00:00Let's talk now to Matt Maley, Chief Market Strategist at Miller Tabak in Boston.
00:04Good to see you again, Matt. Welcome back to the program.
00:07We have got quite a few big banks to talk about.
00:09We'll break them down in a minute, but let's talk about the broader theme,
00:12which is that they've all done better than expected.
00:16Yes, this is particularly impressive.
00:19I mean, one part of it is a little bit understandable.
00:22I mean, the trading revenues were better than expected,
00:25and given how strong the market has been, that's not a surprise.
00:28And same with Morgan Stanley.
00:31Some of their wealth management numbers were much better than expected.
00:35Again, with the market doing so well, that was not a surprise.
00:38But the investment banking revenues, I mean, a lot of people really felt that that would dip
00:42because of the government shutdown here in the U.S. at the end of last year,
00:48and yet they were still able to come in better than expected.
00:51So this is something that's definitely helping the entire group,
00:54although some of the companies with the credit card-related issues are not rallying quite as much.
01:01Well, you mentioned Morgan Stanley and their wealth management division,
01:04which it looks like is generating a lot of their money.
01:07What else is working for Morgan Stanley?
01:10Well, again, that investment banking area.
01:13I mean, you think of Goldman Sachs and Morgan Stanley,
01:16and they have been at the top of the investment banking industry for decades, really.
01:22And there was a time for a while there that Morgan Stanley was losing a little bit of its cachet in that area,
01:31but it's coming back in a big way because people thought,
01:33well, they're focusing so much on wealth management that they're losing a little bit on the investment banking side.
01:39Well, that's no longer the case.
01:40If it ever was the case, it's certainly not being proven to be wrong now.
01:44So these are all positive things coming together for the stock.
01:48So Goldman Sachs, Goldman Sachs, rather, also beating expectations.
01:52Why do you think people weren't expecting them to do as well as they've done?
01:57Well, I mean, to be honest with you, I was surprised.
02:00I mean, the people were a little bit cautious on this name.
02:04They've made a lot of right moves.
02:05I mean, remember what they did in that wealth management area of the mid-sector?
02:10They got into that.
02:12It didn't work out for them, and they got out.
02:14I mean, that was a smart move.
02:16And so the overall factor, though, is that they're still at the top when it comes to trading.
02:22They're still at the top when it comes to investment banking, along with Morgan Stanley.
02:25And so these things have come together quite nicely.
02:28And the whole banking sector, it's funny.
02:30The KBE Bank ETF, it actually is making a new all-time high.
02:36People forget that its all-time high was way back in 2007.
02:39But we're just starting to get above that now.
02:41If it pushes higher from here, that's going to attract a lot of that momentum money.
02:45So this could be a real good group over the coming months.
02:48We should talk about BlackRock as well, which now has a record $14 trillion in assets.
02:54Is that down to it broadening out its business, do you think?
02:58Yeah, that definitely seems to be part of their – they're brought it out into the private markets,
03:02especially the private credit markets.
03:03I mean, there's definitely some risks involved there.
03:07So if we do see any kind of a breakdown in the fixed income market, and we do have to note that long-term interest rates in many parts of the globe,
03:15especially in Japan but also here in the U.S., they're, if anything, moving higher in the last couple of months.
03:21So that could create some problems down the road.
03:25But, yeah, they've been able to broaden out.
03:27I just do – I'm a little bit worried about some of the risks that may be involved at some point when those private markets see a hiccup of some sort.
03:35I want to briefly touch on that oil price, which has been a bit up and down, hasn't it?
03:39Highs yesterday falling back on Thursday.
03:42Geopolitics must be having an effect, of course.
03:44Where do you see oil prices going next?
03:47Yeah, the thing about – it's funny because I tend to be – excuse me – bullish on the energy stocks.
03:52But a lot of that has to do with the cost-cutting and things they've done.
03:55In other words, they can do well even if oil prices don't rally in a big way.
04:00And so I still like the group.
04:02However, for the price of oil, I mean, we have to remember that President Trump, when he makes a move militarily, he wants a quick strike operation.
04:09We certainly saw that the first time the U.S. hit Iran.
04:14And then, of course, with the most recent developments in Venezuela.
04:17And so, you know, thinking that we're going to have some sort of a boots on the ground, a big problem there, I think is a little bit stretched.
04:24So I think oil prices will stay subdued.
04:26And the one caveat, of course, is that if the situation in Iran really deteriorates and we have chaos there, all bets are off.
04:34So we have to stay very nimble when it comes to this area of the market.
04:38Matt, great talking to you, as always.
04:40Thanks for coming back on the program.
04:41That's Matt Maley from Militar Back in Boston.
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