NEW YORK ( TheStreet) -- Might Morgan Stanley ( MS) pull a rabbit out of a hat and post strong second-quarter fixed income trading results?

Morgan Stanley
Morgan Stanley CEO James Gorman

Few who keep an eye on the bank are looking for a strong number in this critical area, given that Citigroup ( C), JPMorgan Chase ( JPM) and Bank of America ( BAC) all posted big declines in both equity and fixed income trading revenues versus the first quarter. Goldman Sachs ( GS) followed suit on Tuesday, reporting a 40% drop in fixed income trading revenues versus the first quarter.

Not to mention that Morgan Stanley watchers are devoting an increasing amount of attention to the firm's wealth management business, which includes its Morgan Stanley Smith Barney brokerage division.

However, Bernstein Research analyst Brad Hintz notes that Morgan Stanley has been uncannily silent about its view of the quarter's credit trading results.

"You're not getting the messages from Morgan Stanley that the quarter was dreadful," Hintz says. "Part of that might be that when you've a history of disappointing in fixed income maybe there's no reason to have that commentary coming out of the firm."

After a poor performance in early 2009, Morgan Stanley overhauled its fixed income unit, bringing in Jack DiMaio, whose guaranteed three-year $15 million a year contract, signed with Credit Suisse in 2001 when DiMaio was just 34 years old, is the stuff of Wall Street legend.

DiMaio's team delivered big in the first quarter when $2.7 billion in fixed income revenues reflected a 124% increase over the first quarter of 2009, according to Sandler O'Neill research.

But fixed income results were stronger all over the Street in the first quarter. One former Morgan Stanley fixed income managing director, now at a different company, says he heard Morgan Stanley was one of several banks that saw poor performance in their interest rate products trading businesses in May. However, he could provide no further color other than to say "all the people that I know are still employed."

Analysts are looking for Morgan Stanley to earn 46 cents per share on revenue of $7.92 billion in the June period. In the year-ago equivalent quarter, the firm reported a wider than expected loss of $1.10 a share on revenue of $5.41 billion, but it blew past Wall Street expectations in the first quarter with earnings of $1.03 a share on revenue of $9.1 billion.

Sandler O'Neill analyst Jeff Harte expects the company's institutional securities business, which includes fixed income trading, to account for $4.6 billion of the $8.1 billion in revenues he has projected for Morgan Stanley. Harte predicts most of the remainder--some $3.1 billion--will come from the global wealth management unit.

Morgan Stanley shares were up 1.4% to $25.12 in late trades. Year-to-date, the stock is down about 16%, but it has gained back some ground since sinking to a 52-week low of $22.40 on July 1.

-- Written by Dan Freed in New York.
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