A great new feature/app has just been announced for the iPhone -- a "location-based reminder." This app sets a reminder or alarm, as an example, to buy dog food when you might pass in front of a PetSmart.
1. the US dollar vs. the euro;
2. the price of copper;
3. the price of gold;
4. the price of Morgan Stanley's common stock; and
5. the price of General Motors' common stock
On October 3, 2008, the S&P 500 closed at 1099.23, the exact same level that it closed at last night.
This memo was sent by James Gorman last night to the employees at Morgan Stanley (MS) in order to clarify "the confusion and misinformation":
Over the past few weeks, there has been an enormous amount of confusion and misinformation about Morgan Stanley and others in our peer group. In fragile markets, where fear triumphs over common sense, these things are bound to happen. It is easy to try to respond to the rumor of the day, but that is not usually productive. Instead we should let balanced third parties do their own analysis and let the facts speak.
To help you wade through the maze of numbers and information, it might be worth reading two analyst reports that were published this morning. One is from Howard Chen at Credit Suisse that examines Capital, Funding and Liquidity at Morgan Stanley and Goldman Sachs and, in some detail, highlights the dramatic improvement to our financial strength over the last three years. The other is from Matthew Burnell at Wells Fargo, who writes about Eurozone and Derivative exposure for the sector and plainly underscores that our exposure to the Eurozone and France in particular is not a concern.
I encourage you to stay focused on your job, remember that we are a client-focused Firm and do what you need to do to help our clients navigate this turbulence. It is in times like these when our professionalism, market wisdom and client focus are truly valued.
The U.S. stock market, on a P/E multiple basis, appears to be discounting 2011 S&P 500 earnings of about $78 a share, which I believe will turn out too low. (The current rate of earnings is annualizing at $100 a share in third quarter 2011). But, given risk premiums (earnings yield less corporate bond yields), the market is discounting 2012 S&P profits of slightly under $60 a share, which, to me, seems ridiculous.
Though the last two recessions saw sharp profits downturns, the average recessionary earnings drop is only about 16%. Today, corporations are well positioned from a balance sheet (liquidity and inventory-wise) compared to those previous periods.
I finally think Yahoo! is in play, and the most likely buyers would be Alibaba and private equity firm Silver Lake, which recently provided Alibaba with financing.
