Macaskill on Markets
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Sideways: How to trade Trump 2.0
Donald Trump is now likely to win the US presidential election after a disastrous debate performance by incumbent Joe Biden. Trump 2.0 may bring complications as well as benefits for Wall Street. -
Boomer candy could end in a derivatives sugar high
Derivatives structurers are thriving, but regulators aren’t convinced the biggest Wall Street banks have a firm grasp of their complex exposure. -
Sideways: Macron is Monsieur M&A
President Macron’s newfound zeal for cross-border financial M&A is creating a headache for France’s big banks.
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A US climate bill filled with green credits will create business for banks and provide relief from the backlash against ESG products.
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West Virginia state treasurer Riley Moore has opened another front in a campaign by Republican officials in the US against banks that promote ESG policies.
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HSBC Asset Management’s head of responsible investing has had it up to here with consultants and regulators lecturing him on climate change risk.
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Anything except a brief stay on as chairman would cast a baleful shadow over the chief executive’s successor at JPMorgan.
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Junior bankers should relax about the threat to their jobs from AI and lean into opportunities to bluff their way to Wall Street glory.
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A move back up in rates is creating a PR battle among Wall Street banks. JPMorgan was punished for a cautious outlook, Goldman Sachs promoted strong fixed income trading results and Bank of America projected a Zen approach to rate moves.
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The Fed chair has made a remarkable, virtually unconditional surrender to opponents of his plan for Basel III implementation in the US. The tactical withdrawal is embarrassing, but it makes strategic sense.
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Luring star bankers from rivals – like Citi’s appointment of JPMorgan veteran Viswas Raghavan – can bring hidden costs beyond the expense of replacing stock options for the lucky new hire.
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Wall Street bankers tempted to pick a fight with the Federal Reserve should take a lesson from the insider trading plea deal by investor Joe Lewis.
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Opposition to the proposed Basel III endgame for US banks is now so widespread that a climb down by the Federal Reserve is likely. Wall Street bankers like Jamie Dimon can stop crying wolf about increased capital requirements and think carefully about publicly threatening their regulators.
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Our resident seer hears Ted Pick say don’t worry about the $20 million Morgan Stanley loyalty bonuses.
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Banks and investors opposed to European Union derivatives clearing plans have made an astonishing charge: the EU is worse than the US in jealously guarding its own markets.
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A tactical retreat on crypto regulation might help SEC chair Gary Gensler to avoid being bogged down in a war of attrition for the rest of his term.
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Tottenham Hotspur’s Joe Lewis was indicted for insider trading just before yen volatility presented an opportunity for profitable currency dealing.
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Banks including NatWest and JPMorgan are struggling to put out reputational risk-management fires.
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An odd legal case trying to pin the blame for Credit Suisse additional tier-1 (AT1) bond losses on former chief executive Brady Dougan and other veteran managers could complicate the task of recovering losses for holders of $17 billion of bonds that were wiped out in the takeover by UBS.
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Veteran banker Tom Montag is to join the board of Goldman Sachs in a bid to bolster support for embattled chief executive David Solomon. Weak second quarter earnings could make this task harder.
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Could trading of US sovereign credit default swaps trigger a global systemic meltdown? Probably not, but default swap shenanigans aren’t helping to calm jittery markets.
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The bank has started the process of choosing a successor to CEO James Gorman just as it tries to settle an investigation into its equity block trading practices. This could pose a challenge for Ted Pick.
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JPMorgan’s AI model to interpret central bank messaging came out just as it emerged that Jerome Powell had been pranked into discussing policy with Russian provocateurs. Euromoney’s distinctly obvious heuristics model (D’Oh!) might be needed.
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Relative winners after a year of interest rate hikes include Bank of America and Citigroup. Losers are led by regional US banks, while alternative asset managers argue that higher rates present a historic opportunity.
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Michael Klein can’t be expected to ‘devote significant time and attention’ to the unlikely prospect that UBS will allow a CS First Boston spin-off without being paid. Greensill-style invoices for Klein’s theoretical future services could be the answer.
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Interest rate risk management has been complicated by the fall in yields after the US bailout of SVB’s depositors. Clients may feel that hedging chiefly benefits Wall Street dealers rather than themselves.
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Goldman Sachs likes to mix it up when it comes to choosing peer banks for market share comparisons.
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Commodity trading could deliver further hefty profits for banks, led by Goldman Sachs, but there are multiple risks as well as opportunities for dealers.
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The UK broadcaster’s chair Richard Sharp is familiar with accusations of conflicts of interest from his time at Goldman Sachs.
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Goldman Sachs might wonder if the time is coming to rebrand from being Wall Street’s Bank of Dave (Solomon).
