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Morgan Stanley last Friday racing to ensure that its financial lifeline from the Bank of Japan’s confidence in large-scale, the embattled Wall Street investment banks to continue to weaken.

Investors have begun to doubt whether the Bank of Japan, Mitsubishi UFJ Financial Group, through its 9,000,000,000 U.S. dollars of investment, or, if to do so, whether or not there will be sufficient to protect Morgan Stanley. Both sides insisted that the agreement will close Tuesday.

However, some investors have begun to float the other options for Morgan Stanley, have been proud of the branch bank Morgan empire. Mitsubishi may buy some of the recommendations of the entire company. It was also stated that Morgan Stanley may seek to merge the bank in the United States. Some said that the federal government to buy into the besieged company.

Increasingly concerned about the fate of Morgan Stanley is easy to see the stock market last Friday. The bank fell 22 percent, or 2.77 U.S. dollars to 9.68 points, less than half the value of early this week. The decline left the stock down nearly 82 percentage points.

At present, Mitsubishi is considering to increase the line of credit agreement, Morgan Stanley can be used, if not hit, according to Morgan Stanley’s share of the unauthorized implementation of the detailed records.

Mitsubishi executives in Washington this weekend’s meeting of the International Monetary Fund. Morgan Stanley has been in close contact with the bank a week. In particular, Morgan Stanley warned that the Bank of Japan, its share price may be under attack Thursday after the temporary ban on short selling, a strategy used to bet on the company’s stock price.

Analysts said it was difficult to ascertain why Morgan Stanley’s share price dropped drastically.

“I think you have a very real top investment bank in the Morgan Stanley franchise,” the company’s哈特杰弗里Sandler O’Neill analyst. “As an analyst, we can do fundamental analysis of companies, but as an analyst, it is very difficult to achieve the basic analysis of the market sentiment.”

Morgan Stanley into a bank holding company for a week after the collapse of Lehman Brothers last month. This business model it easier for Morgan Stanley to borrow the Federal Reserve.

Morgan Stanley had a preliminary discussion with Citigroup may be a combination of transit to reach an agreement, Mitsubishi.

Citigroup and JP Morgan declined to comment last Friday and asked them to consider the possibility of the merger, Morgan Stanley.

Mitsubishi’s big ambitions of expansion in the United States. It recently bought the remaining shares of UnionBanCal, the Bank of California, for a premium price. Mitsubishi already has most of UnionBanCal since 1996.

Nearly three weeks ago, the Mitsubishi hit its deal with Morgan Stanley in 25.25 U.S. dollars per share, and insurance premiums, growth, has resulted in some doubt Mitsubishi will seek to renegotiate. Mitsubishi 9,000,000,000 U.S. dollars of investment, 30 billion dollars in common stock, this is only part of a direct impact on Morgan Stanley’s stock price sank.

Mitsubishi and Morgan Stanley plans to set up a strategic committee to chart the future cooperation after the end of the transaction. In particular there may be a logical combination of its Japan business, Morgan Stanley said the implementation.

This is not the acquisition of Morgan Stanley Mitsubishi access to more than 1,000,000,000,000 U.S. dollars of the balance sheet, but this is a topic of the bank plans to deal with, the executive said.

Mitsubishi spokesman did not respond to requests to comment last Friday.

A Morgan Stanley spokeswoman said, without making any changes to the transaction, the bank has not negotiations.

Fall in the stock market and currency fell to global concerns, but the yen exchange rate have a high-rise too much anxiety. Yen was up 10 percent against the U.S. dollar last week. Last month, it has been a staggering 34 percent against the euro.
One reason is that Japanese investors increased the quality of the flight. Another reason, many economists believe that the end is suddenly one of the world’s largest money easy to plan, the so-called yen carry trade.
Hammer appreciation of the yen helped the Tokyo stock market Monday siege. The stock price hit a 26-year low, and a decrease of 50 percentage points. A strong yen to make Japanese products more expensive during the recession in Europe and North America, to the detriment of profits, the Japanese exporters.
7 finance ministers from the world’s richest countries issued a joint statement, as the Tokyo stock market down, saying they are “concerned about the recent volatility in the exchange rate against the Japanese yen and its possible negative impact on economic and financial stability.” However, Yen Still strong, suggesting investors doubt the government will intervene to stop the yen’s rise.
Christine Lagarde, French Minister of Finance, confirmed in an interview with Bloomberg News.

The yen’s appreciation is owed part of its status as a safe haven - in turbulent times, investors put money into the currency as Japan is the world’s largest economy after the United States, its banking system, limited exposure to sub-crisis Even if it is faced with an economic recession.

