Displaying items by tag: Morgan Stanley

(New York)

Rockefeller is a storied US name, but not exactly so in wealth management. That may be set to change as a new Rockefeller-branded wealth manager, Rockefeller Capital Management, has just launched with some high profile backing and executives. Industry star Greg Fleming, a former president at Merrill Lynch and former head of wealth and asset management at Morgan Stanley, is leading the young firm, which has its eye on getting $100 bn under management. The firm is backed by a Rockefeller family trust as well as a number of other investors.

FINSUM: The name alone will probably attract capital, but $100 bn is a lofty goal for a brand new wealth manager.

(New York)

Morgan Stanley has just come out with a big warning for investors. The bank says that the selloff over the last few weeks, which amounted to around 10% at its peak, was just a tiny start to what is to come. Describing the recent losses as the “Appetizer, not the main course”, Morgan Stanley says that big trouble will occur when growth weakens but inflation keeps moving ahead. “Strong global growth and a good first-quarter reporting season provided an important offset. We remain on watch for ‘tricky hand-off’ in the second quarter, as core inflation rises and activity indicators moderate”.

FINSUM: If growth starts to weaken, but inflation and rates are still rising, that is the catalyst for a big correction, or more likely, a prolonged bear market. But we are not there yet.

(New York)

Morgan Stanley went on the record yesterday arguing that market liquidity will likely vanish in the event of turmoil. The bank says that the reduction in bank participation in trading, brought on by post-Crisis regulation, has led to “shadow banks” taking up the burden of liquidity. Such shadow banks including entities like professional trading firms, hedge funds etc. However, Morgan Stanley points out that this type of liquidity provider has never been tested in a tumultuous market, and that liquidity is likely to vanish.

FINSUM: While there may be some truth to it, banks love to over play the amount of liquidity they provide in periods of turmoil. When the market gets ugly, they tighten up just like everyone else.

(New York)

Morgan Stanley’s wealth management can be described as nothing other than an unmitigated success in the fourth quarter. The numbers are in, and the data show that the unit is minting cash as the broker enjoys the transition from commission-based to fee-based accounts as provided by the fiduciary rule. Revenue increased a whopping 10% and the profit margin rose from under 10% the previous year to an eye-watering 26% in 2017.

FINSUM: We realize the importance of fiduciary duty, but how is a transition to much more expensive fee-based accounts—which are hugely boosting net profits to big firms—in the ultimate best interest of clients?

(New York)

The big bond gurus of Wall Street, Bill Gross and Jeffrey Gundlach, both struck fear in the hearts of bond investors yesterday, saying that the recent Treasury sell-off confirmed that a bond bear market had begun. However, Morgan Stanley is now pushing back against that assertion, saying that Treasuries are still offering value and should be fine. “This isn’t the bear market you’re looking for” says Morgan Stanley. MS says that the Fed is not likely to react sharply to inflation and that the Chinese aren’t going to stop buying Treasuries outright, both factors which will support the market.

FINSUM: While there are some headwinds related to possible tightening, on the whole there are a number of fundamentals which seem likely to continue to support both Treasuries and credit (like demographics—we know we often mention this point).