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Wednesday, 29 June 2016

Morgan Stanley Must Resubmit Capital Plan in Fed Stress Test

Morgan Stanley was alone among the largest U.S. banks in stumbling through the Federal Reserve’s annual stress tests, getting conditional approval to increase payouts to shareholders. Thirty other firms passed, while two subsidiaries failed.
Morgan Stanley must shore up internal systems and resubmit plans for managing capital by Dec. 29, the Fed said Wednesday. Examiners again failed U.S. units of Deutsche Bank AG and Banco Santander SA, saying they suffer from “broad and substantial weaknesses” in how they manage capital. And one regional lender, M&T Bank Corp., passed only after adjusting its plan for shareholder payouts.
“Morgan Stanley exhibited material weaknesses in its capital planning,” the Fed wrote, listing deficiencies in how the firm designs specific scenarios, shortcomings in its modeling practices and related governance and control issues. “These weaknesses warrant further near-term attention but do not undermine the quantitative results.”
The annual review is a cornerstone of the Fed’s strategy to prevent a repeat of the 2008 financial crisis and taxpayer-funded bailouts by forcing the largest banks to bolster their operations with more capital. Wednesday’s results mark this year’s second and final round, determining whether firms can withstand losses and still pay dividends, buy back stock or make acquisitions.

The Fed’s Wednesday findings are arguably the more important part of the stress-test process since they dictate how much capital will be returned to shareholders. Increased dividends and buybacks can help to bolster a bank’s share price.

Morgan Stanley has been slower to recover from the financial crisis than some of its peers, reflected by its smaller dividend and more gradual buyback ramp-up. Mr. Gorman has worked to make the firm more stable by adding to its wealth management business, earnings from which are less volatile from quarter to quarter.

After taking the so-called “mulligan” last year—the term for occasions when a bank’s first submitted capital plan doesn’t pass muster with regulators—Morgan Stanley’s plan was approved. The firm raised its quarterly dividend to 15 cents from 10 cents and increased its buyback program.

US stocks claw back half of ground lost post-British vote

Banks and other financial companies led another broad surge in U.S. stocks Wednesday, turning the Dow Jones industrial average and the Standard & Poor's 500 index slightly positive for the year.

It was the second rally in two days for the stock market, which had been rattled since Friday by investor concerns over Britain's vote to leave the European Union.

Those worries eased Wednesday as traders shifted money back into stocks. The gains over Tuesday and Wednesday erased more than half of the losses U.S. markets suffered in the two-day slide that kicked off on Friday.

Britain's stock market has recouped all its losses in the same stretch, but other major markets in Europe and Asia have yet to bounce back fully. Markets in France, Germany, Japan and Hong Kong have gotten back about half the ground they lost; Brazil's has recouped about three-quarters.

"The market has moved from a shock," said Erik Davidson, chief investment officer for Wells Fargo Private Bank. "The worries around 'Brexit' are now moving from short-term worries to long-term worries, and that's why we're seeing this dramatic rebound in the market."

The Dow gained 284.96 points, or 1.6 percent, to 17,694.68. The S&P 500 index rose 34.68 points, or 1.7 percent, to 2,070. The Nasdaq composite added 87.38 points, or 1.9 percent, to 4,779.25.

European stock indexes posted gains that eclipsed Wall Street's for the second day in a row. The British pound edged up against the dollar following its plunge to 31-year lows after the British vote last week.

Britain's benchmark stock index, the FTSE 100, gained 3.6 percent, while Germany's DAX rose 1.7 percent. France's CAC 40 added 2.6 percent.

On Wall Street, financial companies, which had taken the brunt of the selling after the British "leave" vote, rose 2.3 percent. The sector is still down 5.6 percent for the year.

Citigroup jumped 4.2 percent, adding $1.68 to $42.12, while American Express rose $2.02, or 3.5 percent, to $59.63. JPMorgan Chase gained $1.68, or 2.8 percent, to $61.20.

