The return of the prodigal? A leader to guide the venerable bank out of the wilderness? Or a panic hiring which says that Morgan Stanley has wasted the past three years? All I will say is that - regardless of John Mack's comments that he will stick to the strategy of his ex-chief executive, Phil Purcell - Morgan Stanley will not be around in the same shape by this time in 2007.
For those who have not been following it closely, a quick recap. Morgan Stanley bought the credit card business Dean Witter in 1997, bringing with it Mr Purcell. Soon, a power struggle broke out between him and Mr Mack, the investment banking star. In 2002, the former won, and Mr Mack quit, briefly heading CSFB.
But earlier this year, Mr Purcell decided to pick a fight with some senior investment bankers, who quit, then turned the tables on him and forced him out. After saying they would not rehire Mr Mack, that is exactly what Morgan Stanley's board did, ratifying his reappointment on Thursday.
Barely was the ink dry on the contract when Bank of America announced one of the mega-deals that are putting Morgan Stanley's future into question. It is coughing up an eye-popping $35bn (£19bn) for MBNA, the credit card firm. This follows its $49bn purchase of FleetBoston less than two years ago, and JP Morgan Chase's $59bn takeover of Bank One in early 2004. These deals give the big three banks in the US (Citigroup is the third) a significant heft in retail financial services. If Morgan Stanley is going to continue to shackle its investment bank to the Dean Witter consumer credit business, it is going to have to do something to get some heft itself.
Morgan Stanley considered merging with both JP Morgan and Chase Manhattan before they came together. But as Mr Purcell favoured the former and Mr Mack the latter, no offer was made. More recently, Mr Purcell has talked about merging with Wachovia, the fast-growing financial services mini-conglomerate. This seems a poor choice. Wachovia's rapid growth culture could grate with the traditional Morgan Stanley stability.
If you were seeking a deal that would give Morgan Stanley the muscle it needs, the best place to look is the other side of the Atlantic. Two British banks have decent US presences - Royal Bank of Scotland and HSBC - and both would give the Dean Witter side heft.
HSBC would dearly love to have the quality of Morgan Stanley to graft on to its under-clubbing investment banking business (which is run by an ex-Morgan Stanley man, John Studzinski). RBS has long avoided investment banking, but maybe that's because something of the quality of Morgan Stanley has not become available.
Mack the Knife - as he is nicknamed - may merely decide to get rid of Dean Witter and go back to basics. So all this speculation would be irrelevant. But something is going to happen.
Barclays, book that table
One consequence of the Bank of America deal is that the rumours about Barclays should die down for a while. If City chatter is to be believed, the Yanks and the Brits have been talking for some time, without ever finding a way to get together. Periodically, Bank of America does a deal, and the rumours go away.
But does Barclays need to merge? The answer would seem to be yes: its UK growth is as restricted as anyone's; Barclays Capital, the engine of recent success, cannot be relied on to keep delivering the goods; Barclaycard and Barclays Global investors are good businesses, but they are not the answer, and neither is Africa - though the Absa purchase could prove a canny deal.
Barclays needs growth from either the US or Asia. It really likes India, but is restricted from buying anything in the country. But who is the largest foreign bank in the fast- growing sub-continent? Standard Chartered.
Barclays played footsie with Standard Chartered under the restaurant table two chief executives ago (for each bank). And why not again? Time to book once more at Chez Nico.Reuse content