Good morning. Welcome to Morgan Stanley's Third Quarter 2022 Earnings Call. On behalf of Morgan Stanley, I will begin the call with the following information and disclaimers. This call is being recorded. During today's presentation, we will refer to our earnings release and financial supplement, copies of which are available at morganstanley.com. Today's presentation may include forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ materially. Please refer to our notices regarding forward-looking statements and non-GAAP measures that appear in the earnings release. This presentation may not be duplicated or reproduced without our consent. I will now turn the call over to Chairman and Chief Executive Officer, James Gorman.

Good morning, everyone. Thank you for joining us, and I know we're starting a little later than some of the previous quarters. So I appreciate you staying with us. The Firm performed well in a very uncertain and difficult environment. An ROTCE of 15%, excluding integration expenses, flexes stability and strength of the business model. Wealth Management pre-tax margin, excluding integration expenses, was 28.4% and coupled with $65 billion of net new assets, demonstrates how this business even in a very volatile market environment and with indices down over 20% this year, continues to attract new client assets and remains highly profitable. This business' enormous scale and channel diversification should ensure continued success. Investment Management and Investment Banking were clearly impacted by the market environment. But as I've said elsewhere, advisory and underwriting activity has not gone away, it has simply been deferred. Fixed income and equities remains very solid with no areas of obvious concern. Both businesses navigated the complicated markets without serious incidents. Finally, the strength of our capital position is very clear, as shown by the continuation of our strong buyback program with $2.6 billion of share repurchases in this past quarter, coupled that with a dividend yield north of 3% and a CET1 ratio of 14.8%. On an operating basis, this Firm is doing well in a post-COVID world. From a markets perspective, we expect continued volatility as the Federal Reserve continues to tighten policy such to bring down inflation to acceptable long-term levels. This is an environment where it behoves management to be prudent but balanced, a wholesale retreat from the markets is not called for. But at the same time, I must be more cautious in credit-sensitive parts of the business. Fortunately, the business model changes for the past decade or more, plus the acquisitions of Smith Barney, E*TRADE and Eaton Vance put us in a position of significant relative strength and should support solid absolute performance in the months ahead. I'll now turn the call over to Sharon to discuss the quarter in detail, and together, we'll take your questions.

Thank you, and good morning. The Firm produced revenues of $13 billion in the quarter. Our EPS was $1.47, and our ROTCE was 14.6%. Excluding integration-related expenses, our EPS was $1.53, and our ROTCE was 15.2%. We built our business model to perform through the cycle and withstand volatile environments, evidenced again by the performance this quarter. In Institutional Securities, fixed income benefited from macroeconomic developments and in Wealth Management, we continue to attract strong net new assets, underscoring the benefits of an advice-driven model and a variety of backdrops. The Firm's year-to-date efficiency ratio was 72%. Excluding integration-related expenses, our year-to-date efficiency ratio was 71%, ensuring future growth remains a priority, and we continue to invest in tech-driven efficiencies. And with the abatement of COVID-related restrictions, marketing and business development expenses have progressively normalized as our teams reengage with clients and our colleagues in person. Efficiency remains an important performance objective and we review incremental spend on an ongoing basis. Now to the businesses. Institutional Securities revenues were $5.8 billion, down from the robust prior year, but seasonally strong for -- seasonally strong rather, for a seasonally slower quarter relative to historical levels. Strength in fixed income and equities was a counterbalance to muted activity and investment banking. Investment Banking revenues decreased year-over-year to $1.3 billion, with meaningful declines across products, particularly underwriting. Ongoing market volatility continued to weigh on issuance and led clients to delay strategic actions. Advisory revenues were $693 million. Solid results reflected the completion of previously announced strategic transactions. Revenues were down relative to the record prior year and in line with broader M&A market volumes. Equity underwriting revenues were $218 million with year-over-year declines across products, reflecting the overall volatility in global equity markets. Fixed income underwriting revenues were $366 million. Investment grade issuance…

[Operator Instructions] We'll go first to Ebrahim Poonawala from Bank of America.

