Morgan Stanley (MS) reported $16.79 billion in revenue for the quarter ended June 2025, representing a year-over-year increase of 11.8%. EPS of $2.13 for the same period compares to $1.82 a year ago.The reported revenue compares to the Zacks Consensus Estimate of $15.92 billion, representing a surprise of +5.49%. The company delivered an EPS surprise of +10.36%, with the consensus EPS estimate being $1.93.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and ...

Core Viewpoint - Morgan Stanley reported strong quarterly earnings, exceeding expectations and showing significant year-over-year growth in both earnings per share (EPS) and revenues [1][2]. Financial Performance - The company achieved quarterly earnings of $2.13 per share, surpassing the Zacks Consensus Estimate of $1.93 per share, and up from $1.82 per share a year ago, representing an earnings surprise of +10.36% [1]. - Revenues for the quarter reached $16.79 billion, exceeding the Zacks Consensus Estimate by 5.49%, and up from $15.02 billion year-over-year [2]. Market Performance - Morgan Stanley shares have increased approximately 12.6% since the beginning of the year, outperforming the S&P 500's gain of 6.2% [3]. Future Outlook - The company's earnings outlook will be crucial for assessing future stock performance, with current consensus EPS estimates at $1.94 for the upcoming quarter and $8.52 for the current fiscal year [4][7]. - The Zacks Rank for Morgan Stanley is currently 3 (Hold), indicating expected performance in line with the market in the near future [6]. Industry Context - The Financial - Investment Bank industry, to which Morgan Stanley belongs, is currently ranked in the top 21% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8].

Financial Data and Key Metrics Changes - For Q2 2025, the company reported revenues of $16.8 billion, EPS of $2.13, and a return on tangible equity (ROTCE) of 18.2% [6][12] - Year-to-date revenue reached $34.5 billion, with EPS of $4.73 and ROTCE of 20.6% [6] - The firm has achieved six consecutive quarters of durable earnings, indicating consistent performance across varying market conditions [6] Business Line Data and Key Metrics Changes - Wealth and Investment Management saw total client assets increase to over $8.2 trillion, with a record profit before tax of $2.2 billion and margins exceeding 28% [7][22] - Institutional Securities generated revenues of $7.6 billion, with equity markets contributing $3.7 billion despite a slowdown in activity during part of the quarter [8][14] - Investment banking revenues were $1.5 billion, with a notable rebound in equity underwriting, while fixed income underwriting revenues were $532 million, reflecting a decline from the previous year [15][16] Market Data and Key Metrics Changes - The company noted a strong performance in Asia and EMEA regions, contributing to the overall revenue growth in institutional securities [14] - The investment banking pipeline remains healthy, with increased activity expected as market conditions stabilize [32] Company Strategy and Development Direction - The company is focused on generating returns on incremental capital deployment and investing for growth across its integrated firm globally [6][10] - Management emphasized the importance of deepening client relationships and expanding lending capabilities, particularly in wealth management and investment banking [37][38] - The firm is also exploring inorganic growth opportunities that align with its core strategy, while maintaining a high bar for acquisitions [40][81] Management's Comments on Operating Environment and Future Outlook - Management expressed a constructive outlook on the market environment, anticipating continued growth in wealth and investment management despite ongoing economic and geopolitical uncertainties [11][31] - The firm is witnessing increased client engagement and a willingness to navigate market volatility, which is expected to support future performance [9][44] Other Important Information - The company announced a quarterly dividend increase to $1 per share, reflecting its commitment to returning capital to shareholders [10][31] - Total spot assets increased by $54 billion from the prior quarter, with a standardized CET1 ratio of 15% [30] Q&A Session Summary Question: Thoughts on incremental return on capital and regulatory environment - Management highlighted the potential for increased profitability through regulatory reform and organic growth in investment banking and wealth management [36][40] Question: Impact of tariff policy on corporate sentiment - Management noted that if tariff policies remain within expected parameters, it could clear uncertainty and lead to increased strategic activity [44] Question: Inorganic growth opportunities - Management stated that any acquisitions must align with the core strategy of raising, managing, and allocating capital for clients, with a focus on organic growth [48][50] Question: Net new assets and advisor recruitment - Management reported strong net new assets driven by workplace channels and emphasized the strength of recruiting across all channels [52][54] Question: Stablecoins and market structure legislation - Management is actively discussing the implications of stablecoin