Morgan Stanley posted a record quarterly profit on Thursday that blew past analysts’ expectations as another of Wall Street’s big investment banks gained from huge swings in financial markets because of the coronavirus crisis.
The bank wrapped up second-quarter results for the big U.S. lenders that shook out along expected lines. trading powerhouses Morgan Stanley and Goldman Sachs performed better than Main Street rivals JPMorgan Chase, Bank of America and Citigroup, which had to build large reserves for loans that may go bust.
Morgan Stanley Chief executive officer James Gorman, like other Wall Street executives this week, cautioned that the bank’s record-setting trading numbers would be hard to repeat in the coming quarters.
“Clearly, it will be difficult for the back half of 2020 to satisfy the record first half results …. That said, several parts of our business ought to continue to perform well,” said Gorman.
A hallmark of Gorman’s tenure as CEO has been the bank’s decade-long expansion into wealth and asset management, businesses that diversified the bank’s revenue streams and provide balance against the unpredictability of its trading business.
Gorman said the decision to keep the bank’s consumer loan business small also helped this quarter. Credit cards and small business loans are expected to be badly hit by the COVID-19 pandemic, and rival bank Goldman Sachs had to set aside $1.6 billion for loans that could go bad.
In contrast, Morgan Stanley set aside just $239 million.
The bank’s stock was up over 3% at $52.98 by mid-morning.
The bank’s trading unit recorded a 68% jump in revenue, led by a nearly 168% surge in bond trading. Equities trading revenue rose 23%.
Investment banking was another bright spot, with revenue jumping 39% as companies looked to hold up their financial position to ride out the effects of COVID-19 pandemic.
Overall revenue jumped 31% to a record $13.41 billion in the quarter, clocking an increase in all its segments.
In the wealth management unit, where revenue rose 6% since last year, clients took advantage of both the markets and lower interest rates to borrow more. The unit generated about a third of the bank’s revenue for the quarter.
Securities-based loans, or loans on the value of one’s brokerage account, rose 17% year over year, while mortgages rose 12%.
The bank’s earnings attributable to common shareholders rose 45% to $3.2 billion, or $1.96 per share. Analysts on average had expected a profit of $1.12 per share, according to IBES data from Refinitiv.
Morgan Stanley is a financial holding company.
The Company’s segments include Institutional Securities, Wealth Management and Investment Management.
The Company’s Institutional Securities business segment provides investment banking, sales and trading, and other services to corporations, governments, financial institutions and high-to-ultra high net worth clients.
The Company’s Wealth Management business segment provides an array of financial services and solutions to individual investors and small-to-medium sized businesses and institutions covering brokerage and investment advisory services, market-making activities in fixed income securities, financial and wealth planning services, annuity and insurance products, credit and other lending products, banking and retirement plan services.
The Company’s Investment Management business segment provides a range of investment strategies and products.
Overall, the bias in prices is: Upwards
Note: this chart shows extraordinary price action to the upside.
The projected upper bound is: 57.28.
The projected lower bound is: 48.58.
The projected closing price is: 52.93.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 23 white candles and 27 black candles for a net of 4 black candles.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 85.1570. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 27 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 66.11. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 25 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 191.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 7 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 3 period(s) ago.
Rex Takasugi – TD Profile
MORGAN STANLEY closed up 1.290 at 52.640. Volume was 20% below average (neutral) and Bollinger Bands were 47% narrower than normal.
Open High Low Close Volume 51.500 53.505 51.350 52.640 3,100,603
Technical Outlook Short Term: Overbought Intermediate Term: Bullish Long Term: Bullish
Moving Averages: 10-period 50-period 200-period Close: 49.50 45.53 45.69 Volatility: 43 63 73 Volume: 2,632,711 2,999,589 3,356,897
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
MORGAN STANLEY is currently 15.2% above its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future.
Our volume indicators reflect volume flowing into and out of MS.N at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on MS.N and have had this outlook for the last 0 periods.