James Gorman to Step Down, Disney Ups the Ante, Foot Locker Shares Drop 5/19/23

David Faber (0:00)

Market insight and analysis. You're listening to the opening bell of CNBC's Squawk on the Street.

Carl Quintanilla (0:12)

Good Friday morning, welcome to Squawk on the Street. I'm Carl Quintanilla with Jim Cramer, David Faber at Post 9 of the New York Stock Exchange. Heading into the weekend with a boatload of news. Powell is on deck, options expiration. We'll be looking for some debt ceiling news, maybe on Sunday. Futures holding up here on this best week for the S&P since March. A roadmap begins with rally mode. S&P, NASDAQ eyeing the biggest weekly gain, as we said, in several weeks. Big Tech leading the way.

Apple and Alphabet highest levels in over a year.

David Faber (0:39)

Plus Disney ups the ante in that feud with Florida Governor Ron DeSantis. It is scrapping plans for a new $1 billion Florida campus.

And there are some struggles in retail. Sure is a Foot Locker. They are down sharply this after the company missed its first quarter numbers and lowered its outlook.

Carl Quintanilla (0:59)

We're going to begin though with the news that broke a few moments ago, and that is Morgan Stanley's James Gorman planning to step down as CEO and assume an executive chairman role in the next 12 months. We've been talking during the break, guys, about sort of the strategic changes he brought, but also some generational change here in financials.

Jim Cramer (1:15)

You know, I think that James Gorman will be known as the man who said, we're not going to get in trouble with the government anymore. We're going to run a different kind of company. We're going to run an advisory company.

And we're doing this in part because it's more lucrative and in part because we are not going to have the episodic up and down earnings that we've seen from other firms, David including Goldman Sachs.

David Faber (1:38)

And it has gone very well under Mr. Gorman's leadership. There's no doubt about it. When you take a look at the performance of the stock versus Goldman Sachs, Morgan Stanley gets a higher multiple, even though it has slightly less in terms of overall profits. But we take a look there, that kind of puts it in perspective, doesn't it? And it is large deals, of course, whether it was E-Trade or Eaton Vance, but the continued focus on wealth management. And again, Gorman not going anywhere for a while. We'll step up, it seems, to executive chair.

We'll be 65 years old.

Jim Cramer (2:10)

A young 65

David Faber (2:12)

And announce this, that this was the plan at the company's annual meeting.

For some time, they've been setting up sort of potential successors, Ted Pick, Andy Saperstein, certainly two of the names that many have heard. We'll see. But a change in leadership appears to be coming within let's call it the next year or so, at a firm that is applauded for the way it's been run under Mr. Gorman and that changed to a certain extent in strategy that you discussed, Jim.

Jim Cramer (2:38)

Well, look, when the brokers got in trouble, and of course we're speaking about Washington, James said, this isn't going to be what's going to happen to us. We're going to cut some businesses that others think are terrific and that have been historic to us.

Because we're not going to be a company that is called down to Washington.

And it succeeded. His company had far fewer instances and I think he changed the focus of the way Wall Street should be done. Brought Morgan Stanley, far more back to the way the old JP Morgan was run pre Glass-Steagall, the split. Which was, okay, listen, we're going to advise the wealthiest, the big companies, we're going to become the trusted team to go to. And he also did something very interesting. He went with Younger, too. And you can see that in the ads. He kind of decided, we're going to get them early.

This is the opposite of what Goldman did. Goldman kind of was high net worth and then went down to people who would, I would regard as never would have walked into Goldman. Morgan Stanley decided to go after people. For instance, he made an acquisition to work on getting people who were IPO companies.

David Faber (3:53)

Right, it was brilliant.

Jim Cramer (3:55)

People who got stock right from the beginning, wow, go, yeah.

Carl Quintanilla (4:02)

Meantime, Jim, obviously also the tip of the spear on some cultural issues, return to work comes to mind and the move to trim some banker head count around the world.

Jim Cramer (4:13)

Three thousand took the hit before he let his successor have to deal with it. I've had, I've come quite, this is a big position for my shadow trust and come quite close to him. He was on, I think he was on last on our show and there's a quality about this man that has been sorely lacking on Wall Street, humility. When you speak to him, he has not forgotten that he did not come from wealth.