Randomly Noted

A look at Morgan Stanley’s earnings report today is yet another example of how the not-very-sexy businesses can be good ones to be in. When people think of Wall Street, they think of investment bankers and traders. And often we hear about the larger-than-life deals and money these folks make. But the banking and trading business can be very volatile, whereas the wealth management business may not grow as steadily but is, well pretty steady.

At Morgan Stanley, the firm reported wealth management revenues in the most recent quarter were $3.1 billion. The quarter before (this year’s 2Q): $3 billion. And the year-ago 3Q was $3.0 billion.

Institutional securities had $2.8 billion of revenues in the most recent quarter. It was $4.5 billion last quarter and $5.0 billion the year before.  In a sense, Morgan has created a hedge against the volatility brought on by sales and trading by being in the wealth business.

It’s about 1130pm here in London – time to head into the office for many currency traders and traders in gilts, the U.K. government bonds.

That’s because we’re about the start the ritual of UK gilts and currency markets being open overnight during the counting of votes for a U.K. general election, as Britons find out whether Labour’s Gordon Brown has to hand the keys to Number 10 Downing Street to his Conservative rival David Cameron.

You’ll see the overnight (well, overnight for Britons) markets coverage on our Newswire. The opening gilts comment that usually comes out at around 8am London time will come out at about 1am as LIFFE, the market that is the main trading venue for gilts futures, will open then.

It’s good news for the handful of places in London that offer pizza delivery overnight. But the reality is that not much trading gets done. Traders who have sat through previous vigils report that spreads are wide and it’s not easy to make money. After all, everyone else in the market is watching the same results coming through, it’s not easy to come up with a truly original trading strategy in these circumstances – and with wide spreads you need to be  very sure that you’re right because quickly backing out of a trade is pricey.

Fund managers certainly aren’t going to be phoning big orders through either for the same reason.

In this environment with low liquidity small trades can make big moves. The real market verdict may have to wait until around 8am London time, when liquidity comes into the sterling market and gilts volumes rise.

However TV exit polls are predicting that no party will win. If no party emerges with a clear majority it could be days, not hours,  before it’s clear who is running the U.K.