It’s going to take the financial institutions a couple of years to get back to a normal cycle, Morgan Stanley CEO James Gorman told the “Fast Money” team Wednesday.
“We need to get through the political cycle here, in China, in Europe over the next 12 months. We need to get through the fiscal instability that is in Europe,” Gorman said. “We need to get through the bank reform both of the banks’ own balance sheets and of the regulation of those institutions … I think it will be 12 to 24 months before we have real clarity.”
The Fast traders were troubled that Gorman thinks it will take that long to get back to “normal.”
While Stephen Weiss thinks Gorman is one of the best CEOs in the financial community, he doesn’t like the uncertainty of what he said.
“I don’t even think if he were pushed he would tell you what the model is going to be … going forward the next year or two,” he said, “and that’s what makes it difficult for me to step into it.”
Brian Kelly agrees. “Morgan Stanley can just do fine as a company, but as an investment it’s a completely different story. I am still staying away.”
Zach Karabell thought it would be better if Gorman acknowledged that there may be a new normal in the future, instead of looking to go back do the old normal.
“It makes me anxious when someone even points to some sort of future reversion to a past model that no longer exists,” he said.
Despite the lack of clarity for the next 12 to 24 months, Morgan Stanley reported earnings for the quarter of $1.14 per share that topped analysts’ expectations Wednesday morning. But much of the beat was due to debt value adjustment.
Gorman, however, was still encouraged by the numbers.