I am not a big proponent of the diversified model. It is extremely hard to manage, and I just think there is a lot of value to be had from focusing on a few things really well. The turnaround process at Morgan Stanley will take some time.

In terms of investment banking, in terms of capital markets, in terms of investment management, really everything was very positive. Their outlook statement was also quite positive: their backlogs are up compared to where they were last year and they expect to be able to continue to pick up market share.

The U.S. origination business may be slowing while it is growing in other markets.

Asset management remains the highest quality revenue stream and the highest return-on-equity revenue stream in the financial-services business.

They really have built a very impressive investment-banking capability. They won't always be No.1, but they clearly have been effective in merging their investment and commercial banks.

The miss appears to be weakness in the trading portion of the Investment Bank unit, a frequent culprit due to its excessive volatility versus peers.

Strategically, it's been very, very difficult for PaineWebber to gain or maintain share in anything other than its main retail business, ... What they probably hope is by getting together with a more global firm that they can turn that around.

As this problem is unlikely to resolve itself quickly, we remain concerned that 2006 forecasts could be too aggressive.

The recent moves to eliminate the worst-performing 10 percent of brokers and rein in the training program are a good start to improving margins. But these are just the first steps.

To think they're immune would be very imprudent, and I'm sure they'd be the first to agree with me on that. But from everything I can infer, the second quarter is starting out just as strong as the first, and they manage their risk very well. Earnings growth could contract quite a bit if things get bad, but they're well protected from severe loss in most any market environment.