Morgan Stanley’s Big Beat, Amazon Goes Nuclear, Luxury Letdown 10/16/24

David Faber (0:00)

Market insight and analysis. You're listening to the opening bell of CNBC's Squawk on the Street.

Carl Quintanilla (0:06)

Good Wednesday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Jim Cramer, David Faber at Post 9 of the New York Stock Exchange. Pre-market relatively steady after Tuesday's breather and plenty of cross currents. Morgan and Stanley in United beat, but we're watching this flurry of negative pre-announcements out of European companies. Ten year 402 Our roadmap begins with the banks though and the deal making boost. Morgan Stanley, the latest to report a 56% surge in IB revenue will break down the quarter.

David Faber (0:33)

Plus global chip stocks took hit yesterday. That after disappointing outlook came from ASML, but shares of NVIDIA are looking for a bounce at the open. And United Airlines reporting a stronger profit than had been anticipated. Also unveiling a $1.5 billion share buyback program.

Carl Quintanilla (0:50)

Let's begin with the banks. Morgan Stanley reported before the bell, they do beat on earnings and revenue. Posting some strong numbers for wealth management of 14 trading. And as we said, Jim, investment banking with a blowout number.

Jim Cramer (1:02)

Yeah, but I'm glad you mentioned all of these because they're much stronger. My child just owns it. I was quite concerned. I thought I might get snuckered on this one. I thought this could be a bad one for me because Goldman had good numbers and I was fearful that, well, hold it. Can everyone be across the board? Good. Charlie Sharp yesterday will get to that. Wells, good. But this was turned out to be a really terrific quarter. David, this is quite a change from the last two years of James Corman. I like Corman very much, but there's some sort of acceleration here that I didn't expect. You do?

David Faber (1:36)

Because, you know, as we pointed out, the stock price itself has underperformed many of its large capatures over the course of this year.

Jim Cramer (1:42)

As it should have because it was not as good.

David Faber (1:43)

So not the greatest start for new CEO Ted Pick, obviously, who's taken over this year.

Jim Cramer (1:49)

I mean, not a greatest hand.

David Faber (1:51)

Well, I don't know. Really? Was it hand? And what are you talking about in terms of re-acceleration? Explain.

Jim Cramer (1:57)

Well, I mean, wealth management had skunked me as not being great for a company that I was recruited for, for wealth management many years ago. And I would have said that was the premier firm. It was debated between Goldman and Morgan Stanley.

Morgan Stanley led in that division for a long time. And I also felt that the e-trade acquisition, which no longer seems to be a worry, had been a bit of a drag. This was an all-systems go from a guy who, I don't know what it's talking about. Hey, Ted Pick, the warmest, greatest guy, you got to get with him. I don't know. I was thrilled. I thought that this was the one. I have my investment club meeting at 12 And I envisioned this, I had this blank for get ready to talk about why you still like Morgan Stanley because it's been disappointing. And that's a nod to you, my friend.

David Faber (2:50)

And by the way, nobody's running away from this. You can see the year-to-date performance. It's not been bad by any stretch, Carl.

Jim Cramer (2:55)

No, but I'm defensive about it.

David Faber (2:57)

No, it's just, it's lower than that of many of its peers, including, of course, Goldman Sachs. That said, it did have a higher return on tangible common equity, 17.5% of the third quarter, 18.2% year-to-date. Different business, though, as well.

Jim Cramer (3:09)

Right, but this was actually pretty good. Transactional revenues increased 10%. The banks, Carl, didn't really stick up the garden party. I mean, I know that's a low bar. But, and as David certainly points out, Morgan Stanley had been one of those where I was very defensive about. And I feel like...

David Faber (3:28)

You're feeling better. Interesting, Goldman yesterday, you know, started the morning quite strongly.

Jim Cramer (3:34)

Up 16 points.

David Faber (3:35)

And then retreated more or less.

Jim Cramer (3:37)

Then plummeted 15 Now, what was that? Was that just really smart market orders by people?

David Faber (3:43)

I don't know.

Carl Quintanilla (3:44)

That's sort of fit with the broader trend of yesterday. There are some comments from the CFO of Morgan Stanley about, say, commercial real estate, Jim. She argues that restructuring activity is reducing certain losses in that space.

Jim Cramer (3:56)