Is Morgan Stanley on track for strong a fourth-quarter – at least as strong as other Wall Street banks have been predicting for themselves? It seems like a simple question but the answer is, well, complicated.
Historically, the bank’s strongest trading business is equities — it doubled down on stock trading while cutting back on its fixed income, currencies and commodities (FICC) trading business this year. However, across the Street, fixed income has started to rebound while equities revenues have shrunk – which is not good news for Morgan Stanley.
"Things are going fine," said Colm Kelleher, president of Morgan Stanley, in an interview with Bloomberg TV after being asked about recent positive comments made by other bank executives. "I think there's a bit of over-exuberance about how well people are doing."
Flows have picked up, but he said that the overall fee pool for equities and FICC trading are up only slightly year-on-year. Translation: Morgan Stanley claims to be getting an increased share of the fees, “particularly in FICC,” but there hasn’t been any more activity compared to Q3.
JPMorgan and Bank of America Merrill Lynch both claim that their respective trading businesses are performing strongly for the quarter. Jamie Dimon said that J.P. Morgan’s markets division is up about 15% year-over-year, while Brian Moynihan said BofA Merrill’s FICC division is up 15% quarter-to-date compared last year. Morgan Stanley cut 25% of its fixed income team this time last year, but CEO James Gorman thinks this is just about the right capacity anyway.
Kelleher has a positive outlook for 2017 and 2018 and said FICC revenues have nowhere to go but up. However, he believes that much of the bullish fourth-quarter talk can be attributed to “election euphoria.”
Separately, even though a prominent New York Times fashion columnist declared that the office dress code is dead, citing the prevalence of jeans, hoodies, fashion sneakers and other casual looks in the workplace, Bloomberg Game Plan hosts beg to differ.
While acknowledging that workers dress in a wider variety of ways than ever, they contend that the office dress code hasn't gone anywhere, it just looks different. People continue to put on uniforms to signal who they are and what they do – it’s just less codified than in past eras. For example, many Silicon Valley CEOs go with a collared button-down shirt tucked into jeans with a blazer and dress shoes but no tie.
J.P. Morgan told its employees earlier this year that they didn't have to wear suits in an attempt to please its millennial and tech employees. But this doesn't mean there aren't rules – business casual means pullovers and chinos.
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