Bankerspeak of the day, James Gorman edition
WSJ: Why has fixed income been so tough to turn around?
Mr. Gorman: We have never had the kind of foreign-exchange business that the global [commercial] banks have had. And we’ve focused less on building pure flow, client-driven businesses where you need more people. We’ve reasserted our identity around those client businesses. What we’re doing strategically is going back to the future. It’s a sweet spot where we’re very comfortable.
This is almost the platonic ideal of the form. Gorman starts off by changing the subject — it’s far from clear why having a large FX business would make it easier to turn a fixed-income desk around — but then rapidly veers off into the kind of consultant-speak best measured in femtograms. (Gorman used to work for McKinsey.) The really hilarious thing, of course, if you take any of this stuff seriously at all, is the way that Morgan Stanley seems to be trying to reasserting its identity around the businesses where it hasn’t been focusing. But hey, so long as they’re comfortable in their back-to-the-future sweet spot.
The real answer to the question, of course, is “fixed income desks thrive by taking risk, we made a deliberate decision to derisk aggressively at the height of the financial crisis, and if you start seeing lots of profits from the fixed-income desk in future, you can probably assume we’ve learned nothing”. But that would require an honest CEO who speaks English. In reality, nobody with either trait would ever be considered for the job.