【Epoch Times News December 26, 2024】CEO of the American multinational investment bank Morgan Stanley, Ted Pick, expressed optimism about the US economy for next year during an interview with Nikkei Asia on Wednesday, December 25. He attributed this optimism in part to the “pro-growth” government led by Donald Trump, which is expected to relax regulations.
Pick explained that the economy continues to grow, with the balance sheets of both businesses and consumers remaining strong. While inflation rates have slightly increased, they are not high, and the scarcity of labor has led to a continuous rise in wages, creating a “fairly strong balance.” Additionally, the support for growth from Trump’s new government could lead to “selective regulatory relaxation or adjustment,” which would further benefit economic growth. Hence, there are “ample reasons for feeling confident about American consumers and the business community.”
When asked about the potential trade war risks arising from Trump’s plans to impose tariffs on goods from Mexico, Canada, and China, Pick stated that it is still “too early” to discuss whether tariffs would pose a threat, escalate, target specific industries or regions.
He emphasized that while some may view tariffs as not necessarily beneficial, others see them as a tool for policy-making and adjustment, as well as a way to engage the international community.
Pick added, “This is part of political and economic means, and the initial reactions from some trading partners show that people attach great importance to the possibility of tariffs, which helps facilitate constructive dialogues.”
He believed that ongoing visits between leaders of various countries regarding the potential tariff issues signify the importance of dialogue.
Regarding concerns about the Federal Reserve tightening cycle since 2022 while stock prices remain high, Pick expressed that there is reason to believe that the areas of success in the stock market might become more diversified and broad. He mentioned that the reduction in regulations for the financial industry means they can expand more business, including banking, wealth management, and some trading activities, which could perform exceptionally well.
He said, “Our market strategist Mike Wilson believes that the S&P 500 index could rise by about 10% next year, and I think this is not impossible.”
He also addressed the significant debt and fiscal deficits that the Trump administration will face. He stated, “I believe the new government is well aware of this…and fiscal plans from 2025 onwards will take this into consideration.”
He pointed out that if the economy starts to slow down while inflation continues, it could lead to “stagflation.” The key for the Federal Reserve, according to him, lies in acting wisely, cautiously, and slowly to truly consider the price changes they observe.
Having taken over as CEO from James Gorman last January after his 14-year tenure, Pick will succeed him as chairman next January.
He noted, “I have inherited his legacy, and we are clear about what we do, what we don’t do, and there are many interesting businesses we are involved in, such as credit cards, unsecured loans, principal investments…”
He praised Gorman for bringing rejuvenation to Morgan Stanley, reviving people’s identification with Morgan Stanley’s culture of hard work, humility, and caution because everyone remembers the dark days of 2008.
The US banking industry underwent a significant transformation during the 2008 financial crisis, with the last two major investment banks, Morgan Stanley and Goldman Sachs, both becoming traditional bank holding companies under the regulation of the Federal Reserve, marking the end of the dominance of securities firms.