Morgan Stanley peaked at nearly $90 in 2000 and 2007, and then it dropped down to about $9 in 2008. Now, Morgan Stanley is trading $25,77, down -0,40 or -1,53% on friday. The bank will come out with its first-quarter 2016 results on Monday before the opening bell.
Morgan Stanley is a financial holding company. Through its subsidiaries and affiliates, the company provides a variety of products and financial services to a group of clients and customers, including corporations, governments, financial institutions and individuals.
We saw a huge sell-off in the financial markets in January and February and as a result, investors didn`t come back to the market before march. But that was not enough to offset the decline recorded in the prior two months.
Morgan Stanley`s trading income declined, and this put a pressure on its fixed-income, currency and commodities (FICC) trading income. They had a trading weakness last year and reported lower FICC trading income for the fist time in the second half of 2015, and the trend is expected to continue.
According to Reuters, equity capital markets activity totaled $110,8 billion during the first quarter, and that is down 56% YoY. It`s also interesting to see that the data projected a 55% YoY drop in equity underwriting fees for the entire industry.
Morgan Stanley`s equity underwriting fees are bound to be lower this time, and the company drops from one to the third position among the equity capital markets underwriters during the quarter.
M&A is also slowing down, which is down 24% in the first quarter to $4,4 billion and this will be reflected in lower strategic and sponsor related revenues. M&A is slowing down after three consecutive YoY growth. (Maybe Yahoo can fix that a little bit?)
M&A advisory fees has declined 18% YoY, and Morgan Stanley held the second spot during the quarter, projecting to earn about $492 million in advisory fees in Q1. That`s up from $471 from last year.
Low interest rate will hamper all the U.S banks interest income growth and so will it be for Morgan Stanley, but a pick up in consumer and commercial loan demand will aid the company`s interest income.
Morgan Stanley will be out with a report on Monday followed by Goldman Sachs on Tuesday and their trading performance is expected to be better than investors had feared. Q1 was a poor one the three big banks and YoY falls in net income came to 7% at JPMorgan, 13% at Bank of America, and 27% at Citi.
Morgan Stanley has embarked on «project Streamline». In January, they announced that they will aim to shave $1 billion from its cost over two years by cutting staff,, simplifying processes and paying less in legal fees. They axed 1,200 staff in December.
According to Reuters, The U.S Federal Reserve and the Federal Deposit Insurance Corporation said on Friday they had reissud their letter from earlier this week to Morgan Stanley about the bank`s «living will», or plan for a bankruptcy that would not rely on federal aid, because of a technical error.
«The feedback letter for Morgan Stanley has been re-issued du to a drafting error that labeled a weakness as a deficiency, rather than a shortcoming,» said Federal Reserve spokesman Eric Kolling. «The hange has no impact on the firm or the required remediation.»
The first quarter is traditionally the strongest for the big Wall Street banks. How is it this time?
Morgan Stanley is scheduled to report first-quarter results at 8:30 EDT.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.