Brad Hintz, a senior analyst at Bernstein Research and a former CFO of Lehman, issued a report today asking, "U.S. Brokerage: Off to a Flying Start or Stumbling Out of the Gates?" Hintz's conclusion: "Bernstein expects a prolongedcycle through 2012," with slowly rising interests rates in Europe and the U.S. but neverthless "will lead to a continuation of trading volumes on both sides of the Atlantic. In effect, we expect a 2004-2006 prolonged fixed income in the face of rising rates and not a 1994-style precipitous fixed income decline." As for retail?
I heard lots of complaints from FAs about clients who were too scared to do anything in the equity market in 2010 and even more recently --- even as stocks celebrated a second-year anniversary of a bull market on March 9. While Hintz says, "Our investment thesis for the institutional broker/dealers focuses on a cycle call that assumes the largely institutional firms, i.e.and Morgan Stanley, will outperform as equity underwriting and M&A businesses recover in a domestic upturn and the higher margin banking businesses recover. Those securities frims that are more exposed to late cycle businesses --- retail and asset management --- will outperform in the mature stages of the economic cycle as retail investors return to the equity market,"