However, foreign exchange analyst said that most of the recent yen rise is due to a sudden end to the yen carry trade.

Most of this decade, Japanese and foreigners have to borrow money in Japan, interest rates are very low, so the money is cheap. They invested in higher income assets around the world, from housing loans in Seoul and Budapest stock market in Mumbai.

This is to Japan, its 15 trillion U.S. dollars in personal savings to establish the country’s long-term trade surplus, to provide a low-cost capital for the rest of the world.

No one knows how this large-scale outflow of yen.

Most of the yen carry trade took place after the public scrutiny in the form of currency options or other types of derivatives. Analysts agree that the majority of its size in the billions of dollars, and some have estimated that up to 50 trillion. As the yen carry trade growth, foreign exchange analysts warned that it is a bubble of cheap credit, which will burst one day.

Now that day has come, said foreign exchange analyst and economist. Investors have been lifted as part of its yen loans, the panic to flee risk assets - such as the Budapest Housing loans and Mumbai stock - to safer havens like the yen and the dollar, which is an increase of the euro and sterling.

Prospects of a global recession also in many countries of the Central Bank to lower interest rates, reducing the appeal of borrowing in Japan: South Korea cut interest rates three-quarters point, Monday’s biggest one-day move in the past.

As a result, a huge reversal of the currency in circulation, to Japan and its currency. “This is the end of the yen carry trade, yen and the bubble,” the division Sasaki, chief foreign exchange strategist in Tokyo at JPMorgan Chase Bank office. “The yen back home.”

As a result of this capital inflow into Japan, currency analysts expect the yen to continue to rise. Sasaki said his company’s forecast of 87 yen 1 U.S. dollars, but it may be as high as 80 billion yen.

Sasaki said the size of the yen in recent weeks suggested that at least trillion yen, or tens of billions of dollars have been returned to Japan. He said the last time he tried to calculate the size of the yen carry trade as a whole was three years ago, when he estimated that a total of 40 trillion yen, or 425 billion U.S. dollars. He said it could easily grow much larger than in recent years.

All the money from Japan increased by over-abundant cheap capital, and many economists now blame for the current financial crisis. Some of the largest player trade in the United States and Europe, hedge funds and banks. However, Japan also contributed to the outflow of yen individuals pouring their savings into overseas investments, such as emerging markets fund in order to seek higher returns.

Japan has always been conservative and even housewives to enter foreign currency transactions online has become a global foreign exchange markets, collectively referred to as Watanabes wife.

Recently, an indicator of the return of the funds, Japan has been a substantial increase in the personal honor of mutual funds, overseas investment. A survey in Japan, the largest of the 40 individual funds show that the withdrawal of more than 3.5 billion U.S. dollars since the Sept. 12, Sasaki, Mr. Morgan said.

By the end of the yen carry trade could have serious consequences, economists say.

In Japan, the yen has aggravated the dark prospects of the country’s export-oriented economy and hurt companies like Toyota and Sony. The yen’s decline crucial to the prospects for overseas markets like the United States, has led the Nikkei 225 index fell about 50 percent so far this year.

Globally, the demise of the carry trade could contribute to an overall increase in borrowing costs, particularly for developing countries and little-known companies in developed countries to cut off a major source of low-cost capital, economists say .

“Lifting of the yen carry trade is just a way to consider more excessive credit system, said:” John Richards, in charge of Asian Studies at the Royal Bank of Scotland in Tokyo offices. “The higher borrowing costs will rise out of proportion to the risk of investment.”

One of the main reasons by the end of the yen carry trade has been a narrowing interest rate gap between Japan and other developed countries. For many years, Japan’s low interest rates - the benchmark overnight lending rate is 0.5 percent - attractive enough to attract investors to borrow money to invest in countries where it has a high rate of return, despite the foreign exchange rate risks .

Now, these investors to sell off the loan interest rate differential between Japan and other parts of the world’s shrinking, so that the profit decline in yen loans. When its board of directors later this week with the Federal Reserve widely expected to be its overnight call rate again, from the current 1.5 percent. This is the way down from 5.25 percent excellent question, first hit the financial markets in July 2007.

Since then, the yen has risen 24 percent against the dollar, investors have to repay the loans in Japanese yen. In fact, some foreign exchange analysts said the lifting of the yen carry trade may have reached a climax.

Koji Fukaya, senior foreign exchange strategy at Deutsche Bank’s Tokyo office, said he expected the yen’s rise will continue until November, to stabilize the value of the dollar at about 90 yen.