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FTX founder Sam Bankman-Fried faces the full wrath of US authorities, as rival agencies compete to make the most hyperbolic charges against the former crypto exchange head. Death by metaphor could be his provisional sentence.
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The gating of Blackstone’s $69 billion private real estate fund Breit highlights the risks in semi-liquid investment vehicles, even ones that perform strongly. Pitching US private market exposure to European and Asian retail investors may be slowed by the setback.
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Euromoney’s Mystic Maca looks into what’s in store next year and sees some big Wall Street reshuffles.
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Elon Musk is full of praise for his bankers at Morgan Stanley. It’s a shame his $44 billion Twitter deal is set to cost the bank money rather than earning a tip for good service.
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Bankers are sending mixed messages about market strains. Dire warnings about year-end pressures, pleas for regulatory help and assurances that banks can sort this out are being deployed simultaneously.
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From Spacs and securitized products to executive compensation and supply-chain planning, Credit Suisse could split its investment bank into more than three parts.
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Removing UK bonus caps and undermining the BoE could exacerbate a sterling crisis while entrenching US IB dominance.
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Wall Street’s junior human capital resources may not appreciate that there is now a bear market for their output, and that could spell tough times ahead.
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Bank shares have failed to close a valuation gap with fintech competitors despite the prospect of higher interest income from rate hikes. Will the Fed’s newly tough stance on inflation-busting finally give bank stocks some respect?
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If Rishi Sunak prevails in the race to be the UK’s prime minister, then Goldman Sachs will still have one alumnus as head of a leading European economy, even if Mario Draghi steps down from leading Italy.
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Trading divisions at banks aren’t just offsetting slumping deal fees, they are also becoming more efficient. They could drive an upgrade in equity valuations.
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The head of crypto firm Galaxy Digital should get creative about his tattoo of failed token Luna.
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The current market slump gives banks a chance to repel competitors such as crypto firms and fintech lenders.
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The US government’s case against Archegos Capital sets up a contest to guess which of the fund’s prime brokers was the most gullible at any given time. To keep the game interesting, the answer might not always be Credit Suisse.
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Elon Musk’s $44 billion Twitter deal could see his bankers shift from cordial competition for fees to a desperate battle to avoid margin losses if the value of his Tesla holdings falls sharply.
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It looks like Chelsea bid heartbreak for the structuring team at asset manager Centricus, but football financing is a funny old game and it’s never over until the final whistle blows.
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Margin hikes are raising the table stakes in markets from commodities to stock loans. Margins may be a better risk signal than curiously subdued measures like the ViX index of equity volatility.
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Russians could try to use cryptocurrencies to dodge sanctions following the invasion of Ukraine, but a move into the mainstream by crypto exchange heads hungry for fiat currency wealth will complicate evasion tactics.
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Energy price volatility driven by war in Ukraine could deliver a windfall to banks such as Goldman Sachs that retain scale in commodity trading. Profits from dealing can also be made without triggering ESG or sanctions-related pain.
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Wage inflation leads to substantial cost increases at major Wall Street banks.
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The trend continues for ever more dramatic accusations in US legal filings.
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Asset managers are following the well-trodden route of bankers in shifting from finance to politics.
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Euromoney’s Mystic Maca has looked into the future and it’s all about getting things back to the way they were.
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Is the best inflation hedge the asset you just bought? There is more at stake as prices rise than talking your own book.
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A lawyer with a specialism in helping Chinese companies to float in the US is among the cast of characters working on Donald Trump’s Spac.
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Gas price volatility is delivering profits to speculators. It is a reminder that carbon trading markets could face PR problems if energy dealers are viewed as big beneficiaries.
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A consensus that Evergrande’s failure will be more like the LTCM unwind than the Lehman bankruptcy could underplay ongoing challenges in hedging Chinese exposure.
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Bank of America struck a disjointed tone in its announcement that chief operating officer Tom Montag and vice chair Anne Finucane are to retire at the end of the year.
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Credit Suisse is stacking its board with risk management experts, but banks need to do more than fight the last war they lost.
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David Wildermuth, the new chief risk officer at Credit Suisse, may have much of the heavy lifting done by the time he arrives at his desk in Zurich.
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JPMorgan wants to have fun being a disruptor, but persistently low valuations for even the strongest banks limit its options.
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A reported $1 billion score from distressed debt trading could encourage banks to look for risky ways to boost earnings.
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As football fans enjoy an action-packed European Championship, JPMorgan is advancing its project to dominate global sport financing.
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JPMorgan’s new chief financial officer, Jeremy Barnum, is an unusual choice for a role that has become a springboard for greater things.
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US banking chiefs were reminded that their slow move towards socially aware finance brings new risks as they testified to Congress in May.
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Employees in the wealth management and investment banking businesses will be sizing up the risks to their own future financial wellbeing of staying with the firm.
