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When secret agents go off-road: The Bentley SUV
Lifestyle, 4:01
<p>The car closely associated with British spy James Bond has had a US-style makeover - introducing Bentley's SUV, the Bentayga.</p> <p>According to Forbes magazine, the Bentayga starts at $229,100 before tax and is a more "svelte and handsome" version its ugly concept forbear. </p> <p>The car will be shown to the public for the first time at the Frankfurt Car Show this month. Sales will start in Europe, the Middle East, followed by China and US, late in the second quarter.</p> <p>For motor-heads: the sporty automobile has a  6.0 liter, 12-cylinder twin-turbo engine -  a version of which is set to appear in the Audi A8 limousine and Volkswagen Phaeton II - which takes you to 60 mph in just four seconds.</p> <p>Perfect for out-running Russian spies in an Alpine car chase.<br /> Photo: Bentley</p>
Tesco sale is Asia’s biggest private-equity Deal
Capital Markets
<p>Private-equity firm MBK Partners sealed an over $6 billion deal for U.K. retailer Tesco’s South Korea business, the biggest-ever in Asia, including debt. WSJ's Rick Carew looks at why Tesco sold and why MBK wants to own the retailer, known as Homeplus. Photo: Reuters</p> <p>This video originally appeared in the WSJ<br /> Photo: Gordon Joly</p>
Apple vs Google vs Samsung: The war for the mobile wallet
FinTech
<p>It’s on! Google and Samsung are now among the first mobile wallet providers to join MasterCard's newly launched Digital Enablement Express, a platform intended to speed up the roll-out of digital commerce.</p> <p>This comes as Apple cranks up its bank partnerships in the US and Europe ahead of today’s “Hey Siri” media event.  The war for the mobile payments supremacy is in full swing, but how do the belligerents compared?</p> <p>Apple </p> <p>Apple’s OS-based proprietary system Apply Pay allows you to pay by taping your iPhone over an NFC-enabled point-of-sale (POS) terminals. It has ready partnered with over 2,500 banks and credit card issuers, and the number is growing. But they have teething problems, Apply Pay adoption rates have been disappointing to date.</p> <p>Google</p> <p>Google’s first foray in payments - Google Wallet - will soon be discontinued,  making way for its latest offering - Android Pay- which will be launched with the Android 6.0 Marshmallow OS. It doesn’t have as many partnerships as Apple yet, but it hopes to make life harder for its rival by leveraging its one  big advantage: it works across all NFC-enabled Android devices. </p> <p>Samsung  </p> <p>The South Korean firm is a latecomer to the space but will no doubt shake things up with Samsung Pay. This system has wider coverage than its rivals because it allows users to make payments by placing their phone on, or near, magnetic stripe card readers already in wide use. So merchants do not have to install special equipment.  It has already signed up the like of Visa, MasterCard and Chase as partners.</p> <p>The other guys</p> <p>You  cannot talk about mobile payments and neglect to mention Alibaba’s AliPay or Tencent’s WeChat payments platform, both NFC-based. Focusing on China for now, these two are at each other throats but are yet to do battle with the other three. That said, they still have foothold in Asia, potentially bringing them up against Samsung, or putting a damper on any ambitions by Apple or Google to expand into China.  <br /> Photo: Thomson20192</p>
That was not a crash
Capital Markets
<p>Following the market decline of recent weeks, the most reliable valuation measures we identify now project average annual nominal returns for the S&amp;P 500 of about 0.5% in the next 10 years. On a broad range of historically reliable valuation measures (see Ockham’s Razor and the Market Cycle) the May peak in the S&amp;P 500 reached valuations averaging about 114% above run-of-the-mill historical norms – more than double the valuation levels that have historically been associated with the 10% average expected market returns that investors have enjoyed over the long-term. At present, those measures have retreated to about 92% above historical norms.<br /> Keep in mind that low interest rates don’t raise the estimated 10-year expected return on stocks from the current 0.5% level. Low interest rates only make the low expected return on stocks somewhat more “acceptable” because the alternatives are similarly dismal. The Federal Reserve’s policies of zero interest rates and quantitative easing have done nothing but to encourage yield-seeking speculation, bringing valuations to extreme levels, and leaving prospective future investment returns equally depressed.<br /> Those who assert that high equity valuations are “justified” by low interest rates are actually (and probably unknowingly) saying that 0.5% expected returns on equities over the coming decade are a-okay with them. But it’s critically important to understand that while low interest may help to explainwhy current market valuations have been driven to obscene levels, low rates do not change the relationship – the correspondence – between elevated valuation levels and dismal subsequent long-term market returns.