It's been an ugly day for Morgan Stanley shareholders.
Shares have dropped over 5% on news that third quarter trading revenue fell 15% from the same time last year. For the firm’s bond trading business, it was the worst quarter since the financial crisis. It’s just another example — see JPM last week — on why we’re reiterating our call to sell financials. (See Real-Time Alerts)
Morgan Stanley CEO and Chairman James Gorman partially blamed uncertainty about the Federal Reserve’s rate hike for recent volatility. Meanwhile, no help appears to be on the horizon. At least not from New York Federal Reserve Bank President William Dudley.
Earlier today, a small Italian newspaper, CorrieraEconomia, quoted Dudley as saying:
"It's true we thought we could raise interest rates by the end of 2015, but turbulence on financial markets, modest global growth, energy prices and macro-prudential imbalances are slowing this process down."
It is “still too early to think about raising interest rates,” he added.
For the record, #LowerForLonger on rates has long been our macro team’s call for quite some time. Cue more uncertainty…
(Sorry Mr. Gorman.)
Another gripe from the Morgan Stanley CEO was “historic” market moves in China that had made trading difficult.
… Again, no end in sight there for Morgan Stanley.