Morgan Stanley's Ted Pick Says Private Credit Is Having A 'Learning Moment', Refuses To Talk About Recession Amid Growing Concerns

• Pick added that he believes the private credit market has “extraordinary” growth potential, while noting that it is just a question of time and working through economic cycles.
• He also highlighted that the conversation around this asset class has had more balance over the past few days.
• Pick noted that the investment bank’s exposure to private credit is “modest.”

Morgan Stanley (MS) CEO Ted Pick on Wednesday downplayed concerns of the investment bank’s exposure to private credit, while noting that the market is currently in its “learning moment.”

During an interaction with analysts following the investment bank’s first-quarter (Q1) earnings, Pick stated that the $1.8 trillion private credit market is under increased scrutiny due to it being in its relatively early days.

“While it's still a growing class, it's having a learning moment. We'll call it an adolescent moment where both the lenders and borrowers are being looked at carefully,” he said.

Morgan Stanley shares were up more than 5% in Wednesday morning’s trade. Retail sentiment on Stocktwits around the company trended in the ‘bullish’ territory, with message volumes at ‘high’ levels at the time of writing.

Private Credit Has ‘Extraordinary’ Growth Potential, Says Pick

Pick added that he believes the private credit market has “extraordinary” growth potential, while noting that it is just a question of time and working through economic cycles.

“I think now we're all seeing that there's resiliency in the underlying product that the structures and the terms on collateral are very well thought through,” he said.

Pick added that Morgan Stanley’s participation in the private credit market is in line with Wall Street as a distributor. He also highlighted that the conversation around this asset class has had more balance over the past few days. The Morgan Stanley CEO also noted that the investment bank’s exposure to private credit is “modest.”

Meanwhile, Pick also refused to talk about the “R word,” referring to the recent conversations about recession risks amid the ongoing Iran war.

This comes after Citadel CEO Ken Griffin on Tuesday warned about a global recession if the Strait of Hormuz remains closed for a longer period of time, a day after the U.S. enforced a blockade of Iranian ports amid the ongoing war with Iran.

“Let’s assume [the Strait is] shut down for the next six to 12 months — the world’s going to end up in a recession. There’s no way to avoid that,” Griffin said on stage at the Semafor World Economy conference.

Morgan Stanley’s Trading Revenue Soars On Increased Market Volatility

Morgan Stanley reported a surge in trading revenue during Q1 due to heightened market volatility. The investment bank reported a 25% year-on-year surge in trading revenue during Q1 to $5.15 billion, with Morgan Stanley citing healthy volumes across its global equities franchise.

Morgan Stanley also reported a 36% YoY surge in its investment banking revenue to $2.12 billion.

The investment bank reported earnings per share (EPS) of $3.43 on revenue of $20.6 billion. This blew past Wall Street estimates of an EPS of $3.02 on revenue of $19.2 billion, according to Fiscal.ai data.

MS stock is up 8% year-to-date and 74% over the past 12 months. The S&P 500 ETF (SPY) and the Vanguard Total Stock Market Index Fund ETF (VTI) are up 30% over the past 12 months.

Also See: GNS Stock Logs Biggest Intraday Decline In 27 Months On Pricing $8M Offering

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