Interviewer (2:24)

So very exciting some of those business lines. So let's just pick up on the IPO pipeline. The activity we could see later this year. Space X Open AI we're talking about some absolute monsters. You and the team have been historically quite dominant in the tech sector. What are you doing right now to prepare for that moment the might be in our future?

Ted Pick (2:41)

Well, these, these companies, you know, you bank them for a whole bunch of years and you get to know them. So there's a process, obviously the formal bake off process and then the go or no go decision. But typically the company has a pretty good idea what it wants to do ahead of time because it's selected its group and the stakes are really high this, this round because as you say, these, the implied market caps. These companies are enormous, but also they are paradoxically, they're very large, but also mega growers. They have, you know, some of them a little bit of a change the world feel to them. So they could become must own. I mean one of the things that you guys have talked a lot about is so much of the equity base has become either beta or it's become kind of the seven or eight names or what if there are some additional companies that 3, 4 or $500 billion market caps. Trillion, trillion. A half dollar market cap. The active management community says I want to own that. I want to own that from the time of the ipo. So I think it's not just Wall street getting to know these companies. It's a whole bunch of investors who have either backed into early rounds or want to be there when the IPO comes.

Co-Interviewer (3:40)

When we were speaking with you a year ago in meets, you were talking about how it was going to be a great year for IPOs and M& A and it was for your, for your bottom line. You had an incredible year. There was though a lot of IPOs and a lot of deals that got stymied by Liberation Day and policy uncertainty. What has to go right for some of these deals to come to fruition? OpenAI anthropic space X.

Ted Pick (4:03)

Well, I think part of the reason these companies are so interesting to investors is they are not rushed to go public. So there has to be an element of being patient if you're in and the ecosystem, they don't have to come in the first half of 2016, come in 2H26. They could even come in 27. But they are drawing a whole bunch of interest to names like them. Derivative plays in the ecosystem as you sort of disaggregate the entire daisy chain. Where do you want to play? So the anticipation of the company going public almost as is as important as the company itself coming. But whether they come Lisa, in 26 or 27, they're going to come. They're going to come.

Co-Interviewer (4:42)

It's sort of a dissonance right now when you talk to business leaders about how much enthusiasm they is for deals and for energy in the US Economy. And then when you hear the policymakers, you hear uncertainty and you hear sell America. How do you square those two narratives at a time where you do hear a growing number of investors say they are diversifying away from U.S. assets?

Ted Pick (5:01)

I, I hear you guys talking about this a lot. I think there are two separate phenomena, but they're not exclusive. One is we got the arc of history. You know, I've gone on about the end of the end of history and that things would get going again and the nation states would be battling for hegemony and kind of trying to know when out on the rise and fall nations. That's just a historical fact that kind of got. There was an interregnum between Berlin Wall and Covid. We're actually back to the balance of human history as we've all studied. And that means there's going to be the kind of stuff that we are living through right now. It's just been a while and I, and I don't know necessarily that that is something we should expect to go away anytime soon. There's going to be re. Nationalizing. Nationalizing. And that means in some cases there'll be higher country risk, there'll be maybe pockets of illiquidity. There may be opportunistic transactions or allocations that happen. But after 20 years of financial repression, we're back to live markets and live nation states. That's here. But at the same time you have the US capital markets which are more than half the capital stock. And the reality is, very basically, as we know, corporate health is excellent, consumer health at the top end is excellent. And obviously the, the administration's getting after housing for the, for the bottom half of the K earnings as you know, grew 8% this year. They could grow in the mid teens next next year. That's double the long term average. That's pretty good. So good corporate, good consumer, excellent capital markets and easier fed the lower by 75. Maybe there's more to go. Maybe it's a demand driven 2026 in which case the Fed doesn't have to move. We have good inflation, we keep on powering forward Growth, growth or maybe it's supply side where there is spending but there isn't the same kind of job creation then the federal help out. So there are downside cases but just in the main. Oh and the tailwinds of deregulation the bill are kicking in. It kind of is hard to argue against the 26 US led growth case. Now we could get a debate about where asset prices should be but in terms of just two years ago we saw my recession. Last year we weren't sure because the administration's come in, we're not talking about that today. So for our business, very simply we write tickets a kind of two times GDP nominal. And so if you think about our wealth and investment bank, if we're going to grow, you know, 5, 10% on a two times basis nominally, that should be pretty good for our business for doing our job.

Interviewer (7:23)

Corporate health is very good, it's excellent. Sovereign health is questionable.

Ted Pick (7:28)

Right.

Interviewer (7:28)

Can we talk about that?

Ted Pick (7:29)

Right.

Interviewer (7:30)

The move in the last 24 hours, the live market stuff, let's get into that. The move in Japan at the long end of the curve, is that a warning shot? Is that the start of something bigger?