I guess -- so James, you alluded to a lot of cross-currents. I fully appreciate that. I think from your shareholders' perspective, I think why folks own Morgan Stanley is some degree of confidence on the superior ROE, defensibility of that ROE. Just talk to us as you think about -- I mean, we've already seen a ton of market volatility. As we look forward, your confidence where return on tangible equity, 15%, 16%, how defensible do you think that is and understanding the quarter-to-quarter volatility. But how defensible do you think that is? And remind us about the synergies from Eaton Vance, E*TRADE, et cetera, that we should be mindful of when we think about Morgan Stanley's growth relative to what happens to the market?

Great. Well, that's a good broad question to kick it off. I would say, first of all, we're thrilled with the deals we did with E*TRADE and Eaton Vance. I mean they’ve both worked better than expectations. In Eaton Vance, for example, the gem that is Parametric as just the gift that keeps giving. E*TRADE with the deposits that we brought over through that deal, what we've done with the stock plan business is now combined with ours, 35% of the S&P companies. And obviously, having a digital banking platform, I've often described E*TRADE, it's a technology company, and we brought a lot of technology with that. So just on those two things, thrilled with it. In terms of the overall environment and how we play in that environment, maybe I'll just touch on the environment for a minute. It shouldn't be surprising what's going on in the market. So I'm kind of surprised every time I see somebody on TV who seems surprised by it. We had zero interest rates for a decade. We have massive monetary and fiscal stimulus. We have the first land war in Europe in 70 years. The highest inflation in 40 years, and the Fed had to move. Now my opinion was they moved late, but they moved and they're going to keep moving. And rates are now around 3%, they're probably going to go mid-4s, but that remains to be determined. And with that, there will be consequences. So far, we haven't seen clarity around inflation abating. My guess is that we will see that clarity and it will be more evident certainly by the middle of next year. And I think the Fed will be successful in this journey, but that's a gut from all the numbers I'm looking at, but it…

No, it did. And just one quick follow-up to that. At the same time, you've shown a tendency to lean in the opportunistic Eaton Vance, E*TRADE, a lot of disruption among your peers, both here in Europe. Any -- like how do you think about just Morgan Stanley leaning in to actually gain share in this backdrop?

Well, I think you've got to keep investing. And we are not making major cutbacks across the plant. I mean I'm sure Sharon will talk about expenses in a minute. We're obviously being prudent. But we don't see any reason for great draconian measures. We've built a business model. And in times like this is when -- if you can sustain it, you actually do very well coming out the other side. So I feel pretty good about our relative position, to be honest.

We'll take our next question from Christian Bolu with Autonomous.

Maybe, Sharon, on the deposits, I hear your comments on deposit mix shift but sweep deposits were down, I think, 18% Q-on-Q, which I think is the worst quarter decline by significant margin. So I'm a little surprised that you said deposit beta expectations -- deposit beta is in line with expectations. I guess my question is, how are you now thinking about your guide for 50% terminal deposit beta. Is that still realistic given the Fed is still hiking and obviously the pace here of sweep deposit decline?

Sure. So let me just take them and separate them a little. So the change that you saw in mix of deposits, you actually -- what we saw is we have -- I would label it as transactional cash and investable cash. The transactional cash is the sweep deposits that you're talking about. And as James said, with the expanded offering, which was also aided by E*TRADE, we have more diversified products than we've ever had before. And in fact, what we've seen is the savings account that we offer is those other deposits is where those -- that investable cash is going when it's new to the bank. So from the aggregate standpoint, Morgan Stanley actually has the vast majority of its deposits is coming from the Wealth Management system. This is important when we compare it to the last period that you're talking about because that actually wasn't the case. So we had sweep deposits. We had some savings in CDs, but a big chunk of that was actually wholesale that was coming from outside. So what James has said with us being able to attract these new assets, these are new assets that are sitting at Morgan Stanley that over time can be deployed as you think about either different investment opportunities or different transactional opportunities. As it relates to deposit beta, we are outperforming the deposit beta that we've modeled, which is where that NII is still coming from. So NII, as you know, Christian, is going to be made of three different things: the deposit beta, the actual deposit mix and then loan growth. And taken together, that's still propelling NII to where it was this quarter.