Several oil and gas production and transportation companies also notched gains as the price of crude oil rose sharply. Murphy Oil climbed $1.93, or 6.4 percent, to $32.02. Kinder Morgan rose 82 cents, or 4.6 percent, to $18.53.

The market also got a boost from new data on consumer spending and the latest batch of company deal news.

The Commerce Department said that consumer spending increased 0.4 percent in May on top of a 1.1 percent surge in April. The data underscore that consumer spending, which accounts for about 70 percent of U.S. economic activity, picked up in the spring after getting off to a slow start in 2016.

The Canadian Imperial Bank of Commerce agreed to buy bank holding company PrivateBancorp for $47 per share in cash and stock, or $3.73 billion. News of the deal sent PrivateBancorp shares up 23.3 percent. The stock added $8.36 to $44.29.

Tesaro more than doubled after the drug developer said its targeted pill for recurrent ovarian cancer prevented the disease from worsening for many months after chemotherapy ended. There's no approved maintenance treatment to keep ovarian cancer at bay after chemotherapy. The stock gained $40.19 to $77.40.

Global financial markets were rattled last Friday by the British "leave" vote, which many investors did not seem to anticipate. Stocks and oil fell, as did the pound, while bonds and gold rose thanks to their perceived status as safe havens. Ratings agency S&P slashed its top-shelf credit rating for the U.K.

But the two-day slump broke on Tuesday, as investors appeared to set aside their anxiety over Britain's vote.

In another sign that investors' worries are easing, the VIX, a gauge of expectation of future U.S. stock volatility, fell 11.3 percent Wednesday to 16.6. It had hit 25.8 on Friday.

"The VIX is literally where it was two weeks ago," said Tom Siomades, head of Hartford Funds' Investment Consulting Group. "(Investors) dumped everything on Friday, and when they came back, they realized things aren't as bad and it's going to take a long time to unwind this thing."

Saturday, 25 June 2016

Southwest Airlines State Fair Classic

State Fair Classic (known as the Southwest Airlines State Fair Classic for sponsorship purposes) is an annual college football game between the Grambling State University Tigers and the Prairie View A&M University Panthers of the Southwestern Athletic Conference. The game is played on a neutral site at the Cotton Bowl in Fair Park, Dallas, Texas during the State Fair of Texas. The game often occurs the weekend before the Texas–Oklahoma Red River Showdown game at the same stadium and fair.

After relocating to Dallas in 1961, Bishop College eventually took Wiley’s place in the annual contest in the 43rd annual classic in 1967. From that point, Prairie View A&M maintained a presence in the Cotton Bowl with match-ups against Bishop, East Texas State University (A&M–Commerce), Southern and others over the years before moving its annual rivalry game against Grambling State to the Cotton Bowl Stadium in the mid-80s.

With the disbanding of the Prairie View A&M football program in 1990, the State Fair Classic featured Grambling and Elizabeth City State. Even though Prairie View A&M brought football back in 1991, that year Grambling played North Carolina A&T, so it was not until 1992 that the Classic would see the PVAMU-GSU showdown once again. Since then, this has been the annual matchup held at the State Fair Classic. Upon the revival of this pairing, Grambling won every game until this changed with the 2009 edition, and the game subsequent to this has been very competitive, with Prairie View A&M winning four out of five contests between then and 2013.

The classic is accompanied by a press conference/luncheon, pep rallies, alumni fundraising functions, pre-game concert featuring a celebrity artist, golf tournament, jazz show, comedy show, tailgating, and two battles of the bands. The first battle features high school bands in the Dallas area and the last is between the "World Famed" Tiger Marching Band of Grambling State and the Marching Storm of Prairie View A&M.

The classic has an annual estimated economic impact of $8.5 million for the City of Dallas. The stadium attendance generally ranges between 35,000 and 50,000 annually. However, the official 2015 game attendance was 51,328 which solidified the event as one of the largest HBCU football classics in the nation.