<br /> The chart below shows the relationship between the most reliable valuation measure we identify (MarketCap/GVA) versus actual subsequent S&amp;P 500 total returns over the following decade. The current level of valuations is associated with a likely range of 10-year returns between about -3% and +4%, with an average expectation of 0.5% annually.</p> <p>The following chart shows the same data from a time-series perspective. Try the identical analysis with other popular valuation indicators and you’ll see why we rely on MarketCap/GVA and similar variants such as price/revenue, market cap/GDP and our margin-adjusted version of the Shiller P/E. We see all kinds of valuation metrics trotted out by analysts as if they’re meaningful. It’s only when investors examine the historical data (or live through the consequences of failing to do so) that they realize how little relationship many popular valuation metrics have with actual subsequent market returns. For our part, we insist on evidence. It makes us much less fun to hang around with at parties if the conversation turns toward the markets.</p> <p>Market conditions will change. Look at every market cycle in history, and you’ll see that prospective market returns have always approached 9-10% or more in every market cycle – even when interest rates were similar to current levels (prior to the mid-1960’s). The best opportunity to boost investment exposure is at points in the market cycle where a ma</p>
Nerves of steel: City bosses abseil Lloyd’s building for charity
Lifestyle, 4:01
<p>&nbsp;</p> <p>Lord Mayor Alderman Alan Yarrow led a group of 85 abseilers down the 289ft tall building façade of one of the City’s most iconic buildings to support the annual Lord Mayor’s Appeal, Finbuzz reports.</p> <p>The aim was to raise a total of £100k for a number of charities including Mencap and Scope. Charity events will continue to be held in 2015, so check out the Lord Mayor’s Appeal event calendar.</p> <p>For most participants, including Lawson Muncaster, founder and managing director of City A.M., it was their first time ever abseiling.</p> <p>. @CityAM sends founder over the edge (of the Lloyd's Building - for charity) http://t.co/oErsfh7ouypic.twitter.com/Ap3IpGjC6c<br /> — City A.M. (@CityAM) September 4, 2015<br /> No special preparation or shoes were needed, however a team of professional climbers was ready to help on the roof. Still many abseilers stalled for several minutes before stepping over the edge. Some humorously confessed that they should not have watched abseiling YouTube videos the day before.</p> <p>Despite the nerves, the Master Carman of the year Lieutenant Colonel Paul Holder RLC, who donned a Superman costume, said he never felt so confident and relaxed.</p> <p>“It is quite a lot of adrenaline, I really enjoyed it, and for a good cause,” commented Ben Fuller, Head of the Investment Trust Team at Winterflood Securities.</p> <p> The Master C</p>
Three Nomura RMBS traders indicted on charges of conspiracy, fraud
Capital Markets
<p>Three former Nomura Holdings, Inc. (ADR) (NYSE:NMR) (TYO:8604) RMBS traders have been indicted in a Connecticut federal court for swindling millions of dollars from customers while making millions themselves.</p> <p>The 10-count indictment, returned on September 3 and unsealed on Tuesday, alleges that Ross Shapiro, Michael Gramins and Tyler Peters committed conspiracy and fraud offenses while supervising the Residential Mortgage Backed Securities Desk at Nomura Securities International in New York.</p> <p>“The indictment alleges that, for several years, these three defendants handsomely profited by repeatedly lying to Nomura’s customers in violation of federal law,” said U.S. Attorney Deirdre M. Daly in a statement. “ The victims of this alleged conspiracy include numerous funds, retirement plan providers and taxpayer-provided bailout funds that helped our nation to recover from the 2008 financial crisis. Our investigation into corrupt practices in the RMBS and other financial markets continues.”</p> <p>Shapiro was the managing director who oversaw all of Nomura’s trading in RMBS, Gramins was the executive director at the RMBS desk and oversaw trading of bonds comprised of sub-prime and option ARM loans, and Peters was the senior-most vice president of the RMBS desk and focused on Nomura’s trading of bonds composed of prime and alt-A loans.<br /> Nomura RMBS Traders accused of manipulating the bond market<br /> The three are accused of orchestrating a scheme of fraud and deceit to manipulate the bond market in their own favor, resulting in losses that were passed on to investors. They allegedly inflated purchase prices at which Nomura could buy a RMBS bond to induce customers to pay higher prices and deflated prices at which Nomura could sell.