This may be the longest expansion and bull market in US history; it's also the only expansion that has seen thousands of bankers fired every single month as the stock market hit new all time highs every month.
Putting its pre-Christmas bonus pink slips where its mouth is, Morgan Stanley which in recent years has emerged the most bearish US-based bank, is firing 2% of its workforce, or roughly 1,500 bankers, "due to an uncertain global economic outlook" CNBC reported citing people with knowledge of the situation. Morgan Stanley had 60,532 employees as of September 30.
The job cuts at the investment bank, the world’s biggest equities trading firm and a leading mergers adviser, will hit technology and operations roles hardest, according to the report.
While Morgan Stanley has traditionally posted strong results, most recently reporting Q3 profit and revenue that beat analysts’ expectations, the company's internal research has warned the US economy may hit a pothole in 2020. As a reminder, this is what the bank's Chief US equity strategisty Michael Wilson wrote in his year-ahead outlook:
We expect that by April, the liquidity tailwind will fade and the market will focus more on fundamentals. Ironically, the outlook for the fundamentals is less certain for 2020 than for 2018/19 given more developed trade tensions, an election, and a weaker US economy.
Apparently it also meant that hundreds of Morgan Stanley bankers will get a pink slip instead of a year-end bonus.
Indeed, as CNBC notes, Wall Street firms often cut jobs towards the end of the year to avoid paying out bonuses. Morgan Stanley is the first known instance of this, but other firms will likely announce cuts as planning for 2020 continues.
Just don't call it cutting costs - the technical term is "efficiency drive." Just like QE4 is really NOT QE.
Morgan Stanley shares climbed 25% this year amid a broad rebound in bank shares. And since the top imperative for CEO James Gorman and the bank's BOD is to keep the stock price rising in 2020 and repurchasing even more stock, it means that buybacks will take increasing precedence over full-time employees.