m of Morgan Stanley bonds for 5 years (more expensive than Bank of America). At 500bps premium, bonds are regarded to have junk status, say Markit. Shares in MS fell 10% to $13.51. The main driver for the concerns is MS' exposure to European bank debt, in particular France.

Dodd-Frank Prods Morgan Stanley PDT.exit()

Morgan Stanley will close its PDT group and revive it in the shape of PDT Advisors by the end of 2012. It expects the full staff of 60 to join the new firm.

Morgan Stanley Back in the Black, Bye Bye John Mack

Morgan Stanley reported its first quarterly profit in the last three quarters, chiming in at $757m (having made a loss of $159m the previous quarter). Chief exec, John Mack, announced he is stepping down at the end of December. Shares were up 6.5%.

Friends Down, Pfizer eats Wyeth, Steel down 50% since Sep08

The Sales for Friends Provident (the UK pensions and insurance tout) were down 27%, but only down 4% in the fourth quarter. Current CEO Trevor Matthews (formerly with Standard Life) joined as CEO in July 2008. It is interesting to understand the origins of Friends Provident. Friends was founded in Bradford in 1832 and has Quaker origins (Samuel Tuke and Joseph Rowntree). Their aim was "to provide the security of life assurance" to Quakers and their families. 45 friends put up an initial £10,700 Guarantee Bond. The company demutualised in 2001, with a big IPO advertising campaign entitled "You're better off with Friends". Its debt issuer credit rating is BBB (good). 

Pfizer, the world's biggest pharmaceutical company, is expected to conduct a blockbuster takeover of US rival Wyeth for between $65bn and $70bn (editor: deal closed at $68bn). 

Pfizer, being advised by Merrill Lynch and Goldman Sachs, is under pressure from investors to replace >$12bn revenues the company may lose in three years (that's an average $4bn a year) when Lipitor, the cholesterol pill and best-selling medicine in history, faces competition from generic drug makers (the patent expires in November 2011). 

Wyeth is being advised by MS and Evercore Partners (based in East 52nd Street, New York). Pfizer's R&D investment is impressive; at Sandwich, Kent, over 2000 drug-searching scientists are employed. The transaction consisted of cash, debt and stock. 

Corus, the largest steelmaker in the UK and a subsidiary of Tata Steel, is expected to announce the loss of 3,500 jobs as demand falls from carmakers and the construction industry. Steel prices have dropped 50% since September. Steel derivatives on the LME offer risk management for the steel industry. Hot places to trade steel derivatives include the LME, CME, Shanghai Futures Exchage, India and Dubai. 

India is the world's fifth largest steel maker, China is the largest.

Morgan Stanley Smith Barney is Born

Citi Sale

Citigroup has sold a majority stake in Smith Barney for $2.7 billion in cash in return for a 51% share in the Joint Venture (creating the world's biggest wealth manager with $1.7 trillion in client assets). Citi is expected to reveal up to $10bn in losses on Jan 22 when it releases figures for Q4 2008, including a$5bn credit-value adjustment on derivative positions, excluding monolines.

Deal Rationale

The JV is expected to achieve cost savings of about $11bn, partly by rationalizing and consolidating key functions e.g. technology, operations, support, product development and marketing, which consitute approximately 15% of the combined firm's expense base (excluding FinAdvisor commission compensation).