Where does this leave Morgan Stanley?

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We've written variously about the appeal of working for JPMorgan, Goldman and Deutsche Bank in recent weeks, but we have neglected to consider the comparative allure, or lack of it, of the House of Mack.

On some measures, Morgan Stanley is doing very well. As DealBook pointed out earlier this week, it's now top of the global rankings for M&A, compared to 10th at the end of the first quarter 2008.

Analyst Dick Bove is also positive on MS, claiming that -

The new business model which appears to be more oriented to generating a more predictable revenue flow is appealing.

· The global thrust, which is not new, is also positive.

· The restructured balance sheet is a major plus.

· The desire to reduce risk taking is yet another plus.

· The contraction in the competition will help.

Bove adds that Morgan Stanley's acquisition of Smith Barney will generate a steady and recurring revenue stream and that investments from Mitsubishi UFJ and the Chinese government will allow it to expand internationally.

Goldman analysts are similarly upbeat. They upgraded Morgan Stanley last month, based on its strong capital position and ability to profit from improving conditions in capital markets.

However, not all is well at MS. John Mack said this week that 2009 will be a 'difficult year'. Unlike Goldman and BofA he also said he has no plans to repay the US government's TARP money. If key competitors return the cash and MS doesn't, it could find itself at a significant disadvantage in terms of pay.

Some MS bankers may have come to appreciate this already. A FIG banker has left for UBS, the head of infrastructure has left for Greenhill and the head of prime brokerage has resigned.

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