legislation and its potential impact on the business [62][64] Question: Market backdrop and trading environment - Management indicated that the trading environment has been resilient, with strong retail engagement and inflows across various channels [70][72] Question: Asset management and capital deployment - Management acknowledged the potential for growth in asset management but emphasized the focus on organic opportunities within existing businesses [78][80] Question: Net interest income in a lower rate environment - Management discussed the potential for increased lending balances to offset lower rates, indicating a stable outlook for net interest income [82][83] Question: Lending through capital markets division - Management noted a shift in lending dynamics and the potential for increased participation in corporate lending as regulatory environments normalize [88][90]

Financial Data and Key Metrics Changes - For Q2 2025, the company reported revenues of $16.8 billion, EPS of $2.13, and a return on tangible equity (ROTCE) of 18.2% [5][10] - Year-to-date revenue reached $34.5 billion, with EPS of $4.73 and ROTCE of 20.6% [5][10] - The firm has achieved six consecutive quarters of durable earnings, indicating consistent performance across varying market conditions [5][10] Business Line Data and Key Metrics Changes - Wealth and Investment Management saw total client assets increase to over $8.2 trillion, with a record profit before tax of $2.2 billion and margins exceeding 28% [6][19] - Institutional franchise revenues were $7.6 billion, with equity markets business contributing $3.7 billion despite a slowdown in strategic and capital markets activity [7][12] - Investment banking revenues reached $1.5 billion, with equity underwriting showing significant improvement, while fixed income underwriting revenues were $532 million [13][14] Market Data and Key Metrics Changes - The company noted a rebound in investment banking activity in June, indicating a recovery in client confidence and market conditions [7][9] - The Asia Pacific region showed strength in equity products, contributing positively to overall performance [12][13] - The firm reported strong net new assets of $59 billion, despite seasonal tax payments impacting flows [19][21] Company Strategy and Development Direction - The company is focused on generating returns on incremental capital deployment and investing for growth across its integrated firm globally [5][8] - Management emphasized the importance of deepening client relationships and expanding lending capabilities, particularly in wealth management [34][35] - The firm is exploring both organic growth opportunities and selective inorganic acquisitions that align with its core strategy [38][46] Management's Comments on Operating Environment and Future Outlook - Management remains constructive on the market environment, expecting continued strong results for clients and shareholders despite ongoing economic and geopolitical uncertainties [9][28] - The company anticipates a healthy investment banking pipeline and active dialogues with clients, suggesting a positive outlook for the second half of 2025 [29][42] - Regulatory reforms are seen as potential tailwinds for profitability, with management expressing confidence in the firm's ability to navigate these changes [8][88] Other Important Information - The company announced a quarterly dividend increase to $1 per share, reflecting its commitment to returning capital to shareholders [8][28] - Total spot assets increased by $54 billion from the prior quarter, with a standardized CET1 ratio of 15% [27][28] - The firm is actively investing in technology and talent to enhance its global footprint and client service capabilities [11][12] Q&A Session Summary Question: Thoughts on incremental return on capital and regulatory environment - Management highlighted the focus on organic growth and the potential for increased profitability through regulatory reforms and capital deployment [33][34] Question: Impact of macro volatility on corporate sentiment - Management noted that if tariff policies remain predictable, it could clear uncertainty and lead to increased strategic activity [41][42] Question: Inorganic opportunities and capital deployment - Management emphasized that any acquisitions must align with the core strategy and enhance operational leverage without distracting from existing opportunities [46][48] Question: Net new assets and advisor recruitment - Management reported strong net new assets across all channels, with significant contributions from workplace initiatives and advisor-led flows [50][52] Question: Stablecoins and market structure legislation - Management is actively monitoring the stablecoin landscape and its potential implications for the firm, though it remains early to assess specific impacts [60][61] Question: Trends in lending through capital markets - Management indicated a potential shift in lending dynamics as regulatory environments normalize, allowing for greater participation in corporate lending [88][90]

The euro’s rally is about to get another boost, according to Morgan Stanley strategists, as European investors look to hedge nearly $4 trillion of US assets https://t.co/GiX9Sp3pyv ...

