Morning Coffee: Good times at JPMorgan, bad times at Goldman Sachs. Slow death in Credit Suisse equities
Goldman Sachs did not have a good first quarter to this year. Nor did it have a good final quarter to last year. We know that this is ruffling feathers within Goldman Sachs because Pablo Salame, one of Goldman's securities trading heads, held an extended town hall meeting with the bank's staff, where he said he doesn't like losing and came up with a new slogan about client service. Unfortunately, it looks very likely that Salame is going to have to adjust himself to losing whether his staff are, "adding butter," or not.
Brennan Hawken, an analyst at UBS, notes that Goldman Sachs has almost certainly just had another rough three months. He suggests GS is struggling on two counts: firstly volatility remains low in the commodities division, which started the year badly and is now under review. Secondly, Goldman (together with Morgan Stanley) is particularly exposed to M&A, fees from which fell by 9.2% globally year-on-year in the second quarter.
While Goldman finds itself thwarted, J.P. Morgan is thriving. Hawken says rising rates should benefit big universal banks - in other words banks with the kinds of corporate clients Goldman now wants more of - especially if they have strong "macro footprints" in FX and rates. This would be J.P. Morgan, which together with Citigroup reports second quarter earnings this Friday.
As the two banks' fortunes diverge, Goldman Sachs is under increasing pressure to cut costs. J.P. Morgan, on the other hand, offered some of the safest jobs on Wall Street at the end of the first quarter, and this looks set to continue throughout the year.
Separately, imagine being told that someone has been hired to replace you in December, but being kept on in your job for another seven months until he actually arrives. Such was the experience of Michael Paliotta, the former global head of equities trading at Credit Suisse.
Credit Suisse hired Michael Stewart from UBS to run global equities in December last year, but Reuters says Paliotta only just left. This might be because Stewart himself only just arrived after what looked like a very long notice period. Paliotta, who'd been at CS since 2000, was clearly ok with this - but it looks like a long time to be in a role where you're effectively biding time until your replacement takes over.
An ex-Goldman banker became Twitter's CFO. (Variety)
J.P. Morgan hired Tim Berry, a former chief of staff to majority leaders of the US House of Representatives as its new head of global government relations. (Reuters)
Nomura hired Ajay Abrol from Millennium Management as a senior portfolio manager for macro trading. (Bloomberg)
Marshall Wace just made £19m in three days shorting Carillon. (Bloomberg)
Deutsche wants to hire 20 wealth managers to target the Middle East, particularly Saudi Arabia. (Reuters)
Robert Walters says companies are bored of Brexit and hiring as normal. (Telegraph)
The timeframe for when banks wanted a transitional deal on Brexit has already passed. "Every single day I have people coming into my office asking me to press the button on contingency plans." (Reuters)
"I can work Saturday. In that case I'll take Monday off - not as a vacation day, but in exchange for working Saturday." (Forbes)
You may hear tales of overnight successes from time to time, but you’re not getting the whole story. What you’re really seeing is somebody seizing an opportunity thanks to the years of hard work and preparation they’ve put in. (Lifehacker)