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Speaker 1: Shanalie Bassak joins us now with Morgan Stanley, CEO, James

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Speaker 1: Gorman and incoming CEO Ted Peg.

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Speaker 2: Shanale over to you. Indeed, welcome to.

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Speaker 3: Our Bloomberg television and radio audiences. I'm standing by now

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Speaker 3: with Morgan Stanley CEO and Chairman, James Gorman and incoming

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Speaker 3: CEO Ted Pick. Big moment for Morgan Stanley, fourteen years

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Speaker 3: at the home.

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Speaker 2: How does it feel to be passing on the baton?

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Speaker 2: Feels great?

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Speaker 1: You know for several reasons. One, it's time organizations grow

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Speaker 1: because you have changed. I mean, you're not going to

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Speaker 1: grow by doing the same thing again and again. And

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Speaker 1: I feel like we set this up several years ago

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Speaker 1: with the board. We've had a very very intentional process

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Speaker 1: and we ended up with a phenomenal outcome, which is Ted.

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Speaker 1: And we've got other unbelievably good executives who are taking

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Speaker 1: leadership roles as co presidents Andy Sepson and Dan Sinkretz.

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Speaker 1: So so sort of what you hope for. I mean,

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Speaker 1: you try and drive strategy, you try and put together

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Speaker 1: a team, You try and deal with the inevitable knocks

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Speaker 1: that you get from the market and the disappointments that

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Speaker 1: come in times in any complex business, but at the

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Speaker 1: end of the day, you're also trying to hand it

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Speaker 1: off for the next generation. So it feels great and

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Speaker 1: it feels right.

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Speaker 3: You've been rumored to be a CEO contender for oh

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Speaker 3: so long, Ted, how does it finally feel to step

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Speaker 3: into the role next year?

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Speaker 4: Sinali Morgan Stanley was the first place that I worked

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Speaker 4: out of college, and thirty three years later, I'm sitting

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Speaker 4: next to mister James Gorman. It's the thrill of a lifetime.

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Speaker 3: I'm so excited now you've really inherited a gift here,

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Speaker 3: a massive transformation over fourteen years, one of the best

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Speaker 3: valuations here in global banking.

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Speaker 2: But there are investors who are worried this is as

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Speaker 2: good as guests. What do you tell them?

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Speaker 4: There's more to come. There's more to come. We look

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Speaker 4: at the five year chart, the ten year chart, the

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Speaker 4: fifteen year chart. The wealth and ASCID management businesses have

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Speaker 4: these remarkable, durable earnings. The Global Investment Bank has lots

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Speaker 4: of miles to go. So we're thrilled about the business

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Speaker 4: strategy we have in place, and it's going to continue

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Speaker 4: to deliver a long term value for SHEERYLD.

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Speaker 3: Now for both of you, we've been in such a

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Speaker 3: prolongedble market that has hit such volatile times as of late.

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Speaker 3: Do you expect the next couple of years from Morgan

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Speaker 3: Stanley to be a little more choppy?

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Speaker 1: You know, I don't know's I thought this year would

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Speaker 1: be tough than it was. A lot of what's going

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Speaker 1: in the market conspires against our particular business make some

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Speaker 1: of the more commercial retail banks mortgage banks very different

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Speaker 1: business model. But our turn will come. I think, you know,

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Speaker 1: I personally think the US has dodged a recession. I

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Speaker 1: think the FED is very close to being final within

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Speaker 1: probably twenty five bases points. We're starting to see activity.

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Speaker 1: Look at the Chevron deal we just announced the other day.

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Speaker 1: I'm in phenomenal, So we're seeing activity in different sectors.

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Speaker 1: It's coming alive now. So no, I think the next

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Speaker 1: couple of years will be great. But what I care

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Speaker 1: about is over the really long run. When we set

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Speaker 1: about on this journey, we weren't focused on a quarter,

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Speaker 1: and if the stock takes a dip in a quarter,

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Speaker 1: I say that's kind of good news because we're buying

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Speaker 1: back stock and every share you buy back. You're retiring

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Speaker 1: a dividend, so shareholders who hang tough at getting a

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Speaker 1: four and a half percent yield and we buying back

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Speaker 1: stock and the stock's cheap, so it's kind of a

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Speaker 1: good situation being But medium term, no, I think the

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Speaker 1: film is going to.