Consolidated Financial Performance - Net revenues for the second quarter of 2025 were $16792 million, a decrease of 5% from the first quarter of 2025 but an increase of 12% from the second quarter of 2024[2] - Net income applicable to Morgan Stanley for the second quarter of 2025 was $3539 million, a decrease of 18% from the first quarter of 2025 but an increase of 15% from the second quarter of 2024[2] - Earnings applicable to Morgan Stanley common shareholders for the second quarter of 2025 were $3392 million, a decrease of 18% from the first quarter of 2025 but an increase of 15% from the second quarter of 2024[2] - For the six months ended June 30, 2025, net revenues were $34531 million, a 15% increase compared to $30155 million for the six months ended June 30, 2024[2] - For the six months ended June 30, 2025, earnings applicable to Morgan Stanley common shareholders were $7549 million, a 22% increase compared to $6208 million for the six months ended June 30, 2024[2] Segment Performance - Institutional Securities net revenues for the second quarter of 2025 were $7643 million, a decrease of 15% from the first quarter of 2025 but an increase of 9% from the second quarter of 2024[2] - Wealth Management net revenues for the second quarter of 2025 were $7764 million, an increase of 6% from the first quarter of 2025 and a 14% increase from the second quarter of 2024[2] - Investment Management net revenues for the second quarter of 2025 were $1552 million, a decrease of 3% from the first quarter of 2025 but an increase of 12% from the second quarter of 2024[2] Balance Sheet and Capital - Total assets as of June 30, 2025, were $1353870 million, a 4% increase from March 31, 2025, and a 12% increase from June 30, 2024[5] - Total loans as of June 30, 2025, were $267395 million, a 3% increase from March 31, 2025, and a 12% increase from June 30, 2024[5] - Common equity as of June 30, 2025, was $98434 million, a 1% increase from March 31, 2025, and a 7% increase from June 30, 2024[5]

[Financial Overview](index=2&type=section&id=Financial%20Overview) The firm reported strong year-over-year growth in net revenues and net income for Q2 2025, driven by Wealth Management and Institutional Securities, despite a sequential decline [Consolidated Financial Summary](index=2&type=section&id=Consolidated%20Financial%20Summary) In Q2 2025, the firm reported net revenues of **$16.8 billion** and net income of **$3.5 billion**, representing a significant year-over-year increase of 12% and 15% respectively, primarily driven by strong performance in Wealth Management and Institutional Securities Q2 2025 Consolidated Financial Performance (in millions) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | YoY Change | QoQ Change | | :--- | :--- | :--- | :--- | :--- | :--- | | **Net Revenues** | **$16,792** | **$17,739** | **$15,019** | **12%** | **-5%** | | Institutional Securities | $7,643 | $8,983 | $6,982 | 9% | -15% | | Wealth Management | $7,764 | $7,327 | $6,792 | 14% | 6% | | Investment Management | $1,552 | $1,602 | $1,386 | 12% | -3% | | **Net Income** | **$3,539** | **$4,315** | **$3,076** | **15%** | **-18%** | - The provision for credit losses increased to **$196 million**, a 158% rise from the prior year's quarter and a 45% increase from the previous quarter, indicating a more cautious outlook on credit risk[5](index=5&type=chunk) - Excluding mark-to-market gains/losses on deferred cash-based compensation plans (DCP), a non-GAAP measure, firm net revenues were **$16.4 billion** for Q2 2025, compared to **$15.1 billion** in Q2 2024[3](index=3&type=chunk) [Consolidated Financial Metrics, Ratios and Statistical Data](index=3&type=section&id=Consolidated%20Financial%20Metrics%2C%20Ratios%20and%20Statistical%20Data) The firm delivered strong shareholder returns with a diluted EPS of **$2.13**, up 17% year-over-year, while maintaining robust profitability metrics with a Return on Tangible Common Equity (ROTCE) of **18.2%** Q2 2025 Key Financial Metrics | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Diluted EPS | $2.13 | $2.60 | $1.82 | | Return on average common equity | 13.9% | 17.4% | 13.0% | | Return on average tangible common equity | 18.2% | 23.0% | 17.5% | | Book value per common share | $61.59 | $60.41 | $56.80 | | Tangible book value per common share | $47.25 | $46.08 | $42.30 | - The effective tax rate for the quarter was **22.7%**, compared to 23.5% in the same period last year[6](index=6&type=chunk) - Worldwide employee count stood at **80,393** at the end of the quarter, a 2% increase from the prior year but a 1% decrease from the prior quarter[6](index=6&type=chunk) [Consolidated and U.S. Bank Supplemental Financial Information](index=4&type=section&id=Consolidated%20and%20U.S.