Okay. Maybe on just leverage lending and the bridge book. Can you speak to your balance sheet risk appetite? You guys seem to be on a number of sort of like home deals, Citrix, Twitter, et cetera. So first of all, how big is your bridge book or leverage loan book, however you want to characterize it? And then second, are you increasing your risk appetite here to capture opportunities? And then how are you thinking about managing that risk?

So broadly speaking, I'd say we've been extremely prudent in terms of risk management. I think that's most notable actually when you think about our RWAs and just our capital position. So we've been looking at different risk-based metrics really over time and bringing them down over the course of the year. So that's for the entire institution, just knowing that we've entered into what feels like a more volatile period. And as you think about those different relationship and event net of hedges, over the course of this quarter, they actually were quite modest marks, given the environment.

We'll go next to Glenn Schorr with Evercore.

So maybe a follow-up on the deposit conversation. I'm curious, you have these expanded offerings. You have the provided savings accounts. How do you monitor and how do you guide client behavior? And is the goal at all costs keep deposits in-house, even if the cost of those deposits is a lot higher than sitting in a brokerage account? I'm just curious on the how to.

The intention, of course, is to give the clients opportunities and choice, Glenn, as you know, which has been our position over the course of the last God knows how long. But the intention is to give them as many offerings as possible. And yes, as you said, if we can bring those assets in and give them an opportunity to have a savings account or we can issue CDs or as you've always talked about, we have other types of things such as alternatives. What it does is it brings those assets in-house. And then in a point where they want to be deployed into the marketplace, we can do that. As it relates to what we might necessarily give to different deposits, it would be, of course, again, related to the transactional versus investable cash.

Maybe staying in Wealth, the -- you've been very successful at growing your securities-based loan book. I think of those as extremely low risk to Morgan Stanley. But backed by securities and securities of all types have fallen a lot. So I'm curious if you can comment on how big is the book? Will it still grow? And how are you managing the whole margin call situation? Just get a mark-to-market on that, that would be great.

Sure. So we have seen a pay down specifically this quarter, so just in terms of the actual book. But in terms of the risk, which you highlight, we've always said it's really more of an operational risk than anything else. We have obviously seen margin calls, and they've all been handled very well over the course of the quarter. So we haven't seen any issues there. And in addition to that, I think when you look at the LTVs, what we noticed when we have those -- we obviously look at that data internally. And it is very much in line with the longer-dated historical average. And for this quarter, it was over the course of the quarter, on average, was in line with last quarter as well. So I think that book remains very well managed, means a great opportunity and option for our client base. And of course, it will just be dependent on the environment itself.

We'll go next to Brennan Hawken with UBS.

I'd like to drill in a little bit, Sharon, to the comments that you made around deposit betas and deposits and what's been changing in the mix for you all. That all makes a lot of sense. I think that there's clear benefits to having deposits much more oriented to the Wealth Management business and it helps to watch that mix between the sweep and other. But the idea that the NII guide is essentially unchanged and you had $250 million growth quarter-over-quarter, that suggests that basically NII is going to be flat into 4Q. So is that -- have we hit -- given the dynamics, given you have wealthier clients and you have more of their cash, and so you -- there's -- if you want to keep that funding which is, of course, more attractive than wholesale, then you're going to have to pay for it in those savings accounts. And so therefore, is it just -- and with loan growth slowing, is it just right to just assume that, okay, this is probably like the stable level of NII for at least the foreseeable future as we head into 2023? Or will we hit a point where you'll be able to continue to see some -- resume some growth and we've just entered this transition period. How should we think about it a little bit longer term?

