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Morgan Stanley Q3 Earnings Crash, Revenues Miss By $1.2 Billion; Volatility And Burst Chinese Stock Bubble Blamed
While the big TBTF banks managed to hide much of their ugly balance sheet exposure, and prevent it from hitting the income statement in Q3 as reported previously, while covering up prop trading losses as well as they possibly could, the banks without trillions in deposits were less able to do so: first it was Jefferies, then Goldman posted its worst quarter in years, and now here comes the bank also known as Margin Stanley, which moments ago reported Q3 EPS of $0.34, which even if adjusted for various "one-time" items, at $0.48, not only missed consensus of $0.63 wildly, but it also missed the lowest range of the estimate range ($0.53-$0.70).
Q3 Net Income, on an apples to apples basis ex DVA, was a paltry $740 million, nearly $1 billion lower than Q2, and down 44% from the $1.4 billion a year ago.
The driver: a collapse in revenue, which at $7.3 billion non-GAAP and $7.8 billion as reported, was the lowest top-line print since 2012.
Not surprisingly, the biggest pain was again in Institutional Securities, as trading and liquidity ground to a halt in a quarter in which the CBOE literally had no idea what the VIX was for half an hour on August 24. The culprit, as usual, FICC: $583MM, which reported revenues down from $997MM. This was somewhat offset by Equity Sales: $1.8 billion, which were unchanged froim a year ago.
Overall, Investment Banking at $1.3 billion was down 15% from a year ago, while Trading plunged 17% to $2 billion.
Curiously, the biggest reason for the tumble had nothing to do with trading and everything to do with Investment Management, where revenue crashed 59% to $274 million. According to the company, "net revenues of $274 million decreased from $667 million in the prior year primarily reflecting the reversal of previously accrued carried interest associated with the Asia private equity business and lower results in the Traditional Asset Management business."
In other words, the Chinese trading bubble burst.
Still, according to CEO Jim Gorman, it was all volatility's fault:
"The volatility in global markets in the third quarter led to a difficult environment, impacting in particular our Fixed Income business and our Asia Merchant Banking business. The Firm benefited from the stability of the Wealth Management business, our ongoing leadership in Equities and the continued strength of our Investment Banking franchise. Our business model provides a steady foundation for the Firm as we navigate these challenging markets and focus intensely on addressing areas of underperformance.”
Oddly enough, a year ago Morgan Stanley blamed the lack of volatility for a "difficult environment." Thank you Fed for habituating all "traders" to only perform to their maximum when everything is just right.
End result: the bankers will eat it - "compensation expense of $3.4 billion decreased from $4.2 billion a year ago primarily driven by lower revenues" the bulk of which came from institutional sales: "Compensation expense of $1.3 billion decreased from $1.8 billion a year ago on lower revenues" and the abovementioned Chinese blow up: "Compensation expense for the current quarter of $95 million decreased from $253 million a year ago, principally due to a decrease in deferred compensation associated with carried interest."
Bottom line: more wage deflation is coming.
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More fines coming,employees will be the losers for all the top gangsters playing their games.
Number of top gangsters prosecuted since 2008.....zero.
Welcome to the land of nailgun justice.
I think we all need reassurance that no bonuses were harmed by this.
Poor things -- only made $7+ billion in a single quarter.
Free John Corzine!
Oh wait....he is.
1.2 billion miss...thats easy...just buy back some more stock for next qtr and viola...eps beat
MS the next Lehman?
in this real life game of thrones... i think the next sacrifice is either Morgan Stanley or Deutsche bank
Nothing to fear here.
They have TBTF insurance
yep, better get NIRP and cashless society up and running asap so they can bail themselves in and steal even more. good thing they already unloaded any potential derivatives losses onto the taxpayer!
HOW MANY TIMES DID THEY GO TO THE REPO WINDOW FOR SOME HIIDEN QE
how about your Oil hedges bitchez?
Oh how the mighty fall when the game is not sufficiently rigged.
The good, the bad and the really really ugly.
You feel lucky? well do ya??
Given how the markets appear to benefit from poor performance, do you really think that they care if they are profitable?. It would seem that the markets have taught them that sometimes no profits are more profitable than actual earnings.
