=E*TRADE (ETFC) to be acquired by Morgan Stanley (MS) for approx. $13 bln

(Reuters) - Morgan Stanley (MS) said on Thursday it would buy discount brokerage E*Trade Financial (ETFC) in an all-stock deal worth about $13 billion, the biggest deal by a Wall Street bank since the financial crisis.

The deal will help Morgan Stanley boost its wealth management unit, a business that Chief Executive Officer James Gorman has been trying to build out to insulate the bank from weak periods for trading and investment banking.

Morgan Stanley will get E*Trade's more than 5.2 million client accounts and $360 billion of retail client assets as part of the deal. The brokerage's CEO, Mike Pizzi, will continue to run the business following the merger.

"E*Trade represents an extraordinary growth opportunity for our Wealth Management business and a leap forward in our Wealth Management strategy," Gorman said.

E*Trade became popular nearly two decades ago by running commercials that blasted financial advisers for high fees.

Its revenue growth has taken a hit in recent years from the emergence of digital upstarts called roboadvisers, falling commissions and lower interest rates.

E*Trade shareholders will receive 1.0432 Morgan Stanley shares for each share as part of the deal. That translates to $58.74 per share - a premium of 30.7% to the last closing price of E*Trade shares.

TD Ameritrade (AMTD) to be acquired by Charles Schwab (SCHW) ?

• Charles Schwab (SCHW) is in talks to acquire TD Ameritrade (AMTD) for $26 billion, according to reports from CNBC and FOX Business. The move comes after industry disruption essentially forced brokerage firms to cut trading commissions to zero. 

AMTD daily

=E*TRADE (ETFC) reported earnings on Thur 17 Oct 2019 (b/o)

E*TRADE beats by $0.06, beats on revs

Reports Q3 (Sep) earnings of $1.08 per share, excluding non-recurring items, $0.06 better than the S&P Capital IQ Consensus of $1.02; revenues rose 6.5% year/year to $767 mln vs the $742.83 mln S&P Capital IQ Consensus.

• Revenue by segment:
  • Interest Income $521 mln
  • Interest Expense ($66 mln)
  • Commissions $122 mln
  • Fees & service charges $163 mln (approx 21%)
• Operating margin of 50 percent; adjusted operating margin of 48 percent.
• Average interest-earning assets of $55.4 billion; net interest margin of 328 basis points.
• Daily Average Revenue Trades (DARTs) of 267,000, including 36 percent in derivatives, a Company record;
• derivative DARTs of 95,000 Average and end of period margin receivables of $9.9 billion
• Net new accounts of 47,000 Net new retail and advisor services assets of $2.8 billion

"The commission changes over the past few weeks have caused a meaningful shift for the industry-making it even more crucial to deliver a cutting-edge and easy-to-use experience to investors and traders alike. As a digital-first company, backed by one of the most sophisticated customer support teams in the industry, we will leverage our advantage to grow and take share, especially as price is removed as a point of competitive differentiation. Our business is well positioned for the long-term, and we will remain dynamic, optimizing our model in a manner that best delivers long-term value for shareholders."

Earnings this week : Oct 14 - 18, 19 (wk 42)

Monday (October 14)

• None

COLUMBUS DAY: In honor of the holiday, US bond markets and the Federal Reserve Bank will be closed on Monday, October 14, 2019. Stock, options, and futures markets will be open.

Tuesday (Oct 15)

• Morning: APHA BLK C FRC GS JNJ JPM OMC PLD SCHW UNH WFC WIT
• Afternoon: HWC JBHT PNFP SNBR UAL

Wednesday (Oct 16)

• Morning: ABT  ALLY ASML BAC BK CBSH CMA FHN PGR PNC USB
• Afternoon: AA CATY CCI CCK CNS CSX EGBN IBM KMI LLNW NFLX SLG STLD TBK TCBI UMPQ URI WTFC

Thursday (Oct 17)

• Morning: BBT BMI DOV ERIC EWBC FNB GPC GTLS HOMB HON HTLD IIIN KEY MS MTB PM POOL PPG SASR SNA SON STI TSM TXT UNP WNS
• Afternoon: BDN ETFC EXPO FFBC ISRG MRTN OZK PBCT TEAM WAL WDFC

Friday (Oct 18) 

• Morning: ABCB AXP CFG GNTX IBKC KO KSU MAN SLB STT SXT SYF

Notable earnings reports:

• JPMorgan (JPM), Johnson & Johnson (NYSE:JNJ), UnitedHealth Group (NYSE:UNH), Goldman Sachs (NYSE:GS), Wells Fargo (WFC), Citigroup (C), United Continental (NASDAQ:UAL), Charles Schwab (NYSE:SCHW) and BlackRock (NYSE:BLK) on October 15; 
• Netflix (NASDAQ:NFLX), IBM (NYSE:IBM), Bank of America (NYSE:BAC), Kinder Morgan (NYSE:KMI) and Abbott Laboratories (NYSE:ABT) on October 16; 
• Philip Morris International (NYSE:PM), Morgan Stanley (NYSE:MS) and Union Pacific (NYSE:UNP) on October 17; Coca-Cola (NYSE:KO), American Express (NYSE:AXP), State Street (NYSE:STT) and Gentex (NASDAQ:GNTX) on October 18.