Yes. I think -- I mean the truth is, I think we'll have to see, right? So you're right in your assumption that that's basically what it implies in terms of the quarter-over-quarter for NII. Obviously, we haven't given 2023 guidance yet. And the reason, I mean, aside from the fact that we generally give guidance in January. But aside from that, the guidance would obviously also take into place what is actually happening with the deposit mix. And I do think that this is -- obviously, is an accelerated rate hike cycle. The deposit behavior is still playing out, but the intention here is really to make sure that we have these deposits in-house, and they will continue to be deployed into the marketplace over time. So that's the balance that one is trying to achieve when you think about that deposit mix and what we're actually doing from a great bank and growth perspective. On the loan side, I think that, again, where you see the positivity is these are environmental factors, right? So when you think of household penetration from our FAs into different mortgage and lending products, those things continue to rise. So what you're focused on, which is completely fair, is really going to be dependent largely on the environment itself, how quickly you see rates move and then how you see deposit behavior play out over time.

Okay. That is all totally fair. Thanks for that color. Second question would be on the LevFin book. There's definitely some increased focus there. You referenced some marks through the Institutional business on the other line, which wasn't that surprising given the environment. But how are you thinking about managing those risks? There still is some inventory that The Street broadly is going to need to work through and investor appetite has been weak. And so how have you hedged that book? How should we be thinking about those risks going forward? And how are you continuing to manage it?

Clearly, prudent disciplined risk management. And I think that the markets that you've seen so far underscores and underlines that. I think that the other point that I would just mention, as we think about the outlook perspective, what you saw over the course of the third quarter was that the market and issuers and others are very opportunistic as it relates to wins, and it's a window specific driven market. And so when you do see positive windows, and we saw it in August, and we saw in early September, you do see movement. And so, one is watching that calendar as you think through that. And I think we're looking for those market receptivities and for those favorable windows.

I'd just add to it. I mean, there's obviously been a lot of talk about this here in a couple of names in particular, and we can't talk about individual names as much as I'm sure you'd all like us to. By the way, they're not hung deals until they're actually out there. But put that aside. About a year ago, a little over a year ago, we turned quite conservative, Brennan. We across the whole plant we pulled in a little bit. And we pulled in with our margin book, particularly our Asia margin book. We looked across our whole Prime Brokerage platform, and we pulled in a little bit with certain clients there. And we've been quite cautious in our leverage finance arena. And as somebody mentioned one transaction, Citrix, we're actually a small player in that. So we're not -- it's not like we've been large in this space, which might account for the fact -- in the other line, which is -- incorporates a bunch of things, including loan losses, number actually is very modest. I think it was like negative 100. And there are a few pluses in there and minuses. But the aggregate picture is not that -- frankly, it's just not that troubling. We'll remain cautious, as I said in my sort of opening comments, particularly in credit sensitive areas. We're a big institution. We serve a lot of clients. You don't get this perfect. But I feel actually pretty good about the way we've navigated this so far. So stay tuned to it.

We'll go next to Dan Fannon with Jefferies.

I wanted to follow up on the wealth side in terms of organic growth. The fee-based growth did slow a bit. And I think, Sharon, you mentioned some decision-making maybe being a little bit more challenged or slowdown in this type of backdrop. But maybe could you just talk more broadly about the channels that you're seeing growth in both the total flows as well as maybe what's -- where the rate of change might be either the biggest or slowest, whether that's through existing advisors, workplace in the various funnels that you have out there?

