Goldman 'Continues To Manage,' But This Analyst Thinks Morgan Stanley Is Going To Have 'The Best Story'

Goldman Sachs Group Inc (NYSE: GS) came out with dismal fourth-quarter results on Friday on back of lower trading revenue. Kenneth Leon from S&P Capital IQ was on CNBC recently to discuss Goldman’s fourth-quarter results and his expectations from Morgan Stanley (NYSE: MS) when it declares results on Tuesday.

“This [Goldman Sachs] is a well-managed company and this company is the proxy of the capital markets of all the large banks,” Leon said. “If they don’t execute in fixed income then it’s very hard to have exceptional performance. My concern and why we have a whole recommendation is that you can have volatility in fixed-income products, but if you don’t have high trading volume, it’s not going to help performance and the first quarter coming up in 2015 is the strongest quarter historically for Goldman and others and I think for those covering the company, less confidence as we see Goldman’s results today.”

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“Goldman continues to manage where they can, but I am going to tell you that Morgan Stanley on Tuesday is going to have probably the best story,” Leon replied. “The mix of their business is so different than Goldman.”

“Goldman 45 percent to 50 [percent] is institutional client trading, particularly fixed income. Morgan Stanley it’s a much smaller number. Morgan Stanley has this trajectory with well facet management and also they calibrated in fixed-income trading only areas where they think they can make money. So, they are not there for all the product categories, just to support the client. So I think there’s a big difference here.”