This week's biggest % winners & losers : Sept 30 - Oct 4, 19 (wk 40)

The following are this week's top percentage gainers and losers, categorized by sectors (over $300 mln market cap and 100K average daily volume).

This week's top % gainers

• Healthcare: ENDP (3.82 +19.75%), ARQL (8.29 +18.43%), SRPT (88.25 +17.67%), CDNA (25.37 +16.22%), RGNX (38.49 +15.41%), ARWR (30.6 +13.5%)
• Materials: SBGL (6.36 +14.39%)
• Consumer Discretionary: TSG (20.92 +38.82%)
• Information Technology: RNG (163.3 +31.85%), AVYA (13.23 +28.45%), OKTA (116.53 +20.06%), COUP (148.32 +15.97%)
• Energy: TOO (1.53 +30.77%), DHT (6.88 +14.1%), STNG (33.65 +14.07%), FRO (10.28 +12.72%)

This week's top % losers

• Healthcare: GTHX (23.34 -31.29%), LNTH (19.74 -22.04%), ANGO (14.6 -19.02%)
• Materials: SXC (5.31 -15.71%)
• Consumer Discretionary: GPRO (3.97 -21%), TAST (6.8 -16.46%)
• Information Technology: CASA (6.22 -20.47%)
• Financials: AMTD (33.7 -28.25%), ETFC (36.4 -15.87%). SCHW (35.67  -13.86%), IBKR (47.59  -10.86%)
• Energy: NBR (1.57 -18.65%), MDR (1.63 -18.5%), QEP (3.15 -17.54%), CDEV (3.8 -15.95%)
• Consumer Staples: UNFI (7.45 -34.76%), CALM (37.97 -16.4%)

TD Ameritrade (AMTD) and E*Trade (ETFC) eliminate trading commissions

 On October 2, shortly after the market closed, E*TRADE Financial Corp announced that its online brokerage would cut its base commission rate to $0, following in the footsteps of Charles Schwab and TD Ameritrade. 

• Now that E*TRADE, TDA, and Interactive Brokers offer some form of free trading, the industry is closely waiting for Fidelity, TradeStation and other online brokers to respond. 

E*TRADE Financial Corporation (NASDAQ: ETFC) today announced it will eliminate retail commissions for online US listed stock, ETF, and options trades. It will also reduce the options contract charge to $0.65 per contract for all traders while maintaining its active trader pricing at $0.50 per contract. These changes will take effect on October 7, 2019.

• Press release; October 2, 2019
• investopedia.com article
• charts https://finviz.com/screener.ashx?v=211&t=AMTD,ETFC,IBKR,SCHW&ta=0&o=-change

The current commission schedule shows tiered rates, depending on the client's trading frequency. The base rate was $6.95, dropping to $4.95 for clients who traded more often than 30 times per quarter. Options were charged at $6.95 per leg with $0.75 per contract; active traders paid $4.95 per leg with $0.50 per contract. 

TD Ameritrade's commission-free trading starts October 3.

=Charles Schwab (SCHW) to eliminate commissions for stocks, ETFs

Charles Schwab to eliminate commissions for stocks, ETFs and options listed on U.S. or Canadian exchanges, across all mobile and web trading channels;  

• Starting on Oct. 7, Schwab, which holds about $3.72 trillion in client assets, will be slashing its trading commission cost for U.S. stocks, ETFs and options from the previous $4.95 to zero. Trading options will continue to cost 65 cents per contract. 
• This comes after Interactive Brokers (IBKR) last week announced IBKR Lite, which will offer zero commissions on US exchange-listed stocks and ETFs, no minimums, and free market data without its IB SmartRouting system.
• Commissions have been declining for decades but the rise of commission-free trades from start-up trading app Robinhood accelerated the decline in recent years. Robinhood is expected to IPO this year or next.
• TD Ameritrade (AMTD) and E*TRADE (ETFC) seem likely to follow suit to remain competitive.  
• Schwab, TD and ETrade all saw their stock prices take an initial hit on Tuesday following Schwab's pre-market announcement. On a day that saw the S&P 500 Index decline by 1.2%, Schwab shares fell by nearly 10%, TD shares lost nearly 26% and Etrade shares declined nearly 17%.
• https://finviz.com/screener.ashx?v=211&t=AMTD,ETFC,IBKR,SCHW&ta=0&o=-change

Almost forty five years ago, Chuck Schwab made investing more accessible to all Americans with the concept of low commissions to buy and sell stocks. On October 7, 2019, in conjunction with the release of Mr. Schwab's latest book, "Invested," Charles Schwab & Co., Inc. is removing the final barrier to making investing accessible to everyone by eliminating commissions for stocks, ETFs and options listed on U.S. or Canadian exchanges, across all mobile and web trading channels1. Clients trading options will continue to pay 65 cents per contract.