Ted Pick (7:39)

Well, I mean this Japan trade has been talked about forever and, and I would expect that in a lot of, you know, highly indebted countries, you know, off the Liz Truss moment where the demographics are poor and you don't have the wherewithal or fiat to kind of work your way through that there could be some vulnerability. So what does that mean? That means if we sort of do our economics meets, you know, poli side thing, I think that means you want to get closer to places where you can act in your jo joint economic interest. And I think the Japanese example is one that we should continue to pay attention to. I wouldn't be surprised if we see pockets of that now and then when, you know, there's a little talk of the balance sheet looks lousy, but we're going to inject a little stimulus and let's see if anyone notices. Yeah, they noticed. So you know, you sort of have to, you know, then, then you adjust. It's, you know, it's a trial balloon, it gets pulled back and that's probably healthy for markets. You know, you see a lot that's been bought back today. But that's different than the US treasury phenomenon. Yeah, that, that, that's been, that's been hugely overblown. The reality is that when we did this a year ago, the Treasury Secretary, as you know, by anyone who's Talking about the 10 year being so important to keep an eye on, I think the 10 year is around 457, 455, 460. Now it's a 425 for 30. So the 10 year is doing its job. There's some steepening. Yes, it's probably healthy. So I do think there is a conflation between kind of U.S. treasury phenomenon and the world. And I think there's a difference. And you know, we just have to continue to highlight the difference very quickly. Ted? Yes.

Co-Interviewer (9:14)

You spend time, you grew up in Venezuela, new world.

Ted Pick (9:17)

Now you planning to maybe help facilitate.

Co-Interviewer (9:19)

Companies go back in.

Ted Pick (9:21)

I'm not prepped for that question. You lived. Thank you so much.

Co-Interviewer (9:27)

Because you have a different take probably than every other CEO walking around this forum.

Ted Pick (9:31)

Well, Venezuela is an extraordinary place, has a proud, but now in recent decades, very troubled history, but is, you know, if you know your Monroe Doctrine, critical and has, albeit as you've talked about at length, it's, it's more sulfuric but very high, vast quantities of, of oil beneath the ground. So do I think Venezuela is going to be relevant? I think Latin America is going to be relevant. I think the hemisphere is going to be relevant in its sort of thinking around how it wants to get closer while maintaining its own, you know, political and social independence from the US But I think a coming together of some places may make some sense and maybe in the broader economic interest. Back to the previous question was a fantastic answer. Thank you so much.

Interviewer (10:19)

I've got one more landmine. There was some news earlier about Deutsche bank and I just want to breathe some life into that story. And essentially the Treasury Secretary came out, there was some research that he didn't like and according to him, the Deutsche Bank CEO has turned around and said, I don't stand by that research. That's basically the point. Is it difficult for the research department of Morgan Stanley to say what they think in an environment like this one? And I asked this question because I know some tremendous individuals at Morgan Stanley in research and they are all highly intelligent, capable and have the right own thoughts about where they think we are in this moment right now. But is it difficult in the C suite to allow them just to go out there, full throat, full throttle, full, full Blooded and just say what they really think about this moment.

Ted Pick (11:04)

Absolutely not. I've not had a piece of research at my desk for a, for a yellow light or a no go. I think what gets a little tricky is these institutions also have desk analysts. So I don't know if this one came out of the research department or maybe a desk analyst sitting in one of the divisions. But to answer your question directly, we want, we celebrate Broad opin, I do think, but, but to give, to give, not kind of the standard answer. Part of the reason you like our research is because it, it's not just regurgitation because we all have a Bloomberg terminal, okay. So it has to have some kind of value add, but it doesn't have to just be provocation for its own sake. So we have industry leaders, we have sector leaders, we have Seth Carpenter who you pointed out. I was watching you talk to him and I was. And that was quite a moment when.

Interviewer (11:56)

I looked down the bottom of the.

Ted Pick (11:57)

Camera, Starbucks all over my suit. So thanks for that. That was excellent. You had at least one viewer that day and that was me. So. And said, but the answer is the independence of research is, is important. We've invested in it for all these years. That having been said, sort of writing research to just sort of provoke and kind of get your Warhol moment. I mean that is not really fair to the institution either. And it puts, it puts the particular government or whomever in an awkward spot because they read the research. So I think there's got to be a balance between independent integrity and what you're writing. And writing something that actually is meant to add value and bring intellectual capital to the foresemming.

Interviewer (12:39)

The dry cleaning bill. I saw that for you.

Ted Pick (12:41)

I didn't actually split it up. I just swallowed and smiled.

Interviewer (12:44)

Thank you, sir. Thank you very much. Thank you, Ted. Pick that the Morgan Stanley chairman and C E O.