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Speaker 3: Do great, Ted, What are the biggest challenges for you

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Speaker 3: as you navigate this environment?

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Speaker 4: There's just so much opportunity. We're definitely a new paradigm.

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Speaker 4: Interest rates are going to be higher for longer, and

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Speaker 4: the world's gotten smaller, which means the clients need advice

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Speaker 4: they need in the wealth and asked and management space

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Speaker 4: they need in the institutional space, our corporate clients, and

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Speaker 4: we're going to have lots of activity around those clients.

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Speaker 4: So I just want to make sure that we are

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Speaker 4: completely aligned in the business strategy we have in place.

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Speaker 4: It's something that James is painstakingly put together for fourteen years.

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Speaker 4: The market knows we want to do, so I'm incredibly

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Speaker 4: OPTI mystic over the next.

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Speaker 2: Couple of years.

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Speaker 3: Now, A lot of lessons have been learned in this

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Speaker 3: building over the last several decades.

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Speaker 2: Really what to do, what not to do?

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Speaker 3: What is the Morgan Stanley playbook of what not to

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Speaker 3: do in twenty twenty four as you navigate this new environment.

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Speaker 4: Well, I think it's to continue to do what we've

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Speaker 4: been doing, which is to treat each other with respect.

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Speaker 4: This process that James and the board ran was intentional,

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Speaker 4: it was respectful. I couldn't be more thrilled to be

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Speaker 4: working with Andy Sapperstin and Dan Simkowitz, two of my

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Speaker 4: closest friends. They are extraordinary leaders. They're going to drive

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Speaker 4: these businesses. The fact that we've worked so collegially, this

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Speaker 4: is the kind of Morgan Stanley that we've known and loved,

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Speaker 4: the blue Morgan Stanley of respect and focusing on clients.

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Speaker 4: And during this painstaking process, there's been no loss of

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Speaker 4: focus when focused on our shareholders, on our clients. And

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Speaker 4: the fact that today we had a celebration with our

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Speaker 4: partners and it was really quite a wonderful experience shows

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Speaker 4: that we are on the ball and sticking with the future.

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Speaker 3: I'm glad you mentioned Andy and Dan because questions here around.

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Speaker 3: You know, there were two CEO candidates. Now they're going

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Speaker 3: to be the co presidents. How do you keep them around?

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Speaker 3: Are you holding them to any.

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Speaker 2: Lock up periods? No?

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Speaker 1: They've got phenomenal job opportunities, and he's co president. He's

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Speaker 1: now running not just wealth management which included E Trade,

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Speaker 1: but asset management, which includes Edon Vans. So he's overseen

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Speaker 1: the biggest wealth and asset manager in the world at

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Speaker 1: what I believe is the most prestigious and best investment

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Speaker 1: bank in the world. Dan came out of Capital markets

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Speaker 1: and is now going back there after a great running

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Speaker 1: asset management, and he's going to be running all of

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Speaker 1: global trading, banking, capital markets, his old home, turf Research,

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Speaker 1: and most importantly, the two of them are going to

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Speaker 1: work with Ted and helping the manage a firms. So

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Speaker 1: now these are phenomenal opportunities. They are high quality people.

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Speaker 1: These are some of the best jobs on the planet,

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Speaker 1: and you know, we're delighted to have them.

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Speaker 2: Now.

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Speaker 3: I'm glad you brought up the institutional securities business that

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Speaker 3: is your old home as you moved to the new spot.

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Speaker 3: But you know what's interesting, You've long been the number

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Speaker 3: one in equities trading. Lately Goldman has to pass Morgan

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Speaker 3: Stanley in.

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Speaker 2: A couple of quarters.

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Speaker 3: While JP, Morgan and Goldman have been fearing better in

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Speaker 3: various forms of M and A and underwriting.

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Speaker 2: Do you have a plan to be number one again?