“The lifting of the clean-up and will last several weeks,” he said. “Most of the yen carry trade have been released.”

Built on Wall Street gains Tuesday as recent volatility low and an improvement in the credit markets, helped give stocks stronger their meeting on election day 24 years.
Standard & Poor’s 500-stock index closed above 1000 for the first time since Oct. 13, gaining 4.08 percent and the Nasdaq composite index had its sixth consecutive day of birth.
At the close, the Dow Jones industrial average was up 3.28 percent, or 305.45 points at 9625.28. The broad S. & P. index gained 39.45 points to 1005.75 and the Nasdaq rose 3.12 percent, or 53.79 points at 1780.12.
Crude oil set at $ 70.53 a barrel, up $ 6.62 in New York trading on speculation that the largest exporter of oil, Saudi Arabia, has cut supplies to some buyers.
Historically, Wall Street enjoyed a bounce in the fourth quarter, after a presidential election as investors breathe a sigh of relief that the long cycle of elections, with its accompanying uncertainty, has ended. Some analysts said investors seem to be trying to get a jump on the expected meeting of buying on election day.
“We do not know if it’s the end of the bear market yet, but it seems as if the bear took a nap,” she said Saturday Stovall, chief investment strategist at Standard & Poor’s equity research. “So investors are thinking, to enjoy a bit of relief, so the market Lows endless and the pre-election rhetoric.”

Other analysts have said that they believed in elections only a peripheral effect on the market, as there were no major surprises. More importantly for the rally, they said, was a continuous round of reductions in interest rates globally coordinated, a thaw in credit markets and increasing resilience of the market daily to drumbeat of bad economic news. The extreme volatility in the last week of CALMED, although trading volume remained light.

The Chicago Board Options Exchange’s volatility index dipped below 50 for the first time since Oct. 14. The Dow Jones industrial average rallied to 18 percent, to close on October 27, including 10.9 percent gain on Oct. 28.

“Investors are starting to look before some of these numbers in 2009 are beginning to see some recovery,” said Ryan Larson, head equity trader at Voyageur Asset Management. “Some of the volatility coming out of the market.”

Markets showed little reaction as the government reported that new orders for manufactured goods in September decreased $ 11.2 billion, or 2.5 percent, to 432 billion $, a higher-than-expected decline . That came after a 4.3 percent decline in August.

It was the second negative manufacturing report, in two days. On Monday, the Institute for Supply Management index of manufacturing activity in the United States fell from 38.9 in October from 43.5 in September, the worst reading since September 1982. The market also seemed to take in stride news that the costs of day trading in a narrow range eventually ends before the date fixed.

The meeting that took place on Wall Street has been widely. All sectors of industry in the S. & P. index rose, led by energy stocks. Among the 30 blue-chip, stocks that make up the Dow, General Electric, Verizon Communications and Caterpillar were among the strongest performers.

Stock Exchange opened for trading on election day in 1984. This year, the Dow rose 1.2 percent, a gain not topped since, as Ronald Reagan was re-elected.

Shares of MasterCard, the world’s second largest company credit card after Visa, jumped 18 percent, to 170.24 dollars, after the company said it had revenue of more than encouraged greater profit.

However, the company warned that the economic slowdown would affect profit in the near term.

Building on a trend of the past few days has eased the credit markets further Tuesday, with interbank lending rates and corporate decline significantly. The London interbank offered rate, or Libor, a benchmark that banks charges each other, fell from 0375 percent.

Treasury 10-year bill rose 1 17/32 to 102 7 / 32. Yield, which moves in the opposite direction from price, was 3.72 percent, down from 3.91 percent late Monday.

Stock markets were also higher in Europe and Asia. The Dow Jones Euro Stoxx 50 index, a barometer of the euro zone blue chips, rose 5.56 percent, while the FTSE 100 index in London jumped 4.42 percent. The Paris CAC 40 gained 4.62 percent and the DAX in Frankfurt was 5 percent.

In Tokyo, the NIKKEI 225 stock index rose by 2.8 percent Wednesday morning, buoyed by a softer yen and the rally in U.S. markets.

In Sydney, the S. & P. / ASX 200 index was 1.9 percent higher than Wednesday morning. Australian central bank surprised markets Tuesday, with a higher than expected interest rate cut. Bank cut its main interest rate target by three quarters of a percentage point to 5.25 percent, more than half a point, which was widely expected.

Following are the results of Tuesday’s Treasury auction of 238-day cash management bills and four-week bills