Beginning October 7, 2019, the company will reduce U.S. stock, ETF and options online trade commissions from $4.95 to zero. And with no minimum account size3 to open a full featured Schwab brokerage account, every investor, no matter how large or small, can benefit from the expertise and support of a firm that has been entrusted with more than $3.7 trillion in client assets. Every Schwab client using our web and mobile channels automatically qualifies for the new pricing, without opening a new account, making a new deposit or maintaining a minimum balance of any type.

=Interactive Brokers (IBKR) will offer zero-fee trades on stocks and ETFs

Interactive Brokers (IBKR) will offer zero-fee trades on stocks and ETFs via a new service, as it looks to broaden its appeal with retail investors. IBKR stock retreated slightly Thursday, with TD Ameritrade (AMTD), E-Trade (ETFC) and Charles Schwab (SCHW) falling harder.

The new IBKR Lite service will offer unlimited trades on U.S.-listed stocks and exchange traded funds for a zero trading commission. It debuts in October. It will have no account minimums or inactivity fees.

Interactive Brokers will rebrand its existing low-fee stock trading offering as IBKR Pro.

Fee wars have engulfed financial services firms. But to date, online brokers Schwab, TD Ameritrade and E-Trade only allow customers to trade select ETFs for no commission. They've also lowered fees or removed minimums to trade stocks and ETFs, as investing apps like Robinhood capture a new generation of investors.

Customers can switch between IBKR Lite and IBKR Pro, subject to conditions. Pro clients will get potentially better pricing on stock trades through smart routing technology. Price improvement may matter less to regular investors.

Interactive Brokers' stronghold is active traders and institutions, but it's looking to tap a broader audience.

IBKR Stock, Brokerage Stocks Lagging
Interactive Brokers stock fell 0.4% to 51.51 on the stock market today, well off intraday lows of 49.36. Charles Schwab stock lost 2.2%, E-Trade stock tumbled 4.8% and AMTD stock dived 6.5%. Schwab charges $4.95 for stock trades, and has relatively high exposure to asset management. E-Trade and Ameritrade charge $6.95 per trade.

E*TRADE (ETFC) reported earnings on Thur 24 Jan 2019 (a/h)

• 13, 28, 31, 33, 43, 48, 53, 54, 60, 96

** charts before earnings **

 

** charts after earnings **

E*TRADE beats by $0.02, misses on revs

• Reports Q4 (Dec) earnings of $1.06 per share, $0.02 better than the S&P Capital IQ Consensus of $1.04; revenues rose 15.4% year/year to $735 mln vs the $745.69 mln S&P Capital IQ Consensus.
• Daily Average Revenue Trades (DARTs) of 296,000, including derivative DARTs of 93,000. Margin receivables of $9.6 billion; average margin receivables of $11.1 billion.
• Net new brokerage accounts of 947,000; excluding the acquisition of Capital One brokerage accounts, net new brokerage accounts of 35,000. Net new brokerage assets of $19.1 billion; excluding the acquisition of Capital One brokerage accounts, net new brokerage assets of $4.0 billion.

Earnings this week : Jan 21 - 25, 19 (wk 4)

Earnings confirmed to report this week:

Monday (Jan 21)    

• Market closed for Martin Luther King Jr. Day

Tuesday (Jan 22)

• Morning: ATI FITB GATX HAL HMST JNJ LOGI EDU PETS PLD SWK TRV
• Afternoon: AMTD CNMD COF FMBI HOPE IBKR IBM LRN LTXB NAVI RNST SFNC TBK UCBI WTFC ZION

Wednesday (Jan 23)

• Morning:  ABT APH ASML BKU BPOP CBU CMCSA HZO KMB NTRS PG PGR RES ROL SYF TDY TEL UTX WAT
• Afternoon:  ADTN AZPN BGG BXS CATY CCI CMRE CNS CP CTXS CVBF F FFBC FFIV HXL LRCX  LVS NXGN PTC RJF SLG SLM STL TCBI TER TRMK TXN UMPQ URI VAR XLNX

Thursday (Jan 24)

• Morning:  AAL AEP AIT AVX BANC BMY COLB DLX EWBC FCX GWW HBAN ISCA JBLU LUV MKC MMYT ORI RCI STM TAL TXT UNP VIVO WBS
• Afternoon: ALK ASB AVT CUBI DFS  ETFC FHB FII HTH INTC ISRG NBHC NSC OSIS RMD SBCF SBUX SIVB WAL WDC

Friday (Jan 25)

• Morning: ABBV ABCB APD CL DHI ERIC HRC IBKC LEA MOG.A NEE

J.P. Morgan Chase (JPM) unveils its new investing app, You Invest

Shares of Charles Schwab fell 4 percent, TD Ameritrade fell 6.7 percent, E-Trade fell 4.8 percent and Interactive Brokers fell 3.1 percent in premarket trading. The move by J.P. Morgan aggravates a cold-blooded price war, with the globe's largest managers fighting for clients with low-cost options. J.P. Morgan will launch its new service next week.

