Morgan Stanley Reports Profit, but Investors Have Doubts

Profits are good, but not good enough in the case of Morgan Stanley, as investors show worry in the bank. The stock of the company dropped 5.4 percent and reached its lowest levels since January.

Just like Goldman Sachs, Morgan Stanley is switching their sources of revenue and working to make the best of changing regulations. Unlike Goldman Sachs, however, Morgan Stanley is dramatically cutting their fixed-income trading and reducing staff before it continues to lower total profit. In further contrast to Goldman Sachs, Morgan Stanley had a 42 percent loss while Goldman Sachs had a drop of only 7 percent.

The intended direction of Morgan Stanley, as stated by Chief Executive James P. Gorman, is to switch to less volatile practices such as wealth management. “Richard Bove, an analyst with Rafferty Capital Markets, said that Morgan Stanley’s decision to shrink the fixed-income business meant that not only was it losing talented traders, it was not attracting as many as it used to. As a result, it will be hard for Morgan Stanley to keep up with competitors.”

I think that the big investment banks are all going through changes that is leaving the markets in a state of uncertainty overall. Even more so for Morgan Stanley, who seems to be in lower position in the eyes of Goldman Sachs and JPMorgan.

Source:

http://dealbook.nytimes.com/2013/04/18/morgan-stanley-swings-to-a-profit-beating-estimates/

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