Equity, stellar, super killer, 1. 92 million. I want to highlight their Wealth Management. That revenue, 4. 4 billion, better sequentially. Margin dipped a little bit at 26 , but that is their breadandbutter and looks very solid. David they put so much investment into Wealth Management they said it is a big part of their future. The margin down a little bit, but they are still doing well. Morgan stanley does more equity trading than others, so there equities are good. Alix Goldman Sachs, the highlight for them was their Investment Banking revenue, but Morgan Stanley showing no signs of letting up. Is 1. 55 compared to an estimate of 1. 3, so they are beating there. Alix joining us are Alison Williams, and on the phone is can leon. He is a buy rating on Morgan Stanley with a price target of 59. You are big takeaway . Is an i would say ficc little bit of a surprise, but no surprise coming in strong. We expected markets to help their execution, and it looks like they are right on plan. That is a key goal for them that is coming in better than expected. Asset price helped, but i am sure we will hear on the call, they have been moving accounts more toward the feedbackbased model. These are very strong. I think we will hear more about that. I do not see anything on the tax. Ate, the go forward tax rate it will be key as well as the indirect benefits. A lot of what we heard from management was as expected, in terms of a boost potential he to m a and underwriting fees. Alix what we saw in terms of taxes is we enter 2018 with a strong momentum by rising momentum, tax reform, and revolving david what are you looking at most . Kenneth the core businesses are doing well. Wealth management, Investment Banking, and equity. The fixed income did underperform. Morgan stanley has narrowed their presence in that area. I would like this morning, looking at the link between what is the expected tax rate for 2018 and what is the capital plan for returns to shareholders of dividends and buybacks . This quarter, just looking here, they repurchased 1. 3 billion of common stock. I think there is a lot of interest across the large banks on not only the tax effect, but how it affects Going Forward with a return to shareholders. David talk about the tax effect, because this far, a lot of the focus has been on taxes. What about this 1 billion right off . Kenneth i have not seen the details, but what is likely is it is mostly related to recognition of a lower tax rate, the deferred tax assets have less value Going Forward. When you look ahead, the earnings at Morgan Stanley are in the midst of raising their estimates, not only for Morgan Stanley but other large banks. Doubtthe conversation no will be that Morgan Stanleys market cap is greater than Goldman Sachs, but i want to highlight the ficc that number ficc number. Are we getting too much of that market cap comparison . Alison the Fourth Quarter is there weakest quarter and they have said a 4 billion annual, so they are still on target to reach that number. Ficc coming in lower than expectations. I think we talked about this last week, head of all the Companies Reports we saw estimates coming down for citi, deutsche bank, and goldman. I think that sort of signaled quarter, end to the and sometimes estimates cannot catch up. Jpmorgan started out with a disappointing number, and we have seen that at all of the banks. The big picture, their annual target is basically in line with estimates. Volatility has hurt trading but helped banking, and strong banking results. We focus on equity trading because they tend to be the most volatile line, but fees are very strong in the quarter. David as we look into 2018, the tax laws will not just affect Morgan Stanley as a company but will affect their customers. How is that likely to affect them as opposed to other banks . Kenneth for Morgan Stanley for its clients, it is moving toward action and confidence to do transactions. As you go into 2000 18, especially looking at repatriation of cash for Morgan Stanley customers, m a will be an area where they are a leader. Equity underwriting continues to do well. If the animal spirits of the stock market continue, we will see a healthier ipo market this year versus last. Alix what is your number one question on the call . Kenneth really related to return of capital. There is so much calibration going on in terms of whether they are going to be competitive with the other large banks. As an stanley is viewed total return vehicle, so Dividend Growth matters. Alix thank you so much, Alison Williams and kenneth leon. I want to point out where we are trading in the market now, it was a killer day yesterday across the board. Nasdaq, and s p all closing at records. No doubt Morgan Stanley will be helping the market as well. Eurodollar getting a little bit of a boost, a broadly weaker dollar story, and yields, 2. 6 on the 10 year. Selling all across the curve, the highest in about 10 months. Nymex crude up about 2 10 of 1 . Its forecast for u. S. Production and conventional production, lowering its forecast for shale. David time to turn to headlines from outside the business world. The First Time Since 2010, the rate of Economic Growth in china sped up. In 2017, an. 9 increase in 2010 someone 2 10 of 1 . Exports were better than expected last year. On capitol hill, republicans are betting that democrats will not force a shutdown over government immigration. The house is on track to pass a onemonth spending bill today that would for Senate Democrats to decide whether to block the measure in a bid to gain leverage on shielding young, undocumented immigrants from deportation. A new tax introduce overhaul to bring hundreds of billions of dollars to the u. S. It will spend billions on jobs in Manufacturing Centers in the u. S. Apple is also giving employees a 2500 bonus. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am kailey leinz. This is bloomberg. 250 billion, what do you buy with that . We are going to figure out what fun things apple could buy with their cash stash. As we had to break, i want to with out what is happening Morgan Stanley, slightly higher in premarket, up about 1 . A solid beat on revenue, Investment Banking good, Wealth Management up. This is bloomberg. David it is time now for our daybreak first take, where we talk about the top three stories of the morning. First, Bank Earnings with Morgan Stanley just out, edging past Goldman Sachs. China reported strong growth numbers, raising questions of whether it may want to step off the gas. The Trump Administration taking one step forward with apple repatriating cash but potentially a step backward the Government Shutdown. Alix joining us is marty schenker, and we are pleased to welcome stephanie flanders. Stephanie was the chief u. K. And European Market strategist, with a very long resume that goes on a long time. Day isrite chart of the Morgan Stanley versus Goldman Sachs market cap. ,e will be talking about it Morgan Stanley finally surpassed goldman for the First Time Since 2006. What do you make of that . Stephanie certainly in Morgan Stanleys case, these latest results there out some of the risks bear out some of the risks it took. We have always said the likes of Morgan Stanley should not be in the wealth business. Their general approach on equities, all of these things were in question at times, and it is playing out very well, the Wealth Management side and the equities. David one of our colleagues wrote in and said, you talk about Lloyd Blankfein and jamie dimon. What about james gorman . Marty he does not have rock star qualities, but he is certainly bearing up what stephanie said, he took some risks and they are paying off. In terms of market cap, the fact that goldman had a pretty dismal quarter and their market cap went down as a result. I do not think either one is obsessing over their market cap. Alix that is just the press. I am curious but there is so much heat coming down on Goldman Sachs for their commodities business and it is a cyclical issue, not a structural issue. Lloyd blankfein is sticking with that. Fast forward a few years stephanie we should say overall, the banks are looking pretty good relative to where we mightve thought a year or two ago. The way the recovery is playing out, stronger than we would have expected. It is looking good for the banks , so none are looking terrible, but goldman managed to underperform that other strong pack. Money has been lost making big bets on commodities, but if we are looking at china is not going to have the slowdown, and in particular some of the reforms they are bringing in maines a slowdown in china means a slowdown in china will not have the same impact on Global Commodities that we thought, might not be a bad place to be. Overnight, china reported some key Economic Data that showed gdp grew at 6. 9 , the fastest since 2010. This is a chart that shows the white line is gdp growth. The blue line is credit and credit growth. Can they afford to cut back on the credit . Stephanie this has been throughout the whole lots of years we have wanted china to reform, that they constantly worry abouthey growth and the broader public consequences of that. What we have seen and one of the upside surprises over the last year or so is they have managed to have a process combining fiscal support with the supply side reforms that china tackled a little bit of deleveraging and overhang in some of the Steel Industry and elsewhere. It is sort of paying off. I do not expect think we should not expect the slowdown. I do not think it will have the consequences we think. Alix does this make donald trump angry . Marty i do not think so, but another number we should look at is their holdings in u. S. Treasuries. Advisers to the Chinese Government had suggested perhaps that they scale back their purchases of u. S. Treasuries. The november numbers suggest that maybe happening. Is, they are still buying u. S. Treasuries, and where else are you going to go . It does raise somewhat of an alarm, and could potentially pose an issue for the u. S. Government who is looking to actually raise a lot of money. Alix next one. Apple. This is a story that caught my buy yesterday, what can i for 250 billion . Supply. S. M1 money every nfl franchise three times over. A quarter of their outstanding shares, and they could probably or at t, or fund the government infrastructure for the next five years. Why bring that money back . Stephanie it is interesting and clearly playing fantastically to the trump agenda. One of the things economists have said is you are taking this quite big gamble with this tax plan, which gives an enormous ticket value of the money they are handing over to the big multinationals and the changes on the global taxation, and betting they will bring at least a little bit of it back to the u. S. And do something, which in any normal environment