Sure. I think that's a really great question because I think it is pretty remarkable to see $65 billion of assets in a quarter such as this one, it is coming from different parts of the funnel. Specifically, though, the advice-based channel is the one aggregating the most at this point in time versus the self-directed itself, which isn't surprising. But what's so interesting about the advice-based channel is it's a, existing and new clients? Yes. But also, we're beginning to see more and more referrals and more and more anecdotes and stories where you actually see the assets that's coming through the advice-based channel is actually coming through different referrals that we might have seen from the actual workplace relationships. And so we've been on a lot of time when you look at workplace and finding a way to, a, provide better content and more content to various employers, specifically in this environment, which is very, very well received. The number two sort of point is that when you think about the FA, we've talked a lot about how to match various FAs within the workplace. The more and more referrals and the more and more data we have, who's able to monetize those referrals, the better and better it is. And so we're seeing that continue to pick up. And then from a workplace perspective, we also have integrated various relationship managers that we might have seen with the workplace into the actual FA teams. All of those things taken together is coming through from an NNA perspective, the advisor-based channel, but it's clearly a positivity if you sort of think of the rate of change where some of that might be coming from. So I think very proud of the results on the net new asset side.

Okay. And then just to follow up on expenses. You broadly obviously talked about being focused on efficiency. But is there anything specific you can point to that you're doing differently or thinking about as you start budgeting for next year or even as we go into the fourth quarter that from a rate of change that you're focused on?

Well, I'd say that we've been focused on expenses, well, all year -- I mean, we're always focused on expenses, but very much in the spring of this year, we've been taking -- and I spoke about it in the last two earnings call, a very hard look at all of the expenses and just continuing to manage them on an individual project level, understanding where all the costs are coming from and also understanding where the growth is -- we're balancing that, of course, with the need to continue to invest, not only on the business side but also continuing to make sure that the infrastructure and controls are there as you think about expanding the business. So it's really around foundational side where some of those expenses might also be coming through as you think about technology, migration, et cetera. So it's just -- it's tactical in nature as well as this holistic approach of just making sure that you're very cognizant. But it's certainly part of something that we're thinking through as we look at the budgeting perspective.

We also -- I mean, obviously, we're looking at headcount. I mean we're -- you've got to take into account the rate of growth we've had in the last few years, and we've learned some things through in COVID about how we can operate more efficiently. So that's something that the management team is working between now and the end of the year. And again, we want to provide growth opportunities across the platform, but we've also identified some efficiencies. So over time, that will become clearer.

We'll go next to Devin Ryan with JMP Securities.

I want to start on fixed income trading. Obviously, revenues have been quite healthy in the volatile rate environment. Customers moving around their portfolios, as you guys noted, been a long time since we've seen these levels of rates. So I'm curious how you guys are thinking about what a higher for longer environment looks like for fixed income trading once rates settle in. I'm assuming more movement in yield on an absolute basis could be helpful, but would it be great to get your views from any historical context or just broader expectations.

Absolutely. It's interesting. I think when we looked at the beginning of this year, and we said, okay, how do you think about the fixed income environment? What stood out isn't just the absolute level of rates but it's also the dispersion of what's going on in different economies. So if you think -- if you go back a decade and you had all rates at zero for every economy and all of a sudden, you've moved to a place where you have divergent views, obviously also driving foreign exchange, for example. So I think all of that taken together is one that we keep looking at. It's clear that should that continue. That's a place where one would expect higher volatility and, therefore, by definition, likely higher client engagement. And so as we go forward, that's clearly something that we're looking at. But that's how I would reflect where the fixed income market is right now versus where it's been, say, 10 years ago.

Yes. Okay. Just a quick follow-up here, also just on kind of corporate M&A opportunities. Obviously, evaluations across financials and fintech are down pretty dramatically over the last year. And so I'm curious whether you're seeing more maybe opportunities emerge, maybe things you were looking for, but just more sellers potentially coming to market given some of the challenging macro that we're seeing and also the big change in valuations over the last nine months to a year.

I mean you're going to see a little bit of a washout in some of the fintech space. I mean this is reality. You've seen companies trading at valuations with which God we could only dream of over here in our modest little house. But they're just not reality. And that washes out, you'll see consolidation. A lot of these businesses are scale-driven businesses. We have enormous technology requirements to support cyber and stop client fraud, and data control and management and so on. So consolidation is the key word. At these prices, I think the sellers are only there if they need to sell. They're probably holding out for something a little more balanced. And maybe if my projection is right that sort of end of next year, so in the fintech space. Generally, consolidation across financial services has been the catchword for a decade, and we've moved aggressively to be at the front of that. And I think that's just reflecting reality, scale matters.