ESAD MF'S!
Haha, they must be super shit at MS to not win with all the cards. What a bunch of douchebags.
I have a buddy who is an advisor that works for MS. Nice guy. IMHO, not the sharpest knife in the drawer. A little nepotism was involved, but I digress.
He is one of the peeps my wife looks at, when trying to convince me how well EVERYONE else is doing.
The fundamentals scare the crap out of a logic based, thinking person. The fact the wheels are still on the cart serves to not only befuddle, make us look like chicken littles, but also reinforces that when IT happens, IT will be far, far worse.
At some point, it's got to clear.
Edit; a lot of nepotism ( and tits) was involved. :)
Margin Scamley!!!
Doesent Morgan Stanley just get free, unaudited money from the Fed anyway to buy stocks with?
Rumor has it the Fed has been doing stealth QE to keep the stock market from crashing.
My wonder is how, when your business is managing " other people's" money, how is that a thing?
I mean, really, do that many people in this country, have that much wealth, and are that stupid about it, that they require a whole class of highly paid advisors to not only manage it, but...... Grow it! ...and derive a nice income from that management ?????? Really??
There is that much savings and wealth sloshing around???
I don't believe it. I just do not believe it.
How else do you explain it then? A debt fueled spending binge??
US pension funds are huge. What I figure is that they bribe pension fund managers to allow the banks to take care of their money ( lose it) for exorbitant fees (20/2).
Thats just one of their scams. When there is no danger of going to jail, its not hard to come up with clever scams to separate people from their money.
Let's face it: It's hard to make money from shit that's not happening.
from finance.yahoo:
Weak trading revenues are likely to mean Wall Street bankers and traders will get smaller bonuses this year...
boo frickedy hoo [/dr. evil]
So, they have to move their HTF computers a bit closer to the action.
The public thinks that investment bankers and fund managers and all these types are really smart and very knowledgeable experts about all things financial.
This (performance) with almost free money to play with just demonstrates that they are nothing but the stupid greedy gamblers who brought the nation to its knees. The opposite of patriotic.
Just about every thing they do is based on an existing templates where they just plug in the numbers in providing misleading disingenuous information to pension funds and other unsophisticated parties to convince them to invest in products in order to generate their fees and bonuses. Their supposed knowledge and expertise is bogus - they're just salesmen posing as experts. I read about one transaction involving a $6 billion bond negotiation with a $600 million transaction fee. Are you f*cking kidding me? That is 10% of the overall value! And Morgan Stanley STILL performs miserably? These people are exposing themselves as incompetent frauds right in front of people's eyes who don't even see it.
Troubling indeed.
And again....
The problem is China, it's not because the US Central Bank is printing money out of control. It's always somebody else's fault, and not your own.
You missed the memo, A students can do no wrong, got it? Good. Now lets tax A students and see real progress.
Talking about Corzine, et al :
I live in New Hampshire right off I-89 near Concord. Where the exit turns into the road entering town, there is an area where dozens of political posters are put up. On the last election cycle I put one up saying " FREE JON CORZINE - OOPS ". Believe me, ths message stood out from the others . lol. But sadly, I wonder how many actually knew what it was conveying.
This year, I intend to put one up associating Corzine with the cunt Hillary. It has to be short & snappy. Probably something like Corzine - heart symbol - Clinton. But if anyone has any ideas, I'm open to them.
btw, I steal the well made poster frames when candidates leave them up for weeks and I recycle them with my messages using weatherproof poster board and heavy magic marker or paint.
HILLARY AND CORZINE FOR PRISON 2016.
YOU BE CORZINED BY HILLARY.
Thanks Seasmoke. Any others? I can probably put up two or three in different areas near exits.
MORGAN STANLEY. JP MORGAN. THIS MORGAN GUY ISN'T VERY GOOD.
If you're a bank and you lose money in this environment, then you're too stupid to be in business. YOU'RE FIRED!
Donald Trump 2016
They were supposed to rob around 8billion but only managed to rob 7billion in 3 months....aw so sad.....burn the thing to the ground.
Profits reduced by 42%. Poor bankers. They will have to take more money from the FED REPO window to protect their bonuses,