would take a lot of time to pan out. I think that is still the case, that if you get these nice headlines donald trump will be happy. What will they spend the money on . Are they going to get the Foreign Companies currently making for them around the world to come to the u. S. . Alix how many plants can they build. Seven . David that is a lot of manufacturing plants for 2 billion. They have a little thing coming up at midnight tomorrow call the government, whether they will keep it going, and it looks like that are getting farther apart. Marty the optics are not great. The house will have a vote today and paul ryan is pretty sure. The ryan plan, which will keep us going until february 16 and give the democrats the child health insurance. Marty there was a Democratic Caucus yesterday. Not one democratic u. S. Senator said they would vote for this plan, and they need 60 votes and democratics democratic support. David they are saying they will not fund it without daca and two point billion dollars for border security, so they are digging their heels in. Marty at the last minute, there is some sort of compromise worked out. No one wants a Government Shutdown, but the key thing is miscalculation in foreign and domestic policy. You can miscalculate and then the blame game starts. Donald trump wants the democrats to take the hit and it is questionable. Stephanie it is harder to do that when you true all that attention to the bipartisan meeting that went so dangerously wrong. Now they are in a much greater chance. Marty mia alix and i working until midnight on friday . That is what i want to know. Stephanie flanders, a pleasure to have you with us, and marty schenker, you as well. We are watching Morgan Stanley earnings, that stock still up in premarket. Wealth Management Revenue up 10 . We will keep you updated on those headlines. This is bloomberg. The new taxused overhaul to bring hundreds of billions of dollars back to the u. S. Tax will pay a 38 billion and will spend billions on jobs and Manufacturing Centers. You can see just how much was held overseas. The cash held overseas is the cash bar and the blue is and marketable securities. Here to break it down as michael mckee. The headline broke. The market was positive dollar, negative treasuries. Is that the right reaction . Ichael it may be treasuries were negative because apple will pay 38 billion in taxes and may have to liquidate some of their Treasury Holdings to pay that, but we do not know what maturities they are holding. We know the breakdown but we do not know the maturity. David and have eight years to pay it. Michael they have to pay 8 a year in the first five years, so it is not a big upfront cost. They are not is bringing back 250 2 billion by choice and paying taxes on it. Have to pay taxes on it. Every company has to pay taxes on their foreign retained earnings, so apple wont pay the 38 billion anyway. They have been setting aside this money. That was from their 10k for their september earnings report. Capital going to add expense money, but compared to what . That is what they did not tell us. David the critical point is not that there is incentive to bring it back, but eliminating disincentive. They can make a decision to invest but will only make a decision to invest in the United States if it makes sense. Michael the 2. 5 billion is already here because 95 percent of it is invested in dollar denominated assets, so it is not like the money will come pouring back in. Alix how much for they thinking about spending in the u. S. In 2018, and how much more will it increase . The 38 billion over five years is like 6 billion. Michael in their latest filing they said they would spend 16. 5 billion dollars in Capital Expenditures and now they are talking a 30 billion additional investment. Does that include the 16. 5 billion or is it on top of it . Five, youide it by are talking about 6 billion per year in incremental investment, which is a lot. There are only 23 companies in the world that spend as much as 6 billion. Apple is an outlier because of the size. David they are giving bonuses to their employees and will employ more people. They say it will have enormous effects on the u. S. Economy. Michael compared to what . The have been adding about 11,000 to 20,000 employees worldwide and they will add 20,000 workers over the next five years. Is that 20,000 above and beyond what they were going to do . The bonuses, we dont know the details so we dont know we know they are restricted stock units but is there a vesting pay 1500does apple and it grows into the 2500 . What would matter is that they give every person a 2500 raise which would but we have not seen that. Alix cash held overseas by the big guys, a huge amount of money, over 500 billion. Michael they will all pay the tax on it, so that is already baked into the calculations of what the government will be receiving. There is not really a lot of news. Each company, you can figure it out for what their Cash Holdings are. What do they do with the money . If you use apple as an example, they will spend 30 billion. Have some tax liabilities including a liability to ireland. Billion. 171 is that going to shareholders . Alix we will see. Michael mckee, thank you so much. China, stellar growth last year. Alix this is bloomberg daybreak , i am alix steel. The equity rally that led to a record close yesterday is continuing, with Dow Jones Futures up 26 point. Thanks helpi