There has been a bit of good news in regards to the coronavirus pandemic so far, including some potential treatments that have shown promising early results at the moment. However, it’s pretty much certain at this point that major companies around the world will be reporting significant declines in their earnings over the next couple of quarters, at least. Most U.S. banks are now expecting their first quarter 2020 financial results to be quite meager, with Morgan Stanley (NYSE: MS) saying that its profits fell by 30% in Q1 2020.
While it’s not entirely surprising that lending, as well as investment banking revenues, wouldn’t be as profitable during this period, it’s still a significant decline nonetheless. Morgan Stanley reported $1.7 billion in net income for Q1, which is substantially less than the $2.4 billion reported last year. This is even worse than the $1.8 billion most analysts were expecting the investment bank would report.
“A CEO that stands by their short-term targets [set] right before this virus hit . . . I don’t know what planet they’re on,” said CEO James Gorman on Thursday, warning shareholders that earnings estimates will be quite off-target due to this pandemic. “We will not hit those targets in the second quarter, that I can promise you.” Shares of Morgan Stanley were surprisingly up on Thursday after the news, with the stock rising around 5.3%. While overall earnings were down, trading revenues had seen an increase due to this market volatility. However, its not much of a consolation prize in the grand scheme of things.
Other major investment banks have issued dire warnings, not just in regards to their own financial situations, but to that of the country at large. JP Morgan issued a forecast last week where the bank warned that unemployed would hit 20% while second-quarter GDP in the U.S would plummet by 40%. For all intents and purposes, the global economy is now in a global recession that could very well eclipse the Great Depression of 100 years ago. Unemployment numbers were also reported recently, with the figure has grown to around 20 million Americans at the moment.
As for the coronavirus itself, global cases have grown to just under 2.2 million, with the U.S. accounting for just under 700,000 of those cases. While the number of confirmed cases is continuing to grow at a solid pace, some medical experts have predicted that the infection curve could flatten in late Summer or early Fall of this year. However, the after-effects of this pandemic will likely be felt in the economy for years to come.
Morgan Stanley Company Profile
Morgan Stanley is a global investment bank whose history, through its legacy firms, can be traced back to 1924. The company has institutional securities, wealth management, and asset management segments. The company had $2.7 trillion of client assets as well as more than 60,000 employees at the end of 2019. Approximately half of the company’s net revenue is from its institutional securities business, with the other half coming from wealth and asset management. The company derives about 30% of its total revenue outside the Americas. – Warrior Trading News
