James Gorman

Morgan Stanley (NYSE:MS) CEO James Gorman spoke with FOX Business Network’s (FBN) Maria Bartiromo about Morgan Stanley’s fixed-income business. Gorman said, “we’ve been criticized a lot about our fixed-income business the last couple of years” and that “I’m much less worried about fixed income than maybe most folks are.” Gorman also spoke about Bitcoin, saying, “I’m not sure I understand it.  I mean, it is totally surreal.” Gorman went on to say, “I would think and hope that the regulators are paying a lot of attention to it.” When asked about the United States markets Gorman said, “I remain very bullish.  I think the positive risk, if you will, or the upside risk, is the U.S. economy.  It’s taken a while for people to get comfortable with that.”

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Excerpts from the interview are below.

On Morgan Stanley’s fixed-income business:

“I mean, we’ve been criticized a lot about our fixed-income business the last couple of years.  And as I tell folks, the bad news is it’s only 12 percent of Morgan Stanley (NYSE:MS).  The good news is it’s only 12 percent of Morgan Stanley.  That fixed-income franchise actually has significant upside from where it’s been in the last couple of years as we’ve retooled it.  So I’m much less worried about fixed income than maybe most folks are.”

On Bitcoin:

“I’m not sure I understand it.  I mean, it is totally surreal.  I mean, who’s the founder, this guy in L.A.  What’s going on with Mt. Gox?  I mean, there are so many moving parts.  Let’s just say I would think and hope that the regulators are paying a lot of attention to it.”

On the United States markets:

“If you look at the macro environment, I remain very bullish.  I think the positive risk if you will, or the upside risk, is the U.S. economy.  It’s taken a while for people to get comfortable with that, the scar tissue from the crisis.  Clearly, the jobs reports over the last couple of years haven’t been what everybody had hoped they’d be.  The extension of tapering – the extension of QE until the more recent period.  I think that we’re now recognizing the U.S. economy is strong and getting stronger.  And that’s obviously very positive for the markets.  The markets aren’t stupid.”

On whether the fixed-income business has been a weak performer compared to the rest of the business:

“Obviously we will report at the end of this quarter.  The fixed-income markets have pretty widely reported were down in January and February across the street. But again you have to look at institution by institution. We’ve been typically bigger in securitized credit, in the general credit businesses, and now with commodities markets returning, than we were in, for example, in rates and foreign exchange. So depending on your business mix, the current environment affects it differently.”

On investing in Japan:

“Well, firstly, we have a phenomenal partnership with Muneo Kurauchi , Mitsubishi UFJ Bank, that owns 22 percent of Morgan Stanley (NYSE:MS).  And we’ve combined our security business in Japan with them.  That’s been tremendously successful.  So Japan, the third largest economy in the world, we don’t talk about it much, very important to Morgan Stanley (NYSE:MS).  China is obviously incredibly important.  We own part of the securities firm called Huaxin Securities, and we have on the ground businesses across a whole range of our products. China is critical but also Singapore, covering Southeast Asia and then of course Greater China through Hong Kong and our Australian business, my old country.”