%20Bank%20Supplemental%20Financial%20Information) The consolidated balance sheet expanded, with total assets growing 12% year-over-year to **$1.35 trillion**, supported by increases in loans, deposits, and long-term debt, alongside strong revenue growth across all geographic regions Consolidated Balance Sheet Highlights (as of June 30, 2025) | Item | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Total Assets | $1,353,870M | $1,212,447M | 12% | | Loans | $267,395M | $237,696M | 12% | | Deposits | $389,377M | $348,890M | 12% | | Common Equity | $98,434M | $91,964M | 7% | - U.S. Bank total assets grew **13%** year-over-year to **$450.8 billion**, with loans increasing by **14%** to **$252.2 billion**[7](index=7&type=chunk) - Revenue growth was strong across all regions for the first six months of 2025 compared to 2024: Americas grew **11%**, EMEA **20%**, and Asia **28%**[7](index=7&type=chunk) [Consolidated Average Common Equity and Regulatory Capital Information](index=5&type=section&id=Consolidated%20Average%20Common%20Equity%20and%20Regulatory%20Capital%20Information) The firm maintained a strong capital position, with the Standardized Approach Common Equity Tier 1 (CET1) capital ratio at **15.0%** and total average common equity increasing by 8% year-over-year to **$97.5 billion** Regulatory Capital Ratios (as of June 30, 2025) | Ratio | Standardized Approach | Advanced Approach | | :--- | :--- | :--- | | Common Equity Tier 1 (CET1) | 15.0% | 15.7% | | Tier 1 Capital Ratio | 16.9% | 17.6% | | Supplementary Leverage Ratio | 5.5% | N/A | - Risk-weighted assets (RWA) under the Standardized Approach increased by **11%** year-over-year to **$523.0 billion**[9](index=9&type=chunk) [Business Segment Performance](index=6&type=section&id=Business%20Segment%20Performance) The firm's business segments demonstrated varied performance, with strong growth in Wealth Management and Investment Management, while Institutional Securities saw mixed results [Institutional Securities](index=6&type=section&id=Institutional%20Securities) The Institutional Securities segment reported net revenues of **$7.6 billion**, a 9% increase year-over-year, driven by strong performance in Equity and Fixed Income trading, despite a 15% decline from the prior quarter and a 5% decrease in investment banking revenues Institutional Securities Revenue Breakdown (Q2 2025, in millions) | Revenue Source | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Investment Banking | $1,540 | $1,619 | -5% | | Equity Trading | $3,721 | $3,018 | 23% | | Fixed Income Trading | $2,180 | $1,999 | 9% | | **Total Net Revenues** | **$7,643** | **$6,982** | **9%** | - Net income for the segment was **$1.6 billion**, a 6% increase from the prior year, resulting in a pre-tax margin of **28%**[11](index=11&type=chunk) [Wealth Management](index=7&type=section&id=Wealth%20Management) Wealth Management continued its strong growth trajectory, with net revenues up 14% year-over-year to **$7.8 billion** and net income up 21% to **$1.7 billion**, driven by increased client assets and significant net new asset inflows [Income Statement Information, Financial Metrics and Ratios](index=7&type=section&id=Wealth%20Management%20Income%20Statement) The segment's revenue growth was broad-based, with asset management fees increasing **11%** and transactional revenues surging **62%** year-over-year, while net interest income also grew by 6%, expanding the pre-tax margin to **28%** Wealth Management Revenue Breakdown (Q2 2025, in millions) | Revenue Source | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Asset management | $4,411 | $3,989 | 11% | | Transactional | $1,264 | $782 | 62% | | Net interest income | $1,910 | $1,798 | 6% | | **Total Net Revenues** | **$7,764** | **$6,792** | **14%** | - The segment achieved a Return on Average Tangible Common Equity of **41%**, a significant increase from 35% in the prior-year quarter[14](index=14&type=chunk) [Financial Information and Statistical Data](index=8&type=section&id=Wealth%20Management%20Statistical%20Data) Operational metrics demonstrated continued momentum, with total client assets increasing **14%** year-over-year to **$6.5 trillion**, attracting **$59.2 billion** in net new assets, and growing deposits by **12%** to **$383 billion** Wealth Management Key Metrics (as of June 30, 