Morgan Stanley's Ted Pick Talks Trump, M&A Picking Up, Risk

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By from Davos, Switzerland to the World Economic Forum, The Big Event, Ted Pick the Morgan Stanley Chairman.

And fantastic good. One year in the.

Seat, Yes, one year and three weeks. How does it feel amazing?

Yeah?

You know, you come into this job and you you want to do good. What you discover is the quality of underlying franchise and the people, and it's a wonderful franchise.

I got the keys to.

A great car and the partnership is alive and well.

Now you've got to hit the ground running.

Yeah.

American bankers running around CEO very very very happy here in Davas, Switzerland, the CEOs and American bankers and you one of them. Are you optimistic about this year ahead? And what is it about the incoming administration that gives you that confidence?

Jonathan?

I am positive because it is definitely a change in tone.

It just feels like the overall.

Framework is one where's more interaction between the public and the private sectors.

Where you guys are talking.

About last couple of minutes, it can't be state actors alone and it can't be private companies alone.

So the fact that.

There's real dialogue building. I think that's a huge plus. And on the European question, sort of interesting comment too, because I think there may be some catalysts to some now reflection. You know, there were the droggy papers and people read it, they kind of read it, but there was nothing capital markets, union, banking union, kind of European sort of self strength. Maybe this is a catalyst some real conversations.

So in that sense, I think it's positive too.

Are you hearing about actual business activities stemming from that change in tone in Europe or is it just sort of a conversation at this point.

Well, I mean we're like, what twenty five basis points into the new administration, right, We're just getting going. But yeah, hell of a lot more than you would expected two or three weeks ago.

One thing, it's you know, it's constructive.

One thing in your earnings that really stood out as a stock trading revenues that really boomed. And I'm wondering this has been a discussion about how risk on things have been feeling, certainly at Davos, But through the last couple of months, do you see that waning at all or is it just continuing to amp up? In terms of risk taking.

Well, you know, when you become a CEO, one thing is for sure, all of your children are equally beautiful.

But our equities business is.

One of our more beautiful children that I adore. And yes, they put up some great numbers, and I think that is a reflection on just the quality the underlying franchise, but also a sense that people want to allocate to a little more risk, but importantly they kind of want to.

Get beyond the index level.

You guys talk about this a lot, right, sort of index level equity risk premium relative to sectors. And I think one of the positives here is we're talking about the regulation the energy space and energy transition. We're talking about the financial services space, and yes, you need to own the six because they are money machines and great companies, But how about the rest of the four hundred and

That concentration is certainly a risk factor that a lot of people are considering. Another one is the deficit and the cost of interest payments for the US government, for you, for the capital market business. Is that a risk more generally that you've take even the team of focused on.

Yeah, you've been talking about that a lot, and I'm certain and I think it's important because if you don't talk about it, it sort of says, you know, there's no canary in the coal mine, right. But I do think there is the fact that there has been so much attention given to this, and you have folks like fest and coming in who know the bond market, that it has a sort of reaffirmation that we got to look out on that Simpson bowls.

You know, here we are these years later that.

Hasn't even said, you know, term premium is still pretty narrow, so like we haven't seen the long bond really move.

So there's an underlying confidence. I think the question is what kind of growth can we generate.

I think so the conversation that one would have is which comes first, sort of the potential inflationary effect of tars or the positive deregulatory effect. And I think that's going to be one of the things we know is that there's going to be an ongoing dialectic you know which policy function can be transmitted more quickly than the other. And I think that pivoting and transitioning and important.

Do you think it holds back activity that degree of uncertainty given how confident everyone is, and Lisa especially me too, we get nervous when everyone in Davos gets ready.

Yes, contraindicator.

Does it hold back activity without having the clarity on what these changes are going to look like?

I think part of the dilemma is that the vernacular of whether we're really moving with animal spirits as whether we see a bunch of M and A prints like where are those M and announcements?

And the reality is.

Over the last number of years, we've had I think two major uncertainties, right the end of financial oppressions zero and zero.

Is that finally passes?