</p> <p>They are also said to have trained their subordinates to lie to customers. In one instance, one of trader told a salesperson that he had “lied” about a bond price and “marked up by 2 pts,” to which the salesperson responded “haha sick ... well played.”</p> <p>The three, former Lehman Brothers Holdings Inc Plan Trust (OTCMKTS:LEHMQ) employees, face one count of conspiracy, two counts of securities fraud, and seven counts of wire fraud each. The conspiracy count carries with it a maximum term of imprisonment of five years, and the securities and wire fraud have a maximum sentence of 20 years on each count.<br /> “When investment professionals put profits before prudence and the law, it creates a dangerous environment for investors and threatens the integrity of our financial markets,” said Steven Perez, Special Agent in Charge of the Federal Housing Finance Agency Office of Inspector General, in a statement.</p> <p>The SEC also announced on Tuesday related civil fraud charges against Shapiro, Gramins and Peters.</p> <p>According to the commission’s complaint, the three generated at least $5 million in additional revenue from Nomura, and the lies and omissions by the subordinates they trained and coached generated at least $2 </p>
Daily Scan: Abenomics pulls Japan from the brink, Asia rallies
Capital Markets
<p>The prospect of more stimulus in Japan helped drive a 7.7% surge  on the Nikkei today, dragging it back from a seven-month low. The rebound came after Prime Minister Shinzo Abe told a Bank of America-Merill Lynch conference in Tokyo today that he pledged to cut corporate tax rates by a least 3.3% next year, AP reports.</p> <p>The rest of Asia was a field of green by the end of trading. With the Shanghai stock market closing 2.3%, bringing it a full 10% higher than its late August low, indicating the selloff has already hit its trough.</p> <p>The global surge is now set to continue in Europe, with the pan-European FTSEurofirst 300 index up more than 2%in early trade. This is how the other Asian markets performed:</p> <p> Hang Seng: +4.10%<br /> Jakarta Comp: +0.69%<br /> KLSE Comp: +1.02%<br /> Straits Times: +1.48%<br /> Seoul Comp: +2.96</p> <p>Here is what else you need to know:</p> <p>World Bank chief economist warns Fed to delay rate rise. Chief economist Kaushik Basu has warned the US Federal Reserve that it risks triggering “panic and turmoil” in emerging markets if it opts to raise rates at its September meeting and should hold fire until the global economy is on a surer footing. Financial Times (paywall)</p> <p>Southeast Asian reserves shrinking rapidly. The lowering of the yuan's reference rate and expectations of a U.S. interest rate hike has spurred sell-offs of South Asian currencies.  From July to August, Malaysia and Indonesia saw the steepest drops in their currency reserves. Nikkei<br /> Bangkok shrine attack suspect 'gave device to bomber'. Thai police say a key suspect in the Bangkok shrine bombing has confessed to giving a bag containing a device to the man who carried out the attack that killed 20 people at the Erawan Shrine on August 17. BBC<br /> China leader firms up plans for US state visit. President Xi Jinping will head to the US for a lengthy and elaborate state visit later this month. Hopes of any breakthrough are low for the president's trip, which begins in Seattle and ends at the United Nations in New York. SCMP (Paywall) </p> <p>Australia to take in 12,000 Syrians. Amid growing pressure to do more to help those displaced by violence in the Middle East, Prime Minister Tony Abbott announced that Australia would accept 12,000 Syrians from persecuted minorities on top of the 13,750 overall intake of confirmed refugees for 2015. BBC</p> <p>Queen becomes UK's longest reigning monarch. Queen Elizabeth II is to become Britain's longest-reigning monarch today when she passes the record set by her great-great-grandmother Queen Victoria: 63 years and seven months. BBC</p> <p>Netflix to launched in Hong Kong, Singapore next year. US streaming service said on Wednesday it will launch the new Asia services in early 2016 as part of a larger global expansion. Netflix, which recently launched in Japan, will also roll out coverage to South Korea and Taiwan. SCMP (pay</p>
[Book Review] Misbehaving: The Making of Behavioral Economics
Lifestyle, 4:01