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Speaker 4: Listen, we have some great competitors, as you know, in

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Speaker 4: the global investment bank, inequities and fixed income, and then

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Speaker 4: across investment banking. We're focused on being number one. We

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Speaker 4: want to have the right people in place. We've been

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Speaker 4: investing for the next cycle. That next cycle is going

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Speaker 4: to be investment banking led, and it means that inequities,

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Speaker 4: you want to be one or two every quarter as

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Speaker 4: we have in for the last decade. We have fixed

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Speaker 4: income business, we were structured, it's now top five business

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Speaker 4: and investment banking is going to lead the next cycle.

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Speaker 4: There's going to be a lot of M and A consolidation.

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Speaker 4: It's going to be across industry groups. The world's gotten smaller,

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Speaker 4: there's a new cost of capital. We want to be

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Speaker 4: a leader, a global leader in.

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Speaker 2: All those spaces.

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Speaker 3: Now, James has hinted before to the possibility of more

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Speaker 3: murders and acquisitions for Morgan Stanley moving forward.

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Speaker 2: You've already done some very transformative ones. You know. Do

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Speaker 2: you feel sad that it's a matter of time the

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Speaker 2: CEOC before you can do a significant deal or do

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Speaker 2: you feel like you can jump right in.

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Speaker 4: Well, I think we now have done three major acquisitions

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Speaker 4: over the last fifteen years, all of which were in

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Speaker 4: James's vision, Smith Barney shortly after the financial crisis, e

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Speaker 4: Trade at the dawn of the pandemic, and the Advance.

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Speaker 4: Those are three major integrations. We like what we have,

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Speaker 4: the business strategies in place. Let's execute on what we have.

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Speaker 4: Keep the strategy in place. We always talk about acquisition candidates,

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Speaker 4: but that's often to the future.

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Speaker 2: Now.

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Speaker 3: The other thing, James has said that there were a

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Speaker 3: few things you'd rather get out of the way before

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Speaker 3: stepping down, including the US investigation into Morgan Stanley's role

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Speaker 3: into the block trading market. Is this something that can

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Speaker 3: be resolved before you step down.

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Speaker 1: Well, I'm going to stay, as you know, Schnelli as

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Speaker 1: executive chairman for a period of time. We'll see how long. Frankly,

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Speaker 1: I shouldn't stay too long because it's Ted's job to

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Speaker 1: run the phone now, so I to be there just

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Speaker 1: to help him in whatever way, and obviously meet with

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Speaker 1: regulators around the globe. I've got to know over the

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Speaker 1: last decade plus and key clients, and also in that

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Speaker 1: period there are a few things I want to still

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Speaker 1: clean up. I want to hand I said, as clean

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Speaker 1: a plate as possible. These are monster jobs and enormously complex.

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Speaker 1: You travel a lot, there's a lot that comes at you,

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Speaker 1: so I think it's nice to start with the clean plate.

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Speaker 1: We wouldn't have announced I was stepping down if we

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Speaker 1: didn't think whatever we still have left isn't manageable. I mean,

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Speaker 1: I wanted to see seekar through. We came out of

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Speaker 1: that actually with a better capitalration than we went into it,

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Speaker 1: twelve point nine ct one requirement. We're at fifteen to five.

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Speaker 1: I want to see the initial buzzle proposal. We've seen that.

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Speaker 1: I don't think it will end up where it is,

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Speaker 1: and we're working very closely with regulators. I want to

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Speaker 1: see the sort of summer months, obviously difficult quarter. We

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Speaker 1: knew that was coming, so I wanted to just see

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Speaker 1: the firm through that and then through this transitional leadership.

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Speaker 1: So no, we're very where we are in the process,

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Speaker 1: and I'll do everything I can to help help Ted

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Speaker 1: and help Dan and Andy.

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Speaker 3: Now, one large issue that has been plaguing Wall Street

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Speaker 3: is the lack of gender and ethnic diversity at the

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Speaker 3: top ranks and when the CEO search had come to

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Speaker 3: its final steps, there were no women or people of

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Speaker 3: color that were considered.

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Speaker 2: For the CEO ranks.

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Speaker 3: What is your plan to increase representation in the top

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Speaker 3: ranks of Morgan Stanley.

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Speaker 4: The next generation has lots of representation of all types.

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Speaker 2: It's a priority.

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Speaker 4: It'll continue to be a priority.

