YouSaid · the spoken record

Marshall Stocker

lines on the record: 23
first: 2023-08-24
most recent: 2023-08-24
sittings or episodes: 1
sources: podcast

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“We do use the Eton Vance name, yes, particularly in the United States marketplace. However, Morgan Stanley is a global brand with huge brand equity. And so as Eaton Vance becomes exposed to the global marketplace as a result of the transaction, the Morgan Stanley name is a very powerful brand.”
2023-08-24 · Forward Guidance · The Next Chapter in Emerging Markets Investing | Marshall Stocker, Co-Head of Emerging Markets, Morgan Stanley · IDENTIFIED FROM THE TRANSCRIPT
“Well, Google, the professor Google, Google Marshall Stalker, the Morgan Stanley Emerging Markets team, we were part of Ethan Vans and just acquired by Morgan Stanley. So that's probably the best way. There's plenty of ways to go. Are you using the ETH?”
2023-08-24 · Forward Guidance · The Next Chapter in Emerging Markets Investing | Marshall Stocker, Co-Head of Emerging Markets, Morgan Stanley · IDENTIFIED FROM THE TRANSCRIPT
“When that happened, assets became more valuable. And that's what I think might catch investors off guard because the market is so, so inexpensive. On the fixed income side, again, we would focus more on the direction of rates. Rates probably have to come down here because the economy is slow, right? So if you have an Orthodox policy response, you'll have rates come down. But I think they want to be very careful to not re-stimulate the property market. So the magnitude of the change might be somewhat moderate.”
2023-08-24 · Forward Guidance · The Next Chapter in Emerging Markets Investing | Marshall Stocker, Co-Head of Emerging Markets, Morgan Stanley · IDENTIFIED FROM THE TRANSCRIPT
“System at making the regulatory environment more efficient, which we know relate to excess returns and improve equity valuations. So right now, the Chinese equity market looks to us as though it's pricing like a regulated utility. Without any opportunity to return to the economic liberalization that we've seen before. So I think that's what might catch investors off guard. It did when zero COVID ended, right? When zero COVID was removed, eight shares went up almost 50% like that. All you needed is one change in an economic institution.”
2023-08-24 · Forward Guidance · The Next Chapter in Emerging Markets Investing | Marshall Stocker, Co-Head of Emerging Markets, Morgan Stanley · IDENTIFIED FROM THE TRANSCRIPT
“Fairly well acknowledged understanding of what the imbalances are in China and that the policymakers are doing their best for a modest, orderly transition. Now, one thing that may prevent any type of disorderly transition is that they're capital account is closed, right? So it's hard to see a disorderly transition, but it is reasonably easy to see, I would say, years and years of mediocre economic results as this transition, this improved allocation of capital happens, if it does. That said, assets on the equity side are remarkably inexpensive. I think the assets do not incorporate any type of call option premium that you could see a liberalization of the economic institutions, a movement towards improving the rule of law, improving the bank.”
2023-08-24 · Forward Guidance · The Next Chapter in Emerging Markets Investing | Marshall Stocker, Co-Head of Emerging Markets, Morgan Stanley · IDENTIFIED FROM THE TRANSCRIPT
“China is certainly dealing with a misallocation of capital. I think the leadership there acknowledges it around the housing and property market, the executive leadership there has said repeatedly now that housing is for living. This is an indication that they recognize the misallocation of capital housing and they have been looking for an orderly way to address that. The figures we see as late as this month or the previous month suggest the housing market very much is in a correction. We wouldn't expect any type of deep stimulus because they do want it to correct. Same thing on the monetary policy side. We don't see a whole lot of dramatic activity there with respect to stimulating the economy again because they're looking to reduce some of this misallocation of capital. So I think there's a”
2023-08-24 · Forward Guidance · The Next Chapter in Emerging Markets Investing | Marshall Stocker, Co-Head of Emerging Markets, Morgan Stanley · IDENTIFIED FROM THE TRANSCRIPT
“I think that's very unlikely. I think that's very unlikely in the near term and possibly unlikely in my career. What I worry about is the direction of change. The direction of change in fiscal policy and the monetary policy adventurism of the Federal Reserve is in a negative direction. And that will slowly accrue. One of the things we've talked about, David Kotak brought up, did some really interesting analysis, is whether or not CDS pricing on U.S. Treasury has taken a structurally move upwards as we see fiscal deteriorate and more budget debates happening. So I wouldn't be worried in much way, shape, or form about any type of apocalyptic event or a hyperinflation or such what I would be worried about is a slow deterioration in the institutions of sound monetary policy or the size of government in the United States, meaning a lack of fiscal discipline that could then”
2023-08-24 · Forward Guidance · The Next Chapter in Emerging Markets Investing | Marshall Stocker, Co-Head of Emerging Markets, Morgan Stanley · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, unlikely. Most likely is to monetize your local debt by printing money, but it can happen. And emerging markets give us those lessons. What I'm worry about is that as the more and more we discuss the fiscal trajectory of the United States and the monetary policy of the United States, the more and more we're using emerging markets as an example to which to refer. And I don't think that's a very encouraging when we consider the outlook for the United States.”
