4. Gorman's Rallying Cry
Remain calm Morgan Stanley (MS) employees. All is well. And if you have any concerns about the future of your bank, then follow CEO James Gorman's orders and read the research notes of your competitors.
Yeah, we thought it was pretty ridiculous too, but that's the way Wall Street works sometimes. Bank analysts are not allowed to cover their own companies, so with his stock down almost 50% in the past three months and shortsellers on the attack, Gorman sent a memo Monday to his troops telling them to stop packing their personal belongings and pick up reports from Credit Suisse (CS) and Wells Fargo (WFC) about the state of their company."It is easy to try to respond to the rumor of the day, but that is not usually productive. Instead we should let balanced third parties do their own analysis and let the facts speak," wrote Gorman. Oh man, you know you are in bad shape when you have to count on Wall Street research to persuade your own employees that your ship is not sinking. And if anybody knows that those reports are pure poppycock, it's surely the employees of an investment bank that paid $125 million in 2003 to Eliot Spitzer's global settlement fund because Morgan's star analyst Mary Meeker was pumping up worthless Internet stocks. And let's face it folks, the research has not gotten much better since then. Did you see all those fawning buy ratings on LinkedIn (LNKD) back in June? Oy! Look, we understand Gorman is in a tough spot trying to stabilize the company when credit-default spreads are flaring up, mostly because of worries about the bank's European debt exposure. And it's clear to us, if not the market, that Gorman is trying to be as forthright as he can during the company's quiet period ahead of its earnings report later this month. We must also admit that he's trying a much classier method to save the firm as opposed to telling Tim Geithner to "get f---ed," which is what his predecessor John Mack did the last time the bank was on the ropes in 2008. But if this is all the ammo Gorman has left, then we surely understand why his troops are worried.
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