Morgan Stanley’s Roach Retiring to Focus on Scholarly Work

Morgan Stanley's Stephen Roach
Stephen Roach, non-executive chairman of Morgan Stanley Asia Ltd. Photographer: Kevin Lee/Bloomberg

Stephen Roach, Morgan Stanley’s former chairman for Asia and chief economist, is retiring from the firm to focus on scholarly pursuits.

Chief Executive Officer James Gorman announced the departure of Roach, the non-executive chairman for Asia since 2010, in a memo to employees today. Roach has taught at Yale University and plans to go into academia full-time, according to the memo.

The 66-year-old economist, who joined New York-based Morgan Stanley in 1982, has predicted China will overtake the U.S. as the dominant economy by 2025. Roach said in a Bloomberg Television interview last week that the U.S. must stop blaming China for its problems and focus on creating economic growth through exports.

“Steve will no doubt continue to animate the scholarly discourse, particularly as it relates to the economies of Asia,” Gorman wrote in the memo. “During his career, he has been recognized as one of Wall Street’s most influential thought leaders.”

Roach plans to write a book on the tensions in the U.S.- China economic relationship, he said today in an interview on Bloomberg Radio's “The Hays Advantage” with Kathleen Hays. The Morgan Stanley economics group he helped build will continue to address the major themes shaping the global outlook, Roach said.

Shelf Life

“It’s easy to stay with the trend and make these very short-term trading calls, but I’d like to say that the legacy I’ve left is a team that really looks out into the medium- to longer-term to make calls that have long shelf lives and really can drive broad macro trends in the world and the markets,” he said today.

In 2007, Roach said the U.S. economy would stagnate because of an impending housing slump that would erode consumer spending. He said last month that the U.S. needs to have more active debates about the exit strategy for the monetary and fiscal stimulus provided during the credit crisis, and said leaders need to learn humility from the experience.

“As I look to the United States, I think to this day, there’s a glaring absence of truly being able to fathom the mistakes that were made either on Wall Street, Washington, or Main Street, heading into the great crisis of 2008 and 2009,” Roach said in a Bloomberg Radio interview last month. “So humility is not something that we’ve been able to fully grasp at this point, I’m sorry to say.”

Europe will likely remain in a recession for the bulk of this year, Roach said last month. He said he doesn’t think the Euro will break apart, even as Greece “probably should” exit the group.

Before joining Morgan Stanley, Roach worked at Morgan Guaranty Trust Company and on the research staff of the Federal Reserve Board in Washington. Roach has a Ph.D. in economics from New York University.

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