Ep 43: We The People

A new report from investment bank Morgan Stanley advises clients to shy away from stocks – but WeWork may have a workaround for that…

Global stock markets are up 16% this year. But with economic conditions worsening worldwide, Morgan Stanley thinks that company profit forecasts look overly optimistic – and so do stock prices.
Compared to other investments, Stanley’s recommendation for stock ownership over the next three months is its lowest in five years. And that’s assuming that there’ll be helpful interest rate cuts in 2019…
When shunning stocks, investors often turn to bonds instead. Government bonds have been in much demand recently – but corporate debt is getting love too.
- WeWork is planning to raise up to $4 billion of new debt to shore up its finances before “going public” later this year.

If Morgan Stanley’s right, there may soon be less demand for stocks – including WeWork’s forthcoming public shares.
The firm’s already had to work hard to sell itself: earlier 2019, SoftBank significantly lowered the size of planned investment. While viewed as risky business by several investors, building up a war chest should
- help WeWork steel itself against potential downturns, and
- make it less dependent on investors’ cash when it does go public.
If it raises enough fresh cash, it may even offer fewer shares for sale – potentially making those available more attractive to investors and avoiding an Uber-style first-day drop.

Deutsche Bank released details of its major restructuring plan. Crucially for investors, the bank said it wouldn’t need to raise extra money by selling new shares (something that could’ve watered down the value of stakes held by existing investors).
They nevertheless sold Deutsche’s stock down 5%.

Content source: Finimize. (2019) We The People. Available from: https://www.finimize.com/wp/news/we-the-people/ [Accessed 13 July 2019]

with HT