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Today's big stories

Morgan Stanley reported a meanly strong set of third-quarter results
Parts of your portfolio could suffer if next month’s US elections end up as predicted – Read Now
Pharmaceutical giant Roche’s healthy earnings update was poorly received by investors

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Lifestyles Of The Rich And Famous

What’s Going On Here?

Investment bank Morgan Stanley reported better third-quarter results than expected on Thursday – but its own investors played it cool.

What Does This Mean?

Morgan Stanley’s revenue and profit both beat analysts’ overall forecasts. Its trading operation – helping clients chop and change their portfolios – was responsible for the lion’s share of the outperformance, bringing in almost half a billion dollars more than expected. Investment and “wealth” management – the latter looking after the uber-rich’s riches – generated more revenue than expected too, but wealth fell short in terms of its profit margin. Given that this business line contributes over half “Margin” Stanley’s total profit, that might’ve given otherwise excited investors a reason to act relatively unimpressed: the bank’s share price only ticked up 2%…

Why Should I Care?

Zooming in: Building up the roster.
Morgan Stanley’s CEO is known to be a dealmaker, and he’s accordingly expanded its investment management operations – first by purchasing Smith Barney in the wake of the financial crisis over a decade ago, and more recently by buying Canadian fintech Solium Capital and online brokerage E-Trade. Between Solium’s management of employee stock plans and E-Trade’s catering to a new wave of amateur capitalists, Morgan Stanley’s building an increasingly rare beast these days: a full-service investment management platform customers appear happy to pay for. Last week’s announcement that it’s adding rival Eaton Vance to the mix should strengthen things further.

The bigger picture: How much?
Morgan Stanley reported that the amount its investment management divisions, er, manage rose last quarter – but it’s still got nothing on the world’s biggest such player, BlackRock. The firm now has almost $8 trillion under management – and it revealed earlier this week that investors were pouring cash into long-term strategies last quarter, particularly “fixed income” funds (i.e. bonds), while yanking cash from passive funds tracking stock indexes.

Here’s a question: What makes a good wealth manager?

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3/3

A Spoonful Of Sugar

What’s Going On Here?

Roche, the world’s second-biggest pharmaceutical company, released a largely positive third-quarter update on Thursday – but investors found it a bitter pill to swallow.

What Does This Mean?

Roche’s revenue would have come in 1% higher than the same time last year, but the rising value of its native Swiss currency reduced what overseas (and, indeed overland) sales were worth when brought back home. Revenue instead worked out 5% lower than a year ago – potentially rattling investors, who sent the company's stock down 3%. Still, Roche’s du jour diagnostics business (which sells COVID-19 testing kits) continued to grow, with sales there up 2%. And even with the aforementioned “currency headwinds”, the firm confirmed it’ll rake in about as much this year as previously promised – which might bode well for rival diagnosticians Abbott Laboratories and acquisition-tastic Siemens Healthineers.

Why Should I Care?

The bigger picture: Supposition or suppository?
Diagnostics-focused pharma firms haven’t been investors’ number-one priority recently, given the understandable attention paid to Big Pharma’s attempts to develop a coronavirus vaccine. But that laser focus has its drawbacks: fair-weather investors quickly grew skittish when companies like AstraZeneca (last month) and Johnson & Johnson and Eli Lilly (this week) announced pauses to clinical vaccine trials in response to patient illnesses (tweet this). Temporary setbacks are par for the course with new treatments – but Eli Lilly’s 3% drop after its announcement suggests investors were hoping the drugmaker would follow a smoother path.

Zooming out: From farm to table.
Drugstore chain Walgreens Boots Alliance announced stronger-than-predicted quarterly results on Thursday. That was partly thanks to the pandemic boosting sales of health and wellness items – including, perhaps, Stateside sales of Roche’s or rivals’ test kits. International revenue was a little queasier, however: sales fell as Boots stores were shuttered. Nevertheless, there was more good than bad – and Walgreens’ stock rose 3%.

Let’s get clinical: How Big Pharma makes big bucks.

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– Harper Lee (an American novelist)

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📚 What we're reading

A coffee a day might keep bankruptcy away (The New York Times)
Working from home the fairground in Japan (Reuters)
Life hack: how to listen to someone you disagree with (TED)

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Finimize - 🍾 Morgan Stanley bottles it

Today's big stories

Lifestyles Of The Rich And Famous

What’s Going On Here?

What Does This Mean?

Why Should I Care?

Sore Losers

🌍 Become a globally minded investor

A Spoonful Of Sugar

What’s Going On Here?

What Does This Mean?

Why Should I Care?

📆 Get ready for earnings season

💰 New investors, this one’s for you

Older messages

🙌 New Events: A Beginners Guide To Investing & The Future Is Female

😱 IBM is no more

📉 30 reasons to ditch US stocks

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