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Speaker 3: Do you have specific goals over the next few years

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Speaker 3: to make sure that's you.

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Speaker 4: Know, well, we you oceanized.

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Speaker 2: It's a good question.

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Speaker 4: We run a meritocracy and diversity comes in all types,

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Speaker 4: and we have fantastic women and men from all backgrounds

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Speaker 4: in senior positions on operating committees throughout the firm, and

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Speaker 4: I couldn't be more excited about the look of the

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Speaker 4: firm in the next five ten years now.

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Speaker 3: I know you've said also that you know largely the

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Speaker 3: strategy is in place and it will be a continued

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Speaker 3: into the new leadership. There is one thing that is

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Speaker 3: very much in the mind of CEOs lately, and that's

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Speaker 3: technological disruption happening at a rabid clip. How are you

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Speaker 3: thinking about how this could change Morgan Stanley and its

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Speaker 3: positioning in the future.

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Speaker 1: Well, so, you know, Walter Riston said it best he

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Speaker 1: said the most. I don't think he's totally right on this,

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Speaker 1: but he observed the most important technological evolution for the

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Speaker 1: financial services industry as the ATM machine, and each generation,

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Speaker 1: if you look at it, has embraced technology into the

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Speaker 1: businesses to make them better. What Ted did with the

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Speaker 1: electronic Trading and equities so called MSET phenomenal and that

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Speaker 1: basically fed all about trading apparatus that have supported that

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Speaker 1: business being again number one or two depending on the quarter.

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Speaker 1: But right up there what we've done with each trade.

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Speaker 1: Each trade's a technology company with a brand. What we

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Speaker 1: did with share Works and what is now Morgan standing

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Speaker 1: Work the electronic stock plan business, and Soling We bought

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Speaker 1: Solium is a company of programmers in Calgary, Canada, and

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Speaker 1: that became the birth of the stock plan business. So

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Speaker 1: there's always technology revolution. What any sabasceine is now doing

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Speaker 1: in the AI space, sort of building off the early

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Speaker 1: machine learning we did to create virtual financial advisors. It's endless.

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Speaker 1: We just had a presentation the board on it, so

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Speaker 1: it's in everything we do. We have nearly twenty thousand employees,

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Speaker 1: direct or consultants working for us in technology now.

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Speaker 3: Before I let you, guys go, what is the one

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Speaker 3: biggest piece of advice that you have to ted as

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Speaker 3: you pass over the rans?

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Speaker 1: Enjoy it. It's an incredible privilege to be able to

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Speaker 1: make the call, to make decisions. Sometimes you'll be wrong.

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Speaker 1: The only way to be right is not to make

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Speaker 1: any So I took the approach of I was looking

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Speaker 1: for I don't know what the analogy is, something at

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Speaker 1: bad so I'm not really a baseball player, but I

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Speaker 1: wanted to make enough decisions where we got a lot

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Speaker 1: of things right and along the way a few things

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Speaker 1: mightn't go you away, but that's okay. Just enjoy the journey,

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Speaker 1: embrace the good bits and the bad bits, as you know,

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Speaker 1: Kipling said, and I and those imposts of success and failure,

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Speaker 1: and you know, keep yourself focused on the long term.

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Speaker 1: You're going to have great quarters and you're gonna have

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Speaker 1: disappointing quarters. You're going to think the stocks should be

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Speaker 1: up when it's down and down when it's up. None

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Speaker 1: of that matters. What matters is the long term health

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Speaker 1: of the franchise, the values and your own stability in

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Speaker 1: that role. And part of that is building a team.

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Speaker 1: He's off to a phenomenal start in twenty four hours.

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Speaker 1: He got a standing ovation from the board. Last night

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Speaker 1: we had a wonderful dinner with directors. We had all

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Speaker 1: partners live in this building today and broadcast around to

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Speaker 1: our eighty three thousand employees, so you know, enjoy the moment.

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Speaker 1: It's an incredible privilege.

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Speaker 3: Ted James, it was an pleasure to spend time with

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Speaker 3: you on such a landmark day from Morgan Stanley and

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Speaker 3: hope to see you at the turn of the year

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Speaker 3: when you take your new job.