Morgan Stanley saw profits increase and beat the estimates of analysts because of gains in wealth management and investment banking. Their revenue came in at about 7 billion in the 4th quarter, up 23% from a year ago. With this revenue increase, Morgan Stanley was able to pay its employees more money. As the article states, it could raise some eyebrows on Wall Street. In 2010, compensation was at 62% and it was at 60% in 2012. In 2010, Chief executive James Gorman said that "the rate should be no higher than 50%."
Should this raise some eyebrows on Wall Street? This data seemed to please investors as Morgan Stanley stock went up by 6% ($21.98) in this mornings trade. Or is this a turn around point for Morgan Stanley?
This is good news for the American economy. In terms of our consumption function in Chapter 4 where: C= 'c'(consumer sentiments) + bY+ dW.....the W is the variable really playing into this news. The wealth varible is boosted in this situation, which theoretically could boost overall consumption in the long run. Factoring consumption (c) into our larger function for GDP, this is great news. 'Raised eyebrows' aside.
ReplyDeleteIt looks like Morgan Stanley did a bit of house cleaning in order to increase earnings. It worked! Morgan Stanley is seeing an increase in 206 million since 2011. The main question at this point is whether these earning will sustain. Now that Morgan Stanley has trimmed all the fat off of their cooperation, what happens next? In order to keep profits high and be a major player on Wall Street, they need to find their niche in investment banking and wealth management. Morgan Stanly needs to find something that sets them apart from all the other firms on the street, or else they will fall to competition.
ReplyDelete