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from Breakingviews:

Morgan Stanley gets most relief from first quarter

By Antony Currie

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Few banks have reported much to crow about in their first-quarter earnings. But Morgan Stanley can claim relief, at least, from the $1.45 billion in net income it unveiled on Thursday. Chief Executive James Gorman presided over a far better start to the year than in 2013, including bucking the Wall Street trend in fixed-income trading. More importantly, Gorman looks closer to hitting targets than rivals like Bank of America and Citigroup.

Even so, Morgan Stanley’s showing was not as good as Goldman Sachs managed. The bank run by Lloyd Blankfein earned an annualized return on equity of 10.9 percent in the quarter, compared with 8.9 percent at Gorman’s shop – though Goldman relied on some $500 million more in investment gains than Citi analysts had expected. Morgan Stanley’s ROE is therefore still running shy of the 10 percent seen as a decent proxy for banks’ cost of capital. But momentum seems to be building toward that goal.

In one illustration of this, Morgan Stanley’s fixed-income, currency and commodities unit cranked out a 35 percent increase in its top line from the first quarter last year. BofA eked out a 2 percent increase, while Citi, JPMorgan and Goldman were down between 11 percent and 21 percent. The equities trading unit also had a good quarter, with its $1.7 billion of revenue just besting Goldman’s showing for the second time in three periods.

from Alison Frankel:

Can banks force clients to litigate, not arbitrate?

If you are a customer of a big bank -- let's say a merchant unhappy about the fees you're being charged to process credit card transactions -- good luck trying to bring claims in federal court when you're subject to an arbitration provision. As you probably recall, in last term's opinion in American Express v. Italian Colors, the U.S. Supreme Court continued its genuflection at the altar of the Federal Arbitration Act, holding definitively that if you've signed an agreement requiring you to arbitrate your claims, you're stuck with it even if you can't afford to vindicate your statutory rights via individual arbitration.

But what if you're a bank customer who wants to go to arbitration -- and, in a weird role-reversal, the bank is insisting that you must instead bring a federal district court suit? Will courts show the same deference to arbitration when a plaintiff, rather than a defendant, is invoking the right to arbitrate and not litigate?

from India Insight:

Markets this week: M&M, GAIL top Sensex losers

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By Sankalp Phartiyal and Ankush Arora

India’s benchmark indexes ended lower this week after scaling fresh peaks on Tuesday. The Sensex ended the week down 0.26 percent in its second consecutive week of falls. Indian markets were shut on Monday for a public holiday.

While strong buying by foreign investors bolstered blue chips, profit-booking and worries U.S. interest rates would rise sooner than expected kept shares under pressure.

from Breakingviews:

Lego clan beats Goldman in $1.5 bln ISS float

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By Quentin Webb

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Lego has trumped Goldman Sachs in the $1.5 billion flotation of cleaning giant ISS. The Danish toymaker’s owners, the Kirk Kristiansen family, made a minority investment in the group in 2012 to help cut its debt. ISS’s successful stock-market debut has brought a sparkling return for the Lego latecomers, leaving owners EQT and Goldman in the dust.

from Breakingviews:

Lazard puts M&A feet firmly in big boys’ camp

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By Antony Currie

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Lazard has put its feet firmly in the big boys’ camp. The advisory and asset management firm didn’t just make progress on financial targets that Chief Executive Ken Jacobs set two years ago. Its bankers also goosed revenue in the second half of the year. That makes Lazard look more like Goldman Sachs, Morgan Stanley and JPMorgan than smaller rivals Evercore and Greenhill.

from MacroScope:

Why are US corporate profits so high? Because wages are so low

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U.S. businesses have never had it so good.

Corporate cash piles have never been bigger, either in dollar terms or as a share of the economy.

The labor market, meanwhile, is still millions of jobs short of where it was before the global financial crisis first erupted over six years ago.

from Breakingviews:

Shorter-hour memos won’t cure sick bank cultures

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By Edward Hadas

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The big investment banks are sending out virtuous memos on working hours. Bank of America says junior employees need at least four weekend days off a month. Credit Suisse and Goldman Sachs are also worried about the bad effects of work weeks that often stretch to 100 hours. Such memos are better than nothing, but they cannot cure these institutions’ sick cultures.

from Global Investing:

The hit from China’s growth slowdown

China's slowing economy is raising concern about the potential spillovers beyond its shores, in particular the impact on other emerging markets. Because developing countries have over the past decade significantly boosted exports to China to offset slow growth in the West and Japan, these countries are unquestionably vulnerable to a Chinese slowdown. But how big will the hit be?

Goldman Sachs analysts have crunched the numbers to show which markets and regions could be hardest hit. On the face of it non-Japan Asia should be most worried -- exports to China account for almost 3 percent of GDP while in Latin America it is 2 percent and in emerging Europe, Middle East and Africa (CEEMEA) it is just 1.1 percent, their data shows.

from Breakingviews:

Solo stars Goldman and Morgan Stanley share stage

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By Jeffrey Goldfarb
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Wall Street’s biggest rivalry is fading further into history. Back in the days of so-called relationship banking, Goldman Sachs and Morgan Stanley slugged it out for exclusive assignments. Now, when it comes to mergers and new stock sales, they are working together more often.

from Breakingviews:

Goldman and JPMorgan get one job split right

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By Reynolds Holding
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Goldman Sachs and JPMorgan have managed to get at least one job split right. Neither bank will cleave the chairman and chief executive roles, but they’ve figured out that allowing the general counsel to also run regulatory compliance invites trouble. Interpreting the rules and ensuring they’re followed too often conflict. Rival financial institutions – and companies in other industries, too – should follow suit.

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