<p>Richard H. Thaler has spent his career studying the radical notion that the central agents in the economy are humans?predictable, error-prone individuals. Misbehaving: The Making of Behavioral Economics is his arresting, frequently hilarious account of the struggle to bring an academic discipline back down to earth?and change the way we think about economics, ourselves, and our world.</p> <p>Traditional economics assumes rational actors. Early in his research, Thaler realized these Spock-like automatons were nothing like real people. Whether buying a clock radio, selling basketball tickets, or applying for a mortgage, we all succumb to biases and make decisions that deviate from the standards of rationality assumed by economists. In other words, we misbehave. More importantly, our misbehavior has serious consequences. Dismissed at first by economists as an amusing sideshow, the study of human miscalculations and their effects on markets now drives efforts to make better decisions in our lives, our businesses, and our governments.</p> <p>Coupling recent discoveries in human psychology with a practical understanding of incentives and market behavior, Thaler enlightens readers about how to make smarter decisions in an increasingly mystifying world. He reveals how behavioral economic analysis opens up new ways to look at everything from household finance to assigning faculty offices in a new building, to TV game shows, the NFL draft, and businesses like Uber.</p> <p>Laced with antic stories of Thaler’s spirited battles with the bastions of traditional economic thinking, Misbehaving: The Making of Behavioral Economics is a singular look into profound human foibles. When economics meets psychology, the implications for individuals, managers, and policy makers are both profound and entertaining.</p> <p>This article was published by ValueWalk. </p> <p>&nbsp;</p>
Video: America has more opportunities today than 60 years ago, says Ken Langone
Lifestyle, 4:01
<p>"America owns the world for the next, at least, 25 years," says Ken Langone, co-founder of Home Depot, on Wall Street Week. There are more opportunities for young people today than there were 60 years ago, Langone says. Langone, a proud Republican, says he supports New Jersey Governor Chris Christie for president in 2016, but will back whomever gets the Republican nomination. The Republicans "need to have definition," he says, saying many candidates such as Sen. Mark Rubio are inexperienced and running for the wrong reasons.</p> <p>&nbsp;</p>
Does Morgan Stanley add value for investors?
Asset Management
<p>&nbsp;</p> <p>&nbsp;</p> <p>In an April 21, 2015 column, New York Times reporter Nathaniel Popper observed that, over the last few years, a growing line of mutual funds created by the likes of Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Wells Fargo have attracted billions of dollars from investors looking to earn a good return.</p> <p>Popper noted that in the latest 10-year period, Morningstar data showed that only 38% of Morgan Stanley’s mutual funds outperformed their analyst-assigned benchmarks. Thus, while the fees these funds have generated are among the few consistent bright spots of growth on Wall Street, there is still a question for investors: Have these banks’ actively managed mutual funds actually been good investment choices?</p> <p>Today, I’ll provide further insights into that question as I continue my series evaluating the performance of the market’s foremost actively managed fund families with an in-depth look at Morgan Stanley Investment Management.</p> <p>According to Morningstar, as of April 30, 2015, Morgan Stanley had over $34 billion in assets under management in mutual funds. The firm’s website states: “Morgan Stanley Investment Management strives to provide outstanding long-term investment performance and best-in-class service to a diverse client base, which includes governments, institutions, corporations and individuals worldwide. Our global structure leverages the breadth, depth and access of the Morgan Stanley franchise to provide our clients a comprehensive suite of investment management solutions.”</p> <p>Does Morgan Stanley deliver on what they strive for? Have its funds been adding value for investors, or was the firm the real beneficiary?</p> <p>Active versus passive</p> <p>As is my practice, I’ll compare the performance of Morgan Stanley’s actively managed equity funds to similar fund offerings from two prominent providers of passively managed funds, Dimensional Fund Advisors (DFA) and Vanguard. (Full disclosure: My firm, Buckingham, recommends DFA funds in constructing client portfolios.)</p> <p>To keep the list to a manageable number of funds, and to make sure I examine long-term results through full economic cycles, the period covered will be the 15 years from April 2000 through March 2015. I’ll use the lowest-cost shares when more than one class of fund is available for the full period. In cases where Morgan Stanley has more than one fund in an asset class, I’ll use the average return of its funds in the comparison. The table below shows the performance of 13 of Morgan Stanley’s mutual funds covering seven asset classes – five domestic funds and eight international funds.</p> <p>April 2000 - March 2015</p> <p>Fund<br /> Symbol<br /> Annualized Return (%)<br /> Expense Ratio (%)</p> <p>U.S. Large Growth</p> <p>Morgan Stanley Multi-Cap Growth<br /> CPODX<br /> 0.2<br /> 0.92</p> <p>Morgan Stanley Institutional Opportunity<br /> MGELX<br /> 3.0<br /> 1.67</p> <p>Morgan Stanley Institutional Growth<br /> MSEGX<br /> 4.0<br /> 0.96</p> <p>Consulting Group Large Cap Growth<br /> TLGUX<br /> 1.9<br /> 0.67</p> <p>Morgan Stanley Average</p> <p>2.3<br /> 1.06</p> <p>Vanguard Growth Index</p>