Co-President, Morgan Stanley
Morgan Stanley's Dan Simkowitz: Secular shift happening in credit markets to asset managers
Dan Simkowitz, Morgan Stanley co-president, joins CNBC's 'Squawk on the Street' to discuss outlooks on credit, the economy, ...
About Daniel Simkowitz
Dan Simkowitz, Co-President of Morgan Stanley, appeared on CNBC from the Milken Institute Global Conference on May 7, 2026. He discussed the financing of the AI transformation, stating that the firm is "doing GPU backed financings" and "Google TPU financings" for companies including xAI, Anthropic, OpenAI, and Gemini. He described Anthropic's revenue run rate as having grown "from 9 billion to 30 billion in the space of 30 days." Simkowitz also addressed the IPO market, noting a "healing and then and really robust IPO market starting to develop" after a slow period, and said "it's cooler to be public than it was a year ago." He characterized the current market environment as driven by "complexity," which he said is "driving the market" and "driving our business to a degree," while also noting that "there are very powerful growth forces still that are sort of countering the fear around geopolitics."
Transcript (7 segments)
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Interviewer0:08
We are live from Beverly Hills with the Milken Conference. Joining me now is Dan Simkowitz. He's the co-president of Morgan Stanley Capital Markets. Coming under your purview M&A IPOs. Let's start though with the credit markets. Sure, if we can. What are you seeing right now? You know, obviously only a few weeks ago there was a lot of concern. But generally speaking, spreads seem to be behaving themselves.
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Daniel Simkowitz0:29
David, first of all, thanks for having us here at Milken. Spreads have rebounded pretty dramatically in the last couple of weeks. But I think the big issue is the secular dynamics in the credit market, which is financial repression is over, so rates are higher, maybe structurally. At the same time, there's bank regulation and bank shareholder pressure on banks. So there is capital moving out of the bank system. Insurance companies are outsourcing some of their credit all to asset managers. And so the depth of that market, the old endowment model had very little credit. So sovereign wealth funds, pension funds, endowments now have a bigger allocation to credit. And you're seeing that support the market. And so I think one of your guests yesterday talked about it: when the public market traded off in early April, they stepped in, traditionally viewed as a private credit manager, and stepped into the market. And so you see a real secular shift. And to a degree, we don't really think the distinctions between public and private are really that real.
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Interviewer1:33
Why not?
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Daniel Simkowitz1:33
Credit is credit. And I think corporate credit in particular, but I think it extends into real estate credit. Some of it will trade. And what we're seeing is that shift out of the insurance sort of in-house management, out of the banking system to asset managers, and then they all partner with us. So what we're seeing is they want to see assets in both investment grade as well as non-investment grade traded and non-traded. But there is a big secular shift in the asset managers. And it means we and our issuers have a deeper market to access in the credit market.
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Interviewer2:10
Right. Well, you referenced, of course, Marc Rowan, who also said he thinks investment grade fixed income, you're not going to see a differentiation in 18 months between private and public. You agree with that?
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Daniel Simkowitz2:21
Well, I think what Marc has done and some of his peers, and they're all here, is what they've done, especially with insurance capital, is they've taken it as pure buy and hold relatively plain vanilla, and they've moved it into much more actively managed portfolios. And actively managed could be private or it could be public. But what they're able to do is bring better solutions, frankly, into the market around structure, around asset-backed and other elements. A lot of what they're doing with investment grade is they're bringing secured elements that have been used in the high yield market or the leveraged finance market into the investment grade market. Now, it's not going to be as large a big cap company that doesn't have the same needs as, let's say, a data center situation or maybe an asset company that the public markets with, they'll just keep going. But there is more sophistication going because the capital is moving to great credit managers. And that's not just Apollo, that's Blackstone and Ares. Mike was just here as an example. It's at Pimco. It's at BlackRock. It gives us a lot more partners to work with, more sophisticated, a little bit more velocity clients in terms of how to access these markets. So it's here to stay, no doubt about that. I mean, we've been talking about it for years now, Dan, but obviously even more so.
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Interviewer3:39
Yeah. It's interesting the energy here this year at Milken I think is high, largely coming out of the credit managers. And what's great is it's reflective of the legacy of Mike. Right. He started this move of credit out of, let's say, traditional systems. He did it with the high yield bonds and then it moved to leveraged loans. But now the distinctions are blurring. And just the credit market is growing pretty dramatically as it relates to how it gets deployed. You have a view on this other thing we discussed a lot yesterday: liquidity. And you know, whether you can really create these ETFs in some sort of ubiquitous way that are going to be able to give the retail investor access to what these managers in partnership with us, you know, again, we're the largest wealth manager in the world, which means we're the largest allocator to the asset management industry, but also the largest allocator to private markets. And what these movement and pools means is the innovation is increasing. So as you think about whether it's the democratization of private markets or even the deployment of credit, there's innovation happening. And so you see partnerships happening. Our clients Blackstone, Vanguard and Wellington have done a partnership. Right. You're seeing KKR and Capital Group. BlackRock Pimco are innovating. And then Marc has got the ETFs. I'm not sure which ones are going to succeed, but some of them are around bringing more of that credit market to the hybrid between public and private. You know, what we see is we're helping these asset managers raise capital. We help them R&D around structure. We source the assets for them. We finance some of them, we structure them. And then some of them, to Marc's point yesterday, some of them are going to trade and some of them won't. But to a degree, when we go raise capital for our issuers, whether it's 100 investors or half a dozen, the same underlier and to a degree, the same process that we're engaging. And even in that