2025) | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Total client assets | $6,492B | $5,690B | 14% | | Net new assets | $59.2B | $36.4B | 63% | | Deposits | $383B | $343B | 12% | | Fee-based asset flows | $42.8B | $26.0B | 65% | - The self-directed channel showed strong client engagement, with daily average revenue trades (DARTs) up **26%** year-over-year to **983,000**[15](index=15&type=chunk) [Investment Management](index=9&type=section&id=Investment%20Management) The Investment Management segment delivered strong results, with net revenues of **$1.6 billion**, up 12% year-over-year, and net income of **$245 million**, up 48%, driven by higher asset management fees and a significant increase in performance-based income, with total assets under management (AUM) growing 13% to **$1.7 trillion** [Income Statement Information, Financial Metrics and Ratios](index=9&type=section&id=Investment%20Management%20Income%20Statement) Segment revenues were boosted by a **168%** year-over-year surge in performance-based income, which reached **$118 million**, while asset management and related fees also grew by 7%, significantly improving the pre-tax margin to **21%** Investment Management Revenue Breakdown (Q2 2025, in millions) | Revenue Source | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Asset management and related fees | $1,434 | $1,342 | 7% | | Performance-based income and other | $118 | $44 | 168% | | **Total Net Revenues** | **$1,552** | **$1,386** | **12%** | - Net income applicable to Morgan Stanley for the segment was **$245 million**, a 48% increase from **$165 million** in Q2 2024[17](index=17&type=chunk) [Financial Information and Statistical Data](index=10&type=section&id=Investment%20Management%20Statistical%20Data) Total Assets Under Management or Supervision (AUM) reached **$1.713 trillion**, a 13% increase from the prior year, with long-term net inflows of **$10.8 billion** driven by Fixed Income and Alternatives, despite total net outflows of **$16.5 billion** due to Liquidity and Overlay Services AUM and Net Flows (Q2 2025, in billions) | Category | AUM (End of Period) | Net Flows (Quarter) | | :--- | :--- | :--- | | Equity | $327 | $(2.8) | | Fixed Income | $212 | $6.8 | | Alternatives and Solutions | $636 | $6.8 | | **Long-Term Total** | **$1,175** | **$10.8** | | Liquidity and Overlay Services | $538 | $(27.3) | | **Total AUM/Flows** | **$1,713** | **$(16.5)** | - Long-term AUM grew **14%** year-over-year to **$1.175 trillion**, demonstrating strength in core investment strategies[19](index=19&type=chunk) [Loan Portfolio and Credit](index=11&type=section&id=Loan%20Portfolio%20and%20Credit) The firm's loan portfolio and credit metrics reflect growth in lending commitments across segments and a cautious outlook on credit risk with increased allowances [Consolidated Loans and Lending Commitments](index=11&type=section&id=Consolidated%20Loans%20and%20Lending%20Commitments) The firm's total loans and lending commitments grew **14%** year-over-year to **$452.2 billion**, with growth observed across both Institutional Securities and Wealth Management segments, where Wealth Management loans increased **12%** to **$168.9 billion** Loans and Lending Commitments by Segment (as of June 30, 2025, in billions) | Segment | Total Loans | Lending Commitments | Total | | :--- | :--- | :--- | :--- | | Institutional Securities | $98.4 | $165.4 | $263.8 | | Wealth Management | $168.9 | $19.5 | $188.4 | | **Consolidated Total** | **$267.3** | **$184.9** | **$452.2** | - Within Institutional Securities, secured lending facilities saw the largest year-over-year growth, increasing **29%** to **$62.4 billion**[21](index=21&type=chunk) - In Wealth Management, securities-based lending grew **14%** year-over-year to **$99.8 billion**, representing the largest component of the segment's loan book[21](index=21&type=chunk) [Allowance for Credit Losses (ACL)](index=12&type=section&id=Allowance%20for%20Credit%20Losses%20%28ACL%29) As of June 30, 2025, the total Allowance for Credit Losses (ACL) for loans and lending commitments stood at **$2.061 billion**, with a quarterly provision of **$196 million** primarily reflecting reserves against corporate and real estate loans ACL by Loan Type (as of June 30, 2025, in millions) | Loan Type (Held For Investment) | Gross Loans | ACL | ACL % | | :--- | :--- | :--- | :--- | | Corporate | $7,685 | $271 | 3.5% | | Secured lending facilities | $58,468 | $175 | 0.3% | | Commercial and residential real estate | $8,168 | $398 | 4.9% | | Wealth Management - HFI | $169,349 | $406 | 0.2% | | **Total HFI Loans** | **$246,921** | **$1,271** | **0.5%** | - The total ACL for lending commitments was **$790 million**, with a quarterly provision of **$58 million**[23](index=23&type=chunk) [Supplemental Information](index=13&type=section&id=Supplemental%20Information) This section provides essential context for the financial report, including definitions of non-GAAP measures, performance metrics, detailed quantitative calculations, and a legal notice [Definition of U.S. GAAP to Non-GAAP Measures](index=13&type=section&id=Definition%20of%20U.S.