[ by Melanie Gretchen ]

Morgan Stanley's cuts are hitting the firm deeper and deeper.  Amid greater regulatory demands, weak markets and lower credit ratings, the smallest of the big Wall Street firms isn't finished applying surgery to its ranks.

Status Update. In the last 3 years under James Gorman's leadership, the bank has made cuts to its trading bonds, commodities and other investments and expanding into wealth management.  A week ahead of the Q4 earnings announcements, the latest round of cuts includes 1,600 jobs, including 6% of its support work force, and 6% of institutional securities, which includes its once vaunted trading business.

Under speculation is whether the firm will carry on, to spin off or eliminate much of its trading business;  no official announcement has been made either way.  What to expect from the Q4 report: gains in areas like stock trading, banking and wealth management, against diminished earnings of its fixed income business – suggesting that Mr. Gorman's strategy may well end up paying off, toward further cuts and/or revived fixed-income trading business.

For further details, go to [Dealbook, 1/9/13].