Morgan Stanley -- Cannot Find Key to Vault

Morgan Stanley (MS) came out with some better earnings and some rather strange statements in their press release. Look at the headline where they say “Continued Improvement in Morgan Stanley’s Debt-Related Credit Spreads Reduced Earnings per Diluted Share by $0.36” What improves and then reduces earnings?

Then John J. Mack, Chairman and CEO, said “Although we still have work to do in sales and trading, it offers our single biggest opportunity for growth as we build out our client flow business and pursue disciplined risk-taking.” This implies that disciplined risk-taking is a new concept in this house. Given that they feel they are struggling in this category it sounds like they have not developed a model or formula that they are comfortable with. The discipline they are looking for is profitability. They still have not figured out where the key to the vault is.