Investment Education

Is Morgan Stanley planning about 2,000 job cuts to trim costs? According to reports, the reduction in staff will not impact financial advisors. The cuts were also planned before the recent market correction. The financial sector has been one of the hardest hit by the recent selling action. We saw a huge run-up in financials after the election of President Trump. A lot of euphoria about what was going to happen in terms of banking deregulation, and now you've seen financials under a bit of pressure here. And then you have these job cuts. Jessica, I'm curious how you are looking at what's coming next for financials given the policy uncertainty.

Well, one, I am really concerned with how this looks at the broader picture. I'm still very positive on that AI narrative. However, financials is what really led up at the beginning of the year. And post-election, it was really, really great. The same thing with technology was what led us up before, and then also led the decline. And this looks like it might be happening with financials as well. So, it needs policy certainty. We were promised this pro-business and less regulation that seemed to benefit these financials. What I'm worried about is if this spurs any type of larger trend. Any mass layoffs is absolutely a concern, and if there were hoarding of jobs and now we're cutting and getting into labor trimming, that's a cause, a very cause for concern if that has any bleed elsewhere.

I I thought it was really interesting, too, and I was just looking this up off the back of news about JP Morgan's traders scoring huge gains on the market amid the downturn that we've seen this year. That's something that's going to show up in their earnings, I imagine, right? If they are having so much success beating the market. I believe they're up double digits on the year. Meantime, the broader market is down nearly 10% on the year at the moment. So what does that look like in their earnings moving forward? Is that a good catalyst for financials?

Well, and we want to know why the earnings are doing so well. Is it because of the cost cutting that's happening on the bottom line? Are they increasing revenue? There's a lot of more increase in fixed income that helps with their margins because of the spreads that they can capture. So I I really think financials have a lot of positive catalysts that go for them. But I think what what the market really cared about was that pro-business and administration. And so clarity on that will help. But I'm I am worried about the cost cutting and how that would bleed elsewhere. That's a concern.

And we have a former FTC commissioner on our show later who we'll be able to ask about that.