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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Intelligence podcast. Catch us live weekdays at ten am

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Speaker 1: Eastern on Apple, Cocklay and Android Auto with the Bloomberg

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Speaker 1: Business App. Listen on demand wherever you get your podcasts,

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Speaker 1: or watch us live on YouTube.

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Speaker 2: It is all about the big bank earnings. Yesterday we

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Speaker 2: got a bonanza five of them. Today we get the

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Speaker 2: last of the big six banks, and that is Morgan Stanley.

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Speaker 2: Blackrock also reported as well, So let's bring in Neil Sipes.

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Speaker 2: He has Bloomberg Intelligence US financials analysts and Neil. The

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Speaker 2: takeaway from the big banks results yesterday was that trading

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Speaker 2: revenue has gone gangbusters. And I think we got more

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Speaker 2: proof of that today from Morgan Stanley.

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Speaker 3: Yeah, we sure did, and I think you've seen it

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Speaker 3: across all the names that have reported so far. Pretty

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Speaker 3: I think a lot of people have been using eye

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Speaker 3: popping numbers, right, I mean beats that are in the

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Speaker 3: billions of dollars in beats, not numbers were used to

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Speaker 3: seeing will put it that way, and I think, you know, again,

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Speaker 3: the trading business. I think where we stand today, we've

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Speaker 3: seen really strong equity markets, particularly in the second quarter

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Speaker 3: where you had sort of a V shape recovery really

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Speaker 3: at the beginning around the Middle East tensions sort of

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Speaker 3: easing off of a cliff, and then you had of

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Speaker 3: course SPACEXIPO. There's rumors of more coming either in the

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Speaker 3: second half, maybe they get pushed into twenty twenty seven.

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Speaker 3: So there's tailwinds there that have been driving this activity.

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Speaker 3: There's themes like Asia, there's themes like AI. All of

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Speaker 3: this is sort of fueling particularly equities trading. Again, when

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Speaker 3: you think about the trading business, it's kind of fickle, right,

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Speaker 3: So the repetitiveness of something like the second quarter that

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Speaker 3: we saw, I think that's what people are asking, is,

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Speaker 3: you know, is there more to come on the investment

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Speaker 3: banking side. I think the answer is yes, there right,

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Speaker 3: because we see really strong pipelines. We see Goldman posting

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Speaker 3: the best fees since twenty twenty one and saying the

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Speaker 3: pipelines actually higher than it has been in the past

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Speaker 3: five years, which by the way, was twenty twenty one.

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Speaker 3: So it feels like second half even better in that business.

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Speaker 2: How much can you count on the pipelines to deliver?

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Speaker 2: I mean, you know, it's stuff that's in progress. But

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Speaker 2: has not you know, been finalized or completed. So is

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Speaker 2: that basically as good as it gets?

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Speaker 3: Yeah, And to be fair, the pipelines are there's always

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Speaker 3: optimism in the pipelines even when things are not that great.

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Speaker 3: So I think that's that's where we stand. Is you

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Speaker 3: have to have the inputs to execute on that pipeline,

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Speaker 3: and the biggest inputs are really the markets. Broader sentiment,

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Speaker 3: makes sense, macro conditions, all of that sort of feeds

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Speaker 3: into Okay, are these deals actually going to come to market?

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Speaker 3: Are you know, capital issuers in capital, you know, providers

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Speaker 3: all willing to meet at the same time, and you know,

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Speaker 3: the conditions have generally been there, you know, aside from

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Speaker 3: a couple brief moments in the past couple of years,

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Speaker 3: and the expectation is for more of that to come.

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Speaker 3: But you know, you snap your fingers and markets go

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Speaker 3: against you. All that can sort of ice over for

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Speaker 3: at least a couple of weeks, if not longer.

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Speaker 4: What's when I think of Morgan Stanley, and I think

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Speaker 4: a lot of investors they want to get a sense

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Speaker 4: of the private wealth business and because say they're such

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Speaker 4: a big part of their business and they're so good

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Speaker 4: at it. What are they saying about that that business?

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Speaker 3: Yeah, so it's you know, it's over half of earnings

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Speaker 3: now for Morgan Stanley. So it is really the driver

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Speaker 3: of the franchise. Again, the headlines are generated by capital

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Speaker 3: markets because it can swing so much through the cycle.

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Speaker 3: Ballast is wealth management and I think you know that

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Speaker 3: business again market dependent. It's firing, right. We got margins

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Speaker 3: at thirty percent, which is the target, organic growth at

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Speaker 3: eight percent. I think an interesting component here in the

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Speaker 3: second quarter was the sort of windfall of flows coming

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Speaker 3: from the IPOs that we saw in the second quarters.

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Speaker 3: Think you think about all the wealth that's tied up,

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Speaker 3: you know, within employees and early investors in something like SpaceX.

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Speaker 3: Almost half of the one hundred and fifty billion dollars

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Speaker 3: of flows was derived from IPOs in the quarter that

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Speaker 3: Morgan Stanley involved in. So you think about that flywheel. Yeah,

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Speaker 3: I mean that's Morgan Stanley in a nutshell.

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Speaker 2: That number is so big it's kind of hard to believe.

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Speaker 4: I heard something like.

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Speaker 2: One hundred and fifty billion dollars in net new assets

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Speaker 2: in its wealth management business in a three month period.

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Speaker 3: That's kind of nuts Yeah. I think the only one

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Speaker 3: that comes to mind right off the hop is something

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Speaker 3: like a black Rock who's producing numbers like that, who

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Speaker 3: also reported this morning with also stellar results.

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Speaker 4: So now these are the dumb numbers. The Blackrock numbers

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Speaker 4: are just dumb. The assets under management are what.

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Speaker 3: Now, fifteen trillion trillion fifteen to three.

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Speaker 1: Again is but so much.

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Speaker 2: But it's impassive investments, right, I mean, it's you know,

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Speaker 2: put it there and forget about it.

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Speaker 3: It is. But I think the story with Blackrock now

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Speaker 3: is a little bit of a shift underneath the surface.

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Speaker 3: So yeah, we initially think of ey shares and that's

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Speaker 3: been the powerhouse for Blackrock, but increasingly the growth is

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Speaker 3: coming from the higher fee buckets. Now we have active

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Speaker 3: ets that are really taking off. You have things like

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Speaker 3: private markets, so impressively, the growth at Blackrock has started

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Speaker 3: to shift a little bit more and be more consistent

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Speaker 3: in those non ultralow beta type funds and into things

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Speaker 3: that are more lucrative, which is obviously positive to the business.

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Speaker 3: So you know, they did a handful of alternative transactions

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Speaker 3: in the past couple of years. Those look like they're

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Speaker 3: bearing fruit, and yeah, I mean the growth remains pretty stellar,

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Speaker 3: which by the way. The growth tends to be harder

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Speaker 3: to come by once you reach fifteen trillion, but they

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Speaker 3: keep putting up the numbers, and I think it's getting

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Speaker 3: rewarded for that.

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