James Gorman
isn’t apprehensive about how a doable recession and bear market will have an effect on his financial institution.
The
Morgan Stanley
MS -2.45%
chief government mentioned Monday that he’s “pretty relaxed” in regards to the affect of a doable U.S. recession, a state of affairs he referred to as a 50-50 proposition based mostly on historic expertise.
“We’re in a brave new world right now. I don’t think anyone can accurately predict inflation one year from now,” he mentioned at an investor convention. The authorities mentioned Friday that the consumer-price index hit its highest degree since 1981, and U.S. shares tumbled once more Monday, together with cryptocurrencies and different dangerous belongings, to place the S&P 500 in a bear market, as outlined by a 20% decline from its Jan. 3 latest excessive.
But Mr. Gorman cited a backdrop of sturdy stability sheets for firms and customers as purpose to be optimistic {that a} recession wouldn’t be extreme or final a very long time. And whereas the stock-market selloff has hampered Morgan Stanley’s investment-banking enterprise within the brief time period, the weak market is also purpose to not fear, he mentioned.
“We’ve had plenty of cycles where things look shaky and the market tells a different story,” he mentioned. “I wouldn’t say I’m totally relaxed, but I’m pretty relaxed.”
“Banking is in a difficult spot right now,” he mentioned, alluding to this 12 months’s sluggish tempo of preliminary public choices. “Is it permanently hit? No. It’s delayed. Trading remains active. If trading softens over the next few months, so be it.”
He added that the financial institution’s rising enterprise of managing cash for rich purchasers is “incredibly stable.”
Mr. Gorman mentioned final month at The Wall Street Journal’s CEO Council Summit {that a} gentle recession wouldn’t shock him.
JPMorgan Chase
& Co. CEO
Jamie Dimon
warned this month of an financial “hurricane” brewing, whereas
Wells Fargo
& Co. CEO
Charlie Scharf
mentioned in May a recession within the U.S. can be “hard to avoid.”
Write to Charley Grant at [email protected]
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