Morgan Stanley CEO Gorman says deal activity will return once the Fed pauses

Morgan Stanley Chairman and Chief Executive Officer James Gorman speaks at the Annual Meeting of the Institute of International Finance in Washington, October 10, 2014.

Joshua Roberts | Reuters

Morgan Stanley Chief Executive James Gorman is more confident in the market than the rest of Wall Street, as he expects trading to resume as soon as the Federal Reserve stops raising rates. said there is.

“If the Fed pauses, I’m confident there will be more deal activity and underwriting activity. In fact, I would bet a year on that,” Gorman said on Tuesday’s earnings call. “We don’t think we’re heading into dark times. Whatever negativity there is in the world, that’s not how we see our home.”

His comments came as his New York-based firm reported fourth-quarter earnings that beat Wall Street expectations, citing record wealth management earnings for the bank and growth in its trading business. boosted. Shares rose 7% on Tuesday following the results.

Despite better-than-expected results overall, Morgan Stanley’s investment banking division suffered a significant slowdown amid a collapse in IPOs and bond and equity issuances.

Investment Banking revenues for the fourth quarter were $1.25 billion, down 49% from the year-ago quarter. The bank said the decline was due to a sharp decline in global equity underwriting volumes and a decline in completed M&A deals.

Gorman said trading activity will pick up once financial conditions begin to ease. He said the Fed’s next move would probably be a modest rate hike of 0.25% followed by a pause. He added that he wasn’t sure if the central bank would cut interest rates this year.

“We are a little more confident about the medium-term outlook for the market,” Gorman said. “We want to be poised for growth. I am convinced of that, and I want to be ready for that.”

The Fed has raised its benchmark interest rate to a target range of between 4.25% and 4.5%.

“There is a lot of money waiting to be put to work,” Gorman said. I’m actually pretty confident about the outlook,” he said. .

Leave a Reply

Your email address will not be published. Required fields are marked *