And do we kind of know where rates are going to be and we can focus on the detail of whether they'll be you know, one or two moves or none at all, But at least we generally know that for the next period of time, the US restory rate is somewhere in the mid forest, and then you can apply discount rates for risk and the company and the rest of it, so.

That's kind of pass us. So that's an uncertainty that's.

Taken off the table if you're a CFO and you're a board room. The second set of uncertainty has been around sort of the end of the end of history, which is the resumption of nation states and the like. And one could argue, well, there's a lot of uncertainty in the world. I would argue the combination of having some sense of a rate framework and having some sense that things are going to happen in the US, in Europe, around the world. I think it galvanizes the corporate community.

Those companies need to move so at some.

Level, I couldn't tell you exactly the pacing of that activity, but we've been below trend line in the M and A market. We talked a couple of years from now. I think we'll be a trend line or higher. I'm pretty confident.

I think it's going to be M and A. I think it's going to be IPOs and everything.

I think we've been talking about.

You've talked about so much of the surf paucity of investable names, especially when you get past the Big seven companies and they're sort of small cap orphans without research.

I think there's a Yes, it.

Can be painful starbox for a young company to be public, but you get enduring long term value from shareholders that actually can also add some value, and you can use that currency to make other acquisitions. I think the IPO product is alive well. And I think importantly what's happened is a sort of financialization of the markets. Is the intersection of private and public that's come of age. So maybe you don't go public in the classic Nasdaq and

One area that you've brought in one of your babies that's very beautiful that I'm sure you talk about is your wealth management unit and SIS a big baby.

It's a big baby, big beautiful baby.

One of the drivers of revenues for a very long time. What's been the challenge in accumulating assets and the wealth management growing assets to degree that you really have wanted to?

Well, you have a massive denominator, right, and I think what's happened is we're now the better part of a trillion of aum between wealth and investment manager. And if you look at sort of point to point, what if assets done and obviously markets higher markets health, the assets.

In one year went up by a trillion three.

So people say, okay, you raise two fifty, Well that's a huge number. And for me at LEASTA, what's really important is how is our funnel working? Like think about our wealth business is sort of having three parts self directed E.

Trade.

We're seeing transaction activity really kicking up. That's clearly a positive signal part of what you're asking about. In the sort of pure equity space, we have this workplace business. I want your stock plan business because then I can do factory floor to CEO and then the fee based advisor fifty based points per annum, and the fee based advisory growth is quite impressive, quite impressive, and it's going to continue for years to come, especially if clients need to allocate across sectors.

You've made a lot of acquisitions in the past, any in the pipeline planning any further types of tie ups yourself.

You know, it's interesting we see stuff, but I really love the durable growth organically that we have the two majors major business in the investment bank and the wealth and investment manager. But over time we'll continue to look at stuff as we a Cree Capital.

You've got one minute left on this place this in Have you spoke into the president? I have not, not recently, right, if you have the opportunity too, and Dabas will today to throw a question at the incoming president, the current president, Donald Trump? What would you ask him?

I like the I like the quality of the questioners you have I do.

I like the quality of the question was.

In the mix and you had one, what would that question think?

I think the question I would ask is one where it would give him the opportunity to sort of speak to the possibility that he's thinking about a lot of different possibilities on a lot of different issues, something along the lines of are you open to taking idea flow around a whole.

Bunch of different spaces and give examples?

And I think my guess is the answer that he would give is yes, and I'll give you examples of that. And the reason that's important is because I think we're so early in this administration, people are trying to sort of weigh how much is tactical versus how much is baked. I think there's a lot of discussion and people it wouldn't be so much for him, but people understanding this is a real conversation taking place on a whole bunch of important issues and we're only five days in.

I think people hearing that will give confidence.

That we are in the early stages of the dialectic and.

There's more to come.

I appreciate your time. Thank you so much for having me. Guys, thank you sir. Safe travels back to.

Neo an avid listener and watcher, and.

We appreciate that you got to come on again soon.

NICs, I'd pick the channel to see of Mop and Standing