James Gorman & co. can be forgiven for thinking it’s a little bit too good to be true: It’s best fixed-income quarter in years, beating the big boys at Goldman Sachs for only the second time in a decade, four straight billion-dollar quarters. After all, it has been in the past, and may be in the future.
A decade of failed reboots and trading blowups has left Morgan Stanley’s fixed-income desk well behind rivals like Goldman and J.P. Morgan Chase & Co. Other turnarounds have shown promise only to crumble….
As the second quarter winds down, Mr. Pick and Morgan Stanley are looking to extend their luck in a tougher environment. Trading revenue across Wall Street is expected to weaken from a year ago, when the U.K. Brexit vote spurred client activity.
What to do? Lower expectations.
Mr. Pick has been telling associates in recent weeks that the division is operating with “omentum”— that is, momentum with an “m” so small it is invisible.
“We are modest in our aspirations, but we have proven this dog can hunt,” Chief Executive James Gorman said at a conference Wednesday….
The firm did get some outside help too, specifically “when the markets started to kick up a little bit” and some European rivals pulled back from debt trading, Mr. Gorman said. “I’m not going to get excited until it really happens over a couple-of-year period.”