Southwest Airlines

Southwest Airlines Co. is a major U.S. airline, the world's largest low-cost carrier, headquartered in Dallas, Texas. The airline was established in 1967 by Herb Kelleher and adopted its current name (Southwest Airlines) in 1971. The airline has nearly 46,000 employees as of December 2014 and operates more than 3,800 flights per day. As of 2014, it carried the most domestic passengers of any U.S. airline. As of June 2016, Southwest Airlines has scheduled services to 97 destinations in 40 states, Puerto Rico, and abroad.

Southwest Airlines has used only Boeing 737s, except for several years in the 1970s, and 1980s, when it leased some Boeing 727s from Braniff International Airways. As of January 2016, Southwest is the largest operator of the Boeing 737 worldwide, with over 700 in service, each averaging six flights per day.

For the tenth year in a row, Fortune magazine recognized Southwest Airlines in its annual survey of corporate reputations. Among all industries in 2004, Fortune has listed Southwest Airlines as number three among America’s Top Ten most admired corporations.

On December 13, 2011, Southwest placed a firm order for 150 Boeing 737 MAX aircraft, becoming the launch customer for the type. First delivery is expected in 2017.

In January 2012, Southwest Airlines expressed interest in serving Mexican and South American destinations out of Hobby.[65] On May 30, 2012 Houston's city council approved Southwest's request for international flights from Hobby. Southwest agreed to invest at least $100 million to cover all costs tied to the Hobby upgrade, which includes designing and building five new gates and a customs facility. Construction at Hobby took two years, with international flights beginning in October 2015.

On April 11, 2012, Southwest introduced the 737–800 to the fleet. It seats 175 passengers as compared to the regular 143-seater 737-700. The first 737–800 was called "Warrior One" in salute of the Southwest Employees’ Warrior Spirit.

On May 5, 2014, Southwest announced that it has chosen Amadeus IT Group to replace its current domestic reservation system. Southwest already operates its international reservation system with Amadeus. The new domestic reservation system is expected to take a few years before it is implemented. When completed, Southwest will operate one reservation system by Amadeus.

In September 2014, Southwest introduced new branding, including a new livery and logo.

On October 13, 2014, the Wright Amendment restrictions at Dallas Love Field were repealed and Southwest expanded service at Love Field to include cities outside the previous location restrictions.

Throughout 2014, Southwest expanded service at Reagan-National in Washington D.C. and LaGuardia Airport in New York City through slot acquisitions from the American Airlines/US Airways merger.

On June 10, 2016, Southwest received approval to begin flights to Cuba.  Southwest was one of 6 airlines chosen by the USDOT to commence scheduled service to Cuba. Southwest will launch service from Fort Lauderdale–Hollywood International Airport to Varadero, Cuba and Santa Clara, Cuba. 

Southwest first began to offer a frequent-flyer program on June 20, 1987, calling it The Company Club. Unlike competitors' programs that were based on miles flown, The Company Club credited for trips flown regardless of distance. Southwest Airlines renamed its frequent flyer program Rapid Rewards on April 25, 1996.

The original Rapid Rewards program offered one credit per one-way flight from an origin to a destination including any stops or connections on Southwest Airlines. When 16 credits were accumulated in a 24-month period, Southwest awarded one free round-trip ticket that was valid for 12 months.

On March 1, 2011, Rapid Rewards changed to a points system based on ticket cost. Members earn and redeem points based on a three-tier fare scale multiplier and the cost of the ticket. Changes also included no blackout dates, seat restrictions or expiring credits. It also adds more options to use points.
Southwest Airlines incidents include 2 deaths (1 non-passenger death on the ground, 1 accidental passenger death in the air) and 7 accidents (including 2 aircraft hull losses). The airline was considered among the 10 safest in the world in 2012.

On June 22, 2011, a March 25 recording of an in-flight transmission of Southwest pilot Captain James Taylor apparently unintentionally broadcasting a conversation with his co-pilot was released to the press. The conversation was peppered with foul language directed at gay, overweight, and older flight attendants. According to Southwest, the pilot was reprimanded, temporarily suspended without pay and received diversity education before being reinstated. Captain Taylor also sent an e-mail apology to all of Southwest's employees, especially the crew members who were criticized.