%20GAAP%20to%20Non-GAAP%20Measures) This section defines the non-GAAP financial measures used in the report, which management believes provide greater transparency into the firm's operating performance, including tangible common equity, return on tangible common equity (ROTCE), and results excluding the impact of Deferred Cash-based Compensation (DCP) plans - Non-GAAP measures are used to provide an alternate means of assessing financial condition and operating results[25](index=25&type=chunk) - Tangible common equity is defined as common shareholders' equity less goodwill and intangible assets[25](index=25&type=chunk) - Adjustments for DCP are made to net revenues and compensation expenses to allow for better comparability of period-to-period underlying performance, particularly in the Wealth Management segment[25](index=25&type=chunk) [Definitions of Performance Metrics and Terms](index=14&type=section&id=Definitions%20of%20Performance%20Metrics%20and%20Terms) This section provides explicit definitions for the various performance metrics and financial terms referenced throughout the financial supplement, clarifying the calculation and components of key indicators such as pre-tax margin, liquidity resources, risk-weighted assets (RWAs), and client assets - The Firm expense efficiency ratio is defined as total non-interest expenses as a percentage of net revenues[27](index=27&type=chunk) - Net new assets in Wealth Management represent client asset inflows less outflows, excluding market performance and fees[30](index=30&type=chunk) - Trading VaR represents the potential unrealized loss in portfolio value that would be exceeded with a 5% frequency over a one-day period[27](index=27&type=chunk) [Supplemental Quantitative Details and Calculations](index=16&type=section&id=Supplemental%20Quantitative%20Details%20and%20Calculations) This section provides detailed reconciliations and calculations that support the figures presented elsewhere in the report, including specific adjustments for DCP on net revenues and compensation, a breakdown of non-compensation expenses, and the allowance for credit losses rollforward Firmwide DCP Impact Reconciliation (Q2 2025, in millions) | Item | As Reported (GAAP) | DCP Adjustment | Adjusted (Non-GAAP) | | :--- | :--- | :--- | :--- | | Net Revenues | $16,792 | $(377) | $16,415 | | Compensation Expense | $7,190 | $(371) | $6,819 | Allowance for Credit Losses Rollforward (Q2 2025, in millions) | Item | Loans | Lending Commitments | Total | | :--- | :--- | :--- | :--- | | Beginning Balance | $1,133 | $718 | $1,851 | | Net Charge Offs | $(19) | $0 | $(19) | | Provision | $138 | $58 | $196 | | Ending Balance | $1,271 | $790 | $2,061 | [Legal Notice](index=18&type=section&id=Legal%20Notice) This is a standard legal notice stating that the financial supplement contains financial and business-related information that should be read in conjunction with the firm's official second quarter earnings press release issued on July 16, 2025 - The information in this supplement should be read in conjunction with the Firm's second quarter earnings press release issued July 16, 2025[46](index=46&type=chunk)

Market Performance & Trends - The S&P 500 closed lower, while the Nasdaq Composite closed slightly higher [2][7] - Information Technology sector in the S&P 500 rose by 13%, driven by gains in chip companies [9] - Cyclical sectors lagged, with Dow transports down 16%, S&P 400 mid-caps down 18%, and Russell 2000 down 2% [8] - Bitcoin experienced a 3% decrease after reaching a record high of 120,000 [4] Company Specific News - NVIDIA shares increased by 4% after receiving assurances from the US government regarding export licenses for its H-20 chip to China [3][10][11] - Citigroup's shares rose by 37%, reaching their highest level since 2008, following strong regulatory stress test results and increased stock buybacks [12][13] - MP Materials shares surged by nearly 20% after Apple