Banking Analyst Brad Hintz: 'We Should Tip Our Hat to Morgan Stanley'
Companies / Banking Stocks Jan 19, 2012 - 03:16 PM GMTBy: Bloomberg
Bloomberg TV's Margaret Brennan spoke to banking analyst Brad Hintz this morning, who told Bloomberg TV, "We should kind of tip our hat to Morgan Stanley. They pulled one off here in terms of reducing some of their potential exposure to some of the weaker European banks."
On Morgan Stanley's earnings out today:
"Certainly the one thing that's on everyone's mind on Wall Street is capping the cash compensation of $125,000 in terms of their cash bonus. [Morgan Stanley is] deferring compensation expenses out into the future. That only works if you anticipate a recovery in terms of the performance...That works if you have a management that is optimistic. The bad part from the point of view of the employee is, you know, your grocery store typically won't allow you to pay with Morgan Stanley stock."
On Morgan Stanley earnings:
"The real problem with Morgan Stanley is retail. Retail posted an 8% pretax margin. If you look at Bank of America's numbers, you back out some of the one-time events in the Merrill Lynch business, they're generating a 15% pretax margin. Mr. Gorman still has a long way to go to deliver on his promise of a 20% pretax margin."
On how Morgan Stanley gained its increase in trading revenue:
"That's tough to tell in a given quarter. I think their equity business is quite good. One of the things that surprised me was, the message you're getting from the prime brokers is that this was a very, very weak quarter.
"Mortgage Stanley seemed to be strong. So it looks like you might have a slight market share shift into the prime brokerage business. Their execution business globally looked quite good. The other issue is that Morgan Stanley, at least on fixed income, tends to be more of a government trader."
On Morgan Stanley's exposure in Europe:
"They worked to bring down their exposure, and it appears to have brought down their exposure, and their contingent exposure, to some of the peripheral European banks. The problem that you have with the derivatives book is that you have links to everybody. It takes a long time to get out of those links.
"I think we should kind of tip our hat to Morgan Stanley. They pulled one off here in terms of reducing some of their potential exposure to some of the weaker European banks."
Copyright © 2012 Bloomberg - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.
© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.
