We live in uncertain times
“All of that said, we live in uncertain times. You are well aware the political and geopolitical uncertainties that exist on the domestic front, as well as abroad. How this will impact markets during the rest of the year is too early to predict. We will remain nimble should the macro environment change materially. Notwithstanding these risks, given our business model and leading positions in several franchises,we expected continue to deliver appropritate returns in the absence of a major disruption.”
I suspect that corporate tax cut will probably be a little more modest
“On the regulatory front, there’s huge moving parts, I mean — and on fiscal policy; first the corporate tax rate, as we said, we have a large business that is almost entirely in the U. S. and large parts of the rest of the firm are in the U. S. So anything on the corporate tax rate front is positive to Morgan Stanley, and it appears likely whether it’s this year ultimately or next year, there will be movement on that rate. I suspect it will be a little more modest and some of the numbers that have been thrown out. But nonetheless, anything sub 30%, appears probable would be very positive.”
M&A advisory revenues down 21% but clients remain engaged
In Investment Banking, we generated $1.4 billion in revenues, an 11% increase over the fourth quarter. The increase was driven by strong underwriting results across both debt and equity, partially offset by a decline in advisory revenues. Advisory revenues for the quarter were $496 million, down 21% versus a very strong fourth quarter. Clients remain engaged and interested in discussing strategic transactions, and pipelines are healthy.
We should start to revisit crisis era regulations
“On the regulatory front, I think the weight of opinion is that while the U. S. financial system is demonstrably healthier than it was going into the crisis and in the years following, we’ve reached a point where the amount of capital burden and regulatory burden on the system and some of the elements of that and some of the lack of transparency elements are right for real change, and that has been acknowledged all the way from board members of the federal reserves on down. And so as we said, it’s too early to predict what regulatory changes occur. But let me give you just a very simple one.”
We could move CCAR to every other year
I think there’s a compelling argument to move a lot of these regulatory programs to every other year. We’re six to seven years into it. I think the system has been build inside the banks, which make them much more predictable. And in terms of the CCAR, CLAR resolution planning processes, I’m not sure putting all of these on an annual cycle, which is very expensive, very time consuming, is terribly additive. The amount of response time you have to those is matter of months before you resubmit again.