CEO James Gorman proudly said Morgan Stanley (MS)’s multi-year transformation plan was successful Thursday — and as shareholders, we see no reason to disagree. . “We’ve gradually eliminated the risk in the business divisions that got us into trouble throughout [Great Financial Crisis]“, and we clearly made a big splash in asset building and wealth management, and it worked,” Gorman said in a CNBC interview from the World Economic Forum in Washington. Davos, Switzerland. “We are delighted with what we have achieved.” Club is also delighted, even if the market doesn’t always share our beliefs about the change Gorman has outlined since taking over the Wall Street bank in 2010. Under the leadership of Mr. Gorman, Morgan Stanley has moved towards more stable income related to wealth and wealth management, reducing its reliance on frequently volatile investment banking and trading businesses. Morgan Stanley’s stock performance over the past six months. Morgan Stanley’s strong quarterly results earlier this week confirmed our holdings once again. Arter’s numbers were also released the same morning that its longtime Wall Street rival, Goldman Sachs (GS), reported a significant earnings miss, in part due to the opening into consumer banking. While declining to comment on Thursday about his competitors, Gorman happily outlined what he sees as the benefits of Morgan Stanley’s transformation. “We need to build a business where, if the world gets tough again – which we just saw last year as an example of that – we’re fine. And how to do it. it’s about building stable businesses; it doesn’t matter what the market conditions are,” says Gorman. Everyone who is buying bonds is getting their money out of cash. … Continuous cash flow. Our job is in the middle.” Acquisitions are a big part of how Morgan Stanley moves in the middle of that cash flow The bank took full control of wealth manager Smith Barney a decade ago. More recently, it bought E-Trade brokerage and investment manager Eaton Vance, valued at around $20 billion in total, those acquisitions ended in October 2020 and March respectively. 2020. My answer was, ‘You’re right.’ But it doesn’t matter,” Gorman told CNBC. “We own the business now. It doesn’t matter if it’s plus or minus a billion dollars. What matters is what you can do with the business in 10 years’ time.” Now we own the business. Plus or minus a billion dollars it doesn’t matter. What matters is the time period. 10 years, what can you do with that business Morgan Stanley CEO James Gorman Economic outlook Gorman was also asked about his thoughts on the global economy, inflation and the Federal Reserve His outlook is relatively upbeat at a time when consensus expectations are for a recession in the United States, albeit mild, Gorman said he thinks 2023 will be an improvement over For 2022, a time of stock market declines and heightened price pressures prompted a very aggressive interest rate hike from the Federal Reserve. “I think it’s going to be better. I really did,” Gorman said. While it’s unclear what the Fed will do with rates in the coming months, Gorman said that at least one favorable move is that US inflation has peaked. recent government support has supported Gorman’s position, with downward pressure on prices on both consumers and wholesale manufacturers. Another positive is what is happening economically in China, While the CEO said Beijing’s decision to ease strict controls on Covid was important, he put more emphasis on adopting growth-oriented economic policies. He pointed to this week’s meeting between US Treasury Secretary Janet Yellen and Chinese Vice Premier Liu He as evidence Elsewhere in the banking industry, the CEO JPMorgan (JPM) executive Jamie Dimon told CNBC early Thursday that he believes the Fed may need to raise rates higher than currently anticipated because, “There’s a lot of core inflation, which won’t go away too quickly,” he thought. Despite fears of a widespread recession since last year, the Club maintains confidence in Morgan Stanley. The transition plan that Gorman showcased during Thursday’s interview shows why we’re not just continuing to invest, but strengthening our position at lower levels as stocks sell off. early last year. As of now, we have a 2 rating on Morgan Stanley, meaning we will wait for a pullback before buying more shares. Shares are up more than 10% in 2023 — largely thanks to a nearly 6% gain on Tuesday as investors cheered the bank’s earnings report. We can certainly be patient while we wait for investment banking revenue to recover from a multi-quarter slump. Shares of Morgan Stanley offer a dividend yield of about 3.3%, and it bought back $1.7 billion worth of shares in the fourth quarter. The company appears to be positioned to resume stock buybacks as in June the company’s board approved a $20 billion multi-year buyback program. (Jim Cramer’s Charity Trust Long MS. See here for a full list of stocks.) As a CNBC Investment Club subscriber with Jim Cramer, you’ll receive trading alerts prior to trading. Jim makes the transaction. Jim waits 45 minutes after sending the trading notice before buying or selling shares in his charity’s portfolio. If Jim had talked about a stock on CNBC, he would have waited 72 hours after issuing a trading warning before taking a trade. INFORMATION ABOUT THE ABOVE INVESTMENT CLUB IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, PLUS OUR DISCLAIMER. NO Fiduciary Obligations OR OBLIGATIONS EXIST, OR BE CREATE, BECAUSE OF YOUR RECEIVING ANY INFORMATION PROVIDED IN RELATED TO THE INVESTMENT CLUB. NO SPECIFIC RESULTS OR PROFITS GUARANTEED.
James Gorman, President & CEO of Morgan Stanley, speaks on the Squawk Box at the WEF in Davos, Switzerland on January 19, 2023.
Adam Galica | CNBC
Morgan StanleyChief Executive Officer James Gorman proudly said (MS)’s multi-year transformation plan was a great success on Thursday – and as shareholders we see no reason to disagree. .
