NEW YORK ( TheStreet) - Is it possible that Goldman Sachs ( GS) is once again facing competition on Wall Street? Morgan Stanley ( MS), the underdog of the two remaining Wall Street securities firms, appears to be digging in its heels for a fight. Morgan Stanley is moving forward with its business realignment, with James Gorman at the helm as its new chief executive. It turned a corner of sorts in the third quarter, reporting a profit of $498 million, after losing more than $13 billion in the three preceding periods. The current average analysts' view is for the firm to report another profit of 36 cents per share tomorrow. Morgan Stanley's nascent turnaround is not significant just for itself, but also in what it means for Goldman Sachs. The two firms have seen many competitors fall to the wayside, or get snatched up by bigger money-center banks. As everyone knows, Bear Stearns, Merrill Lynch and Lehman Brothers are no longer standalone competitors. Their operations are now part of JPMorgan Chase ( JPM), Barclays ( BCS) or Bank of America ( BCS), or they're kaput. Morgan Stanley and Goldman survived the crisis of course, but as Goldman reported blockbuster earnings in 2009, Morgan Stanley hasn't had such a sunny stretch. The firm has been realigning its business strategy, while writing down mortgage exposure and less-profitable credit-market bets. Goldman out-earned its competitor by an average of roughly $4.45 billion per quarter over the past year as a result. A big portion of that gravy came from fixed income trading, which recently lost its status as a major earnings generator as credit spreads have thinned out and activity has moderated.