We'll go next to Mike Mayo with Wells Fargo Securities.

First one, just a general question. Can you just give more details on your tech spending, how much you're spending, what that's growing, how much is to change the bank? I know I've asked you before about how much of your workload you look to move to the cloud, maybe how many apps you have? Just a little bit more meat on the bones. I appreciated the wealth expo that you held in June. I recognize the cost avoidance that you've achieved with the acquisition of E*TRADE. Now that your backbone is complete, your tech backbone, but these are kind of high-level tech comments that you've made. So any public comments that you can give to put more meat on the bones would be appreciated.

Why don't I take that, Mike? I think we don't publicly break out tech. And maybe we'll do more of that through next year. But I would say, just to give you some sense of sort of what the focus is, obviously, moving to the cloud was a big deal, and you saw the deals that we did in that. All of the innovation that's taking place in the financial advisor channel, the next best action, the virtual advisors, all of the technology, and I think you probably saw some of that. The work we've done around workplace. Solium is basically a tech company. E*TRADE is a tech company. Building a workplace platform that doesn't revolve around a financial intermediary, but all of it goes straight from stock plans straight into vested E*TRADE accounts. We're doing a bunch of work. We just did -- reviewed our electronic trading platform in Equities, some of they're doing equities, some fixed income. And some of the opportunities to leverage the derivatives trading within the E*TRADE platform with our electronic trading within our Equities Group. So -- and a lot of stuff we're doing around cyber, data protection, data management. AI is a huge effort. We have a group of people, our distinguished engineers, which we appoint each year, a group of very sophisticated technology software engineers and designers and we had new class just welcomed him actually last week, I think it was. So enormous amount of work going on. I mean to your base question, tech spend is going up. I think it's fair to say along with some of our controls and compliance areas, it's the fastest-growing part of this Firm. But that's good because it's displacing things we would be doing manually, which we shouldn't be doing manually. So I'm perfectly happy to see our tech spend go up. A lot of it is around new innovation, but we're also running a plant which is driving $60 billion in revenue. And there's just basic tech infrastructure that we keep modernizing that is the backbone of that plant. So hopefully, that gives you a bit of a sense.

All right. Maybe drive specifics in another area. You have $65 billion of inflows to wealth in a tough market noted. But I see the definition of inflows has changed over the last year to also include dividends, interest and asset acquisitions. That's from the note in the earnings supplement. So how much of the $65 billion inflows to wealth were related to dividends, interest and asset acquisitions?

I just would highlight, there are no asset acquisitions this quarter, and the dividends and interest was always included in that definition.

Yes, that's -- I mean, to my knowledge, that's not a change that has happened at least in the last two decades, so.

We'll go next to Jeremy Sigee with BNP Paribas.

You talked about E*TRADE and workplace and the multichannel business model, which I think is very powerful. I just wanted to ask because that all bedded down now? Is that fully operational humming along? Or are there any major integration steps or implementation steps still to be done?

So last time, integration, I talked about this actually in the call in January, there will be a back office conversion that we'll see in 2023. But that's the most major thing that we have left to be done. As well as over the course of the fourth quarter, we will expect something in terms of integration expense, specifically from an E*TRADE perspective, it will look similar to the third quarter.

And in terms of referral between the channels, that capability, that's fully happening already. That's in place. It's happening all the capability is there.

I'm sorry, I misunderstood the question that you were talking specifically about the integration expenses and how we were thinking about that is from a referral perspective, I would say there's still a lot more that will continue to be done. So we're just scratching the surface of that entire -- those relationships and bringing those funnels together. What I mentioned, for example, as you think about the referral programs, that's just beginning, right? So the better data that we have amongst who's the best FA to refer to the referral workplace relationship to -- that will just continue as you kind of better understand and aggregate data. Remember, we've invested a lot in the capabilities that you would consider AI in nature. It gives you a better sense of what does someone do with his or her next stock plan distribution, for example, do they buy a house, do they need a mortgage? Okay, what happens at this stage in someone's life cycle? So the more and more data that we aggregate across all of these channels, the more and more powerful the Wealth Management business becomes. So to James' point around the technology investment, that technology investment is core to be able to continue to grow the business with what we've called that we discussed this project genome before.

