WHEN: Today, Thursday, January 19th
WHERE: CNBC's "Squawk Box"
Following are excerpts from the unofficial transcript of a CNBC interview with Morgan Stanley Chairman and CEO James Gorman on CNBC's "Squawk Box" this morning live from the World Economic Forum in Davos, Switzerland. For a roundup of all the interviews on CNBC's "Squawk Box" today, go to davos.cnbc.com. Following are links to the video on CNBC.com: http://video.cnbc.com/gallery/?video=3000585642, http://video.cnbc.com/gallery/?video=3000585643, http://video.cnbc.com/gallery/?video=3000585647
All references must be sourced to CNBC.
James Gorman, Morgan Stanley Chairman & CEO:
GORMAN ON SALES AND TRADING
IF YOU LOOK AT WHAT'S GOING ON IN THE MARKETS, A LOT OF ACTIVITY. THERE'S MOVEMENT IN CURRENCIES, IN RATES, IN OIL, AND IN EQUITIES. IT'S A RARE TIME WHEN THERE'S A LOT IN MOTION. I THINK IT'S A MARKET THAT HONESTLY SCREAMS FOR YOU TO HAVE A VIEW, AND WITH THAT COMES ACTIVITY.
GORMAN ON RATE INCREASE
IF WE DO GET THE RATE INCREASES THAT CHAIR YELLEN AND OTHERS HAVE BEEN ALLUDING TO AS RECENTLY AS YESTERDAY, THERE'S NO QUESTION IT HELPS OUR BUSINESS. WE HAVE $150 BILLION IN DEPOSITS. SO IT CLEARLY HELPS IN THE NET INTEREST INCOME. WE'LL COME BACK TO THE MARKET WITH THAT.
GORMAN ON TRUMP
I DON'T KNOW THAT I CREDIT AN INDIVIDUAL. IT'S MORE A CREDIT TO A SENSE OF SOME REAL POSITIVE CHANGE THAT IS LIKELY TO OCCUR ON THE ECONOMIC FRONT. NOW, A QUERY WHETHER THAT CHANGE WOULD HAVE OCCURRED WHICHEVER ADMINISTRATION IT COME THROUGH. BUT FRANKLY, CORPORATE TAXES, TAX REMEDIATION, INFRASTRUCTURE SPEND – THESE ARE PRETTY BIG MOVERS IF THEY ACTUALLY HAPPEN. AND PARTICULARLY FOR COMPANIES LIKE OURS THAT HAVE LARGE U.S. OPERATIONS.
GORMAN ON CONSUMERS
THE U.S. ECONOMY IS THE GLOBAL ECONOMIC DRIVER. AND WITHIN THE U.S. ECONOMY, THE U.S. CONSUMER IS THE GLOBAL DRIVER. SO IF THE CONSUMER IS FEELING BETTER, THE WEALTH EFFECT OF THE MARKET INCREASES, BETTER EMPLOYMENT PROSPECTS, BETTER WAGE PROSPECTS. IT'S GOING TO DRIVE ACTIVITY.
GORMAN ON CHINA
WE'VE BEEN TRYING TO GET A DOMESTIC LICENSE AND BE A DOMESTIC PLAYER IN CHINA FOR A BUNCH OF YEARS. THE REGULATORS ARE OPENING UP OWNERSHIP LEVELS, SO I THINK SENSIBLY, WE'RE INCREASING OUR STAKE TO 49% AND OBVIOUSLY WE'D LIKE TO GET TO A MAJORITY. IT'S AN ENTITY CALLED HUAXIN SECURITIES. AGAIN, THE SIZE OF THE ECONOMY, HOW COULD YOU NOT BE ON THE GROUND IF THE REGULATORS AND THE GOVERNMENT WILL LET YOU BE ON THE GROUND? HOW COULD YOU NOT HAVE A VIEW THAT YOU NEED TO BE IN CHINA WHEN THE THIRD LARGEST ECONOMY IN THE WORLD, JAPAN, IS A 4 TRILLION ECONOMY.
GORMAN ON BREXIT
I THINK BREXIT IS DISAPPOINTING FROM AN ECONOMIC PERSPECTIVE. OBVIOUSLY, I RESPECT THE WILL OF THE BRITISH PEOPLE. WE'RE SEEING THAT SORT OF MORE ISOLATIONIST, PROTECTIONIST, POPULIST VOTE, WHICH HAS APPEARED IN VARIOUS AND MANIFESTED ITSELF VARIOUS TIMES. WE'RE GOING TO WORK WITH THE BRITISH GOVERNMENT TO – WHAT IS CRITICAL FOR INSTITUTIONS LIKE OURS THAT HAVE LARGE, VERY COMPLEX BUSINESSES, TO HAVE AS MUCH TRANSITION FOREWARNING. WE CAN'T JUST MOVE PEOPLE OVERNIGHT. WE CAN'T CREATE LEGAL ENTITIES OVERNIGHT. THAT'S WHAT WE'LL BE WORKING WITH THE GOVERNMENT FOR, A SENSIBLE TRANSITION AS WE CAN MANAGE THROUGH THIS. BUT THE WILL OF THE PEOPLE HAVE SPOKEN.
GORMAN ON DODD-FRANK
I'M NOT A FAN OF GETTING RID OF DODD-FRANK. THERE ARE ELEMENTS OF DODD-FRANK THAT CLEARLY NEED TO BE CURTAILED. PARTS OF THE VOLCKER RULE ARE UNAMBIGUOUSLY AFFECTING MARKET LIQUIDITY. AND THE FEDERAL RESERVE'S OWN WORK HAS DEMONSTRATED THAT. BUT THE STRUCTURE AT THE FRONT END, MAKING SURE BANKS HAVE ENOUGH CAPITAL. AT THE BACK END, FOR THOSE WHO GET INTO TROUBLE, MAKING SURE THERE'S A RESOLUTION PROCESS SO THEY DON'T CAUSE SYSTEMIC RISK. AND IN THE MIDDLE, HAVING AN ANNUAL HEALTH CHECK IN TERMS OF SICA IS A GREAT STRUCTURE. THE CHALLENGE IS LET'S STOP MOVING THE BALL. LET'S ABSORB THE REGULATION WE'VE GOT. LET'S ACCEPT THE CAPITAL LEVELS WE HAVE ARE NOW SUFFICIENT. LET'S TAKE AWAY THINGS CAUSING LIQUIDITY TO DRY UP IN THE MARKETS.
GORMAN ON A 4 PERCENT INCREASE
I THINK THAT'S UNLIKELY. I MEAN, 4% WOULD BE A MASSIVE MOVE. THIS ECONOMY IS A $17, $18 TRILLION ECONOMY. CHINA, WHICH IS THE SECOND LARGEST ECONOMY IN THE WORLD, IS A $10 TRILLION ECONOMY AND IT'S PROBABLY GROWING AT 6%. OBVIOUSLY THAT PERCENT INCREASE IS SHRINKING. SO 4% IS UNLIKELY. BUT IF WE'RE AT A SOLID 3% GROWTH, I THINK THAT'S A REALLY GOOD OUTLOOK FOR THE U.S.
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