2023-08-24 · Forward Guidance · The Next Chapter in Emerging Markets Investing | Marshall Stocker, Co-Head of Emerging Markets, Morgan Stanley · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, yeah, absolutely. I think your general assumption is correct. Countries that can print currency to pay their currency denominated bonds are likely to do that. That's the base case. But there are countries and emerging markets who have defaulted on their local currency bonds for whatever reason. Sometimes it relates to who owns those bonds. If those local bonds are disproportionately in some large measure owned by foreign investors, countries are sometimes more willing to default on those foreign investors than if those local bonds are collectively held by local institutions and local voters. So sometimes it's the ownership makeup that comes about. There's other circumstances in history where the leadership of a country changes and they don't like the debt that they've inherited from the previous government and so they restructure things.”
2023-08-24 · Forward Guidance · The Next Chapter in Emerging Markets Investing | Marshall Stocker, Co-Head of Emerging Markets, Morgan Stanley · IDENTIFIED FROM THE TRANSCRIPT
“So we discussed the U.S. downgrade of the U.S. Treasury debt by Fitch from AAA to AAA. I made the somewhat simplistic argument that a monetary sovereign, a government that prints its own currency cannot default on its own debt. In other words, when Greece was having problems in the European debt crisis 2011-12, it was because it couldn't print the euro. The European Central Bank printed the euro, whereas the Federal Reserve, the US government does print the dollar. After I made this point in public, you very politely pulled me aside and said, Jackie, that's an interesting point, but technically there have been some times where monetary sovereigns have defaulted. So can you add that nuance to us for us?”
2023-08-24 · Forward Guidance · The Next Chapter in Emerging Markets Investing | Marshall Stocker, Co-Head of Emerging Markets, Morgan Stanley · IDENTIFIED FROM THE TRANSCRIPT
“We've been able to achieve this remarkable accomplishment of a per capita GDP figure that's actually been going down every year for something like the last decade. So we avoid countries where economic freedom is going down. South Africa is certainly one of them. We also try and avoid countries that the institutions are maybe overvalued. I think India is a great example. We own some India, but we are underweight India. We own India because economic freedom, the institutions have been improving under the Modi government, but everybody knows it. 24 of this more expensive in the United States. And so the Indian stock market, I think, is particularly fragile if they don't continue to liberalize their economy.”
2023-08-24 · Forward Guidance · The Next Chapter in Emerging Markets Investing | Marshall Stocker, Co-Head of Emerging Markets, Morgan Stanley · IDENTIFIED FROM THE TRANSCRIPT
“Well, we're underweight collect just generally speaking. We're underweight countries where we believe there is a deterioration in the institutions of economic freedom, countries where we believe the size of government as a percentage of the economy is growing, where the rule of law is worsening. So we've been structurally underway places like South Africa, for example. One of the few countries in the world,”
2023-08-24 · Forward Guidance · The Next Chapter in Emerging Markets Investing | Marshall Stocker, Co-Head of Emerging Markets, Morgan Stanley · IDENTIFIED FROM THE TRANSCRIPT
“All of that return, almost all of that return in the last 12 months has been earnings growth, about 50% earnings growth, 60% equity return, so very little multiple expansion. That's evinced by the seven and a half times earnings. So where can Greece go from here? I think if you look at the developed market economies, the investment grade economies like Germany and France, and consider that maybe Greece's multiple could start to move in that direction towards 12, 13 times earnings from the 7.5 earnings level of the MSCI Greece index, there's still a lot of opportunity on the table for valuation expansion and continued earnings growth because the country is growing quickly.”
2023-08-24 · Forward Guidance · The Next Chapter in Emerging Markets Investing | Marshall Stocker, Co-Head of Emerging Markets, Morgan Stanley · IDENTIFIED FROM THE TRANSCRIPT
“So, before I share my favorite statistic of the moment, we're positioning for two things in Greece. One is what you described, which is a rerating of the multiple that more appropriately reflects that it's going to be the second fastest growing economy, that they're approving economic freedom, that they're becoming investment grades. So certainly the multiple re-rating. But we're also positioning for the earnings growth. My favorite statistic right now, I think, captures both of those the Greek stock market we were talking about this over breakfast. The Greek stock market is up nearly 60% in the last 12 months and it's still only seven and a half times increase. So the S&P, I don't know where is it trading, almost three times higher than that.”
2023-08-24 · Forward Guidance · The Next Chapter in Emerging Markets Investing | Marshall Stocker, Co-Head of Emerging Markets, Morgan Stanley · IDENTIFIED FROM THE TRANSCRIPT
“Builds consumer and investor confidence, it drives excess economic growth, and therefore excess returns as the discount rate drops as a country's rule of law improves and the investment grade rating comes about”
2023-08-24 · Forward Guidance · The Next Chapter in Emerging Markets Investing | Marshall Stocker, Co-Head of Emerging Markets, Morgan Stanley · IDENTIFIED FROM THE TRANSCRIPT
“Addressed the imbalances and their fiscal policy, their regulatory environment, and now we have this investment rate upgrade. What will come after that very likely will be an upgrade to developed market equity status, something they were also punished with, a downgrade to emerging markets. So you have those two things going on technically, and Greece is very likely to be the second pastest growing economy in Europe next year behind Ireland. And all of this comes about because we have a reformist government that was just re-efflected with a mandate to shrink the size of government, privatize industry, make the regulatory environment more efficient. What does that do? It attracts capital.”