I'd just repeat something that Andy Saperstein said at one of the recent conferences that our plan is to generate $1 trillion of new money, new client money every three years. So it's $330 billion. Obviously, in a very difficult environment like this, it's -- that run rate is more challenging, but we've had quarters where we've been much higher than where we are now. So it's about, call it, $75 billion, a little more $80 billion a quarter. And in this quarter, we did $65 billion. That is an unbelievable number. If you think about $1 trillion, we generate over 50 basis points -- 50 basis points per dollar of assets. So that is an unbelievable revenue machine. And there are many, many factors contributing to it. It is a completely different business model because of workplace because of the direct channels, because of what we've done with the bank and the way we've changed the whole financial advisory interaction with their clients through technology. So very exciting this path that we're on, and it's heading towards what I've said, my long-term goal here is $10 trillion in clients' money at 50 basis points is a $50 billion business. And that's the target we're heading for, and that's where we're going to go.

We'll go next to Gerard Cassidy with RBC Capital Markets.

James, you mentioned that obviously, it's no real surprise the market conditions, as you described, some of the issues we've confronted this year. And obviously, capital raising is going to come back at some point. Can you guys give us a little further color on your pipelines of what you're seeing possibly for the fourth quarter as we go into the first of next year in the Investment Banking and trading areas?

The pipelines are solid. The activity, I think what's interesting is continues to be across a diversified base of different companies. So it's not just about one sector in particular. But as James and I highlighted, I think it's really around that macroeconomic factors, and that's geopolitics, et cetera. But what it really ends up doing is creates uncertainty in the cost of capital and in valuation, which therefore also impacts price discovery. And so that's kind of the -- what's the clincher in terms of this realization of what remains a solid pipeline.

Do you think your clients are more realistic about that price discovery today, Sharon, versus maybe six months ago?

I think that people are digesting the various prices and I do think that you're beginning to see that on, say, an issuance perspective, right? So if you think about the cost of capital, that also took people time to -- or rather companies time to digest and understand that we are in a different regime where treasuries are. And so it means that their cost of capital is also higher. And you might not have necessarily seen issuance right away because those corporate balance sheets were there. And now you might see an opportunistic or more prudent behavior from a treasurer or CFO. And so I think that as that mindset begins to shift, then yes, over time, the valuation mindset begins to shift as well.

I mean just to -- I'm on the road a lot, and I see a lot of CEOs. I mean I think the CEOs of sort of established or on the path to established companies are getting very realistic. And they want to get on with business. I mean you can't sit on your hands forever. You've got to figure out always a better way to do business. And the environment, it's wonderful if you have zero interest rates, but that's unsustainable. So we've moved to a normalized and obviously, we're going to go a little higher than that to beat inflation back, but people are adjusting to that. I think the ones that are struggling still, companies that -- private companies that were valued at, let's just say, spotty levels and they're doing new rounds and they're finding they're just not paid at the same. And that's hard to accept as an entrepreneur, it's their baby and they want to believe that it's what it was at the peak. And maybe it was revalued at the peak. That's just what profiting markets do. And again, some of these public companies that have traded down from their offering price because we're in a different environment and money has got more expensive. So those groups will take longer to adjust. But this is sort of real politic around core businesses that have been around for a while, they adjust pretty quickly. I mean, we all get it. We've all been through different cycles. You get a little lucky in certain cycles where things are really cheap. And then you got to move a little harder and a little faster when things aren't. And we've done deals in both kinds of cycles.

There are no further questions at this time. Ladies and gentlemen, this concludes today's conference call. Thank you, everyone, for participating. You may now disconnect.