committed $500 million to buying the company's American-made rare earth magnets [14][15] - Wells Fargo's shares fell by approximately 5% after missing second-quarter net interest income estimates and lowering its full-year guidance for NII [15] - BlackRock's shares dropped by 5% after revenue and performance fees missed estimates, despite total assets reaching a record $125 trillion [17] - Newmont's shares fell by 57% following the resignation of the company's chief financial officer [18] - Omnicom reported second-quarter revenue of $42 billion, slightly above the consensus estimate of just under $4 billion, and adjusted EPS of $205, beating the consensus estimate of $198 [16] - J P Hind reported second-quarter EPS of $131, a penny higher than street estimates, and revenue of $293 billion, also a slight beat [21] Economic Factors - France is considering axing two public holidays in an attempt to tackle the deficit, which could give a boost of several billion euros to the country [23][25] - Kerrygold Butter is planning to slow down its U S investment due to uncertainty regarding Trump's trade settlement with the European Union [26] - The 30-year yield is pinned at the 5% mark, with the 20-year yield also camped out there [19]

Market Trends & Investment Opportunities - Circle's shares have increased by 540% since its IPO last month [1] - Argus initiates Coinbase with a buy rating after its shares more than doubled in the past three months [2] - The potential of updating the financial system with new technological rails for value transfer is enormous for Coinbase and the economy [3] Regulatory Landscape & Impact - The US government's previous stance was an all-out war against innovation in digital assets, but the current period is more normalized [4][5] - The Genius Act specifically addresses stable coins and could be a significant boon for the US government [6] - Stable coin legislation, requiring one-to-one backing with safe assets, could drive trillions of dollars in demand for treasury bills over the next decade [7] - The Genius Act is on the verge of triggering a payment revolution, with the House expected to pass it and the President likely to sign it into law soon [8][9] Stablecoin & Treasury Market Dynamics - For every tokenized dollar issued, $1 will be held in reserves, typically in US treasuries [9] - Stable coin issuers are currently the 16th largest holders of US treasuries globally [9] - Stable coin issuers could potentially become the largest holders of US treasuries, surpassing China and Japan [9] - This development is critical given the high debt levels in the US economy [10]

Core Viewpoint - A significant shift is anticipated in the stock market, suggesting a potential transition from growth stocks to value stocks as the latter are currently undervalued and may outperform in the near future [4][7][8]. Group 1: Market Trends - Growth stocks have consistently outperformed value stocks since the late 1990s, driven by technological advancements and low interest rates [4][6]. - Morningstar's Q3 2025 Stock Market Outlook indicates that value stocks are undervalued relative to the broader market, presenting a potential investment opportunity [7]. - U.S. value stocks are currently trading at a price-to-earnings ratio of 10, significantly lower than the 30 for growth stocks, indicating a potential for higher returns [8]. Group 2: Performance of Key Stocks - The "Magnificent Seven" stocks, which have driven market gains, are now lagging behind the broader market, suggesting a possible shift in market leadership [8][11]. - Major growth stocks like Apple, Alphabet, and Tesla have seen declines year-to-date, while the S&P 500 has increased by 6%, indicating a potential trend reversal [11]. Group 3: Economic Factors - Concerns about economic slowdown and market crashes are rising among U.S. consumers, with 46% expressing serious concerns, which could disproportionately affect overvalued growth stocks [13][14]. - The Federal Reserve's sustained high interest rates are impacting growth companies more than value companies, which are better suited to navigate such conditions [15]. Group 4: Investment Strategy - The Vanguard Value ETF offers a trailing dividend yield of just under 2.2%, providing a reliable income stream for investors amid less exciting growth potential [17]. - Investors are encouraged to consider a balanced portfolio that includes both value and selective growth investments, allowing for defensive positioning while still pursuing growth opportunities [18][19].