• J.P. Morgan’s new digital brokerage service comes with free trades, portfolio building tool and access to equity research.
• The bank’s new trading service starts next week and will be available to its 47 million mobile or online users.
• All customers get 100 free stock or ETF trades in the first year. Those with Chase Private Client get unlimited trades.
• CEO Jamie Dimon hinted at this move in 2016, citing Amazon Prime as his inspiration.

   

The move, more than two years in the making, instantly intensifies the price war that is occurring throughout the investing landscape. Whether it’s executing trades, managing portfolios or simply owning mutual funds and ETFs, costs have been collapsing on Wall Street. Among brokerages, the free trading app provided by Robinhood Markets has gained attention recently for attracting more than 5 million users, and a $5.6 billion valuation, in just a few years. 

J.P. Morgan, the biggest U.S. bank, has a distinct advantage over many competitors: It already has financial ties with half of American households. When its engineers flip a switch in coming days, more than 47 million people who already use the company’s banking app or website will gain access to the new service, called You Invest.

“There are customers out there who may not want to trust their credentials or their money to an app of the month,” said Jed Laskowitz, a J.P Morgan veteran who runs You Invest. ”We’re thinking about what’s right for our customers, helping them get invested, and stay invested and diversified. ”

E*TRADE (ETFC) reported earnings on Thur 19 July 2018 (a/h)

** charts before earnings **

 

** charts after earnings **

 

E*TRADE beats by $0.07, reports revs in-line

• Reports Q2 (Jun) earnings of $0.95 per share, $0.07 better thanthe Capital IQ Consensus of $0.88; revenues rose 23.1% year/year to $710 mln vs the $707.78 mln Capital IQ Consensus.
• Reports Daily Average Revenue Trades (DARTs) of 259,000, including derivative DARTs of 87,000 and a derivatives mix of 34%, a company record.
• Reports Net new brokerage accounts of 188,000. Excluding the TCA acquisition, net new brokerage accounts were 40,000.
• Adjusted operating margin was 46%.

E*TRADE Financial (ETFC) reported earnings on Thur 19 Oct 2017 (a/h)

** charts after earnings **

 

E*TRADE beats by $0.04, reports revs in-line; Acquires Trust Company of America

• Reports Q3 (Sep) earnings of $0.55 per share, excluding non-recurring items, $0.04 better than the Capital IQ Consensus of $0.51; revenues rose 23.3% year/year to $599 mln vs the $598.96 mln Capital IQ Consensus.
  • Daily Average Revenue Trades (DARTs) of 205,763, down 1.2% yr/yr; 32 percent in derivatives
• E*TRADE Financial Corporation also announced today that it has entered into a definitive agreement to acquire Trust Company of America (TCA), a leading provider of technology solutions and custody services to the independent Registered Investment Adviser (RIA) market, for $275 million in cash. E*TRADE expects the transaction to be neutral to earnings in 2018 and accretive in 2019 when full run-rate synergies are expected. The Company intends to fund the transaction through issuance of non-cumulative perpetual preferred stock. The transaction is expected to close in the second quarter of 2018, subject to customary closing conditions and regulatory approvals.

E*TRADE Financial (ETFC) reported earnings on Thur 20 Jul 2017 (a/h)

** charts before earnings **

 

** charts after earnings **

Estimates: EPS to stay flat at 48 cents, as revenue jumps nearly 17% to $554 million.

Results: EPS of 52 cents on revenue of $577 million. Net new brokerage accounts grew at an annualized pace of 4.7% to 41,000. Net new brokerage assets rose at an annualized rate of 3.5% to $2.6 billion.

Stock: E-Trade rose 1.1% late. Shares slipped 0.2% to close at 39.60, but still above a 38.71 entry.

Discount broker TD Ameritrade (AMTD) reported earlier this week and beat on both the top and bottom lines, despite the industrywide slashing of stock and ETF trading fees. Meanwhile, Charles Schwab (SCHW) met profit views on Tuesday.

E*TRADE (ETFC) reported earnings on Thur 21 Jan 2016 (a/h)

** charts before earnings **

 

** charts after earnings **