2023-08-24 · Forward Guidance · The Next Chapter in Emerging Markets Investing | Marshall Stocker, Co-Head of Emerging Markets, Morgan Stanley · IDENTIFIED FROM THE TRANSCRIPT
“So, in the equity funds that I manage, we are significantly overweight Greece. This is a country whose weight in the emerging markets index rounds to zero. It has largely been ignored since the crisis that they had nearly 15 years ago. Greece is on the precipice of becoming an investment-grade country. So while the first night of Camp Kotok, we were discussing the downgrade of the credit rating in the United States. For those of us in the back of the room doing emerging markets, we were whispering about the upgrade that is going to happen in Greece. And so my how the world changes that a country who nearly brought down the Eurozone experiment has”
2023-08-24 · Forward Guidance · The Next Chapter in Emerging Markets Investing | Marshall Stocker, Co-Head of Emerging Markets, Morgan Stanley · IDENTIFIED FROM THE TRANSCRIPT
“Frontier and off index countries, countries like the Republic of Georgia where the investor base is just not that well traveled. The economic institutions in the Republic of Georgia are very good. Ranked amongst one of the highest when it comes to economic freedom, but the assets are still remarkably inexpensive, growing very quickly if you look at the equities and their earnings trajectory, but just overlooked. So those would be two of the principal components to our investment process looking for institutional change, or where the institutions are not appropriately valued by the marketplace.”
2023-08-24 · Forward Guidance · The Next Chapter in Emerging Markets Investing | Marshall Stocker, Co-Head of Emerging Markets, Morgan Stanley · IDENTIFIED FROM THE TRANSCRIPT
“Well, there's several different principles we look at when we're selecting countries to make our fixed income or equity investments. The really exciting ones, I would say, are those countries that are undergoing institutional change where the rule of law, the soundness of the money supply, the regulatory environment are changing, either for the better or for the worse. And we know that those changes empirically, I've written academic papers on this. Those changes empirically relate to excess return. So if you can identify a country that's going to improve its rule of law during the investment horizon, the discount rate goes down and the assets outperform, for example. So the first thing we look for is countries that are changing institutionally. The second thing we might look at is countries whose institutions are not appropriately discounted or appropriately understood by the marketplace. This is probably a little more common among”
2023-08-24 · Forward Guidance · The Next Chapter in Emerging Markets Investing | Marshall Stocker, Co-Head of Emerging Markets, Morgan Stanley · IDENTIFIED FROM THE TRANSCRIPT
“I know some wonderful companies in China, but the Chinese stock market has been in a downtrend for a long time. What makes you impact the country asset allocation? In the world, let's perhaps stick to equities. What are you looking for? What says, oh, let's overweight this country relative to the margin market index, or let's underweight this? And then I want to get into what you're under overweight and why”
2023-08-24 · Forward Guidance · The Next Chapter in Emerging Markets Investing | Marshall Stocker, Co-Head of Emerging Markets, Morgan Stanley · IDENTIFIED FROM THE TRANSCRIPT
“Stop selector, you were, and we see that even more consistently across China. Chinese stocks collectively move together. And so getting the China allocation correct is way, way more important than getting the specific stocks correct.”
2023-08-24 · Forward Guidance · The Next Chapter in Emerging Markets Investing | Marshall Stocker, Co-Head of Emerging Markets, Morgan Stanley · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, that's right. So the first couple academic papers that were published on the source of excess returns for international and emerging market investors, they were published back in 1973 and 74, so 50 years ago, we have 50 years of data that demonstrate that about 80% of excess returns are determined by which country you invest in when you're an emerging markets investor. It doesn't really matter which company, which sector, which style, which capitalization you invest in, all of those factors explain kind of the remaining 20%. So the most contemporary examples I can give you is doesn't really matter how great a stock selector you were amongst the Russian equities. They all went to zero. So if you had chosen to ignore your country level, your sovereign level analysis in the case of Russia, it would have been completely deleterious to your excess return no matter how good of...”
2023-08-24 · Forward Guidance · The Next Chapter in Emerging Markets Investing | Marshall Stocker, Co-Head of Emerging Markets, Morgan Stanley · IDENTIFIED FROM THE TRANSCRIPT
“Jack. I'm the co head of the emerging markets team at Morgan Stanley Investment Management. So I'm responsible for a team of about 50 professionals who make investments in both fixed income and equities of emerging market countries.”
2023-08-24 · Forward Guidance · The Next Chapter in Emerging Markets Investing | Marshall Stocker, Co-Head of Emerging Markets, Morgan Stanley · IDENTIFIED FROM THE TRANSCRIPT