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The US investment bank sidesteps an avoidable reputational own goal as a planned football European Super League collapses.
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Bitcoin’s move into the mainstream is forcing crypto financiers to develop code switching skills to communicate with Wall Street without alienating online evangelists.
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Bitcoin’s boom is dependent on ‘whales’ holding on to long positions, but trading techniques from older markets could create opportunities for whale hunters.
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Rob Karofsky will become sole president of the investment bank at UBS, ending his ‘odd couple’ partnership with co-president Piero Novelli.
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Citadel founder Ken Griffin may have felt more annoyed than threatened by his day testifying to Congress about volatility in GameStop and other stocks popular with retail investors, but scrutiny of market making and clearing is set to increase.
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Goldman’s chief executive David Solomon isn’t impressed by Spac deals from Credit Suisse and Citigroup.
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Gary Gensler could start his tenure running the Securities and Exchange Commission with a dramatic flourish by taking steps to burst the bubble in special purpose acquisition companies.
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BlueCrest Capital Management’s agreement to pay $170 million to settle charges that it used a trading algorithm to exploit investors is a warning that artificial intelligence (AI) can be a tool to dupe the unwary.
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Bitcoin’s recent surge is accelerating integration with established capital markets, as Coinbase makes IPO plans and market-maker B2C2 is sold to Japanese financial services firm SBI.
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Euromoney’s futurologist Mystic Maca gets on a Zoom call with next year, when markets return to a version of normality.
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The firm is pushing the idea that velocity management can drive sustainable growth for its global markets business. But will investors view this as an updated version of proprietary trading?
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The Vatican can build on its successful credit default swap exposure to Hertz and other corporates by going long a new ESG synthetic index.
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Manfred Knof starts early next year, after Martin Zielke is ousted by Cerberus. He joins recently arrived chairman Hans-Jörg Vetter.
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The chairman of UBS seems determined to force a wave of European banking consolidation. A merger of his firm with Credit Suisse may not be possible, but other deals are likely.
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The trend towards social debt issuance at the expense of green bonds poses a conundrum for firms looking to appoint credible leaders for a push into sustainable financing.
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Environmental, social and governance (ESG) investing is moving beyond a compliance-focused cancel culture, giving US banks an undeserved chance to win market share from European firms.
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Unprecedented oil volatility and gold at a record high may tempt banks back into commodity trading, but conflicts of interest with ESG goals could quickly emerge.
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Goldman Sachs chief executive David Solomon’s decision to back a rival to Democratic politician Alexandria Ocasio-Cortez may come back to haunt him.
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A complex investment in Wirecard by Deutsche Bank veterans now working at SoftBank has effectively compounded the eventual embarrassment for Germany Inc from the failure of the online payments firm.
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BlackRock’s contract with the Federal Reserve to support the corporate bond market leaves the world’s biggest asset manager with no room for governance error.
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Investors looking to profit from – and hedge against – credit deterioration due to Covid-19 will need to pick their spots when fighting the Federal Reserve.
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Central bank corporate credit support is helping to cut debt costs for borrowers such as Netflix. A government put option won’t cure all the problems looming in the credit markets, however.
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Bank balance sheets are ballooning and regulators are just fine with that.
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Private lending vehicles that are structured to maximize fees are looking dangerously fragile, and mismarking of asset values could spark legal disputes.
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The Federal Reserve’s expanded bond buying commitment underscores that the safest hedge at the moment is a security that can be sold to a government.
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Recent years have been challenging for market doomsayers, with big equity markets steadily rising and volatility dampened across asset classes. The spread of the coronavirus and understandable fear of its impact has given a boost to professional controversialists.
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Freshly empowered European bank chairmen are making perplexing lurches as they search for new chief executives. A random CEO generator might help.
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The Federal Reserve’s current balance sheet expansion is handing trading profits to big banks.
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The investment banking co-head is proud of his RoE, while the securities team seems subdued about the task ahead.
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A no-growth decade won’t stop bankers from chasing fees and trading profits. Mystic Maca looks even further ahead.
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Elizabeth Warren is showing a unique ability to get under the skin of Wall Street leaders as the US presidential election season heats up.
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Wall Street leaders alarmed by the prospect of a populist anti-finance president such as Elizabeth Warren or Bernie Sanders were given some hope when Michael Bloomberg declared his candidacy for the Democratic nomination.
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Next year promises to be such an exciting year in banking that our resident soothsayer, Mystic Maca, couldn’t wait to share his predictions…
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SoftBank and its roughly $100 billion Vision Fund face growing questions about their use of leverage and the size of stakes built in technology-related companies.
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The fiasco of the failed IPO of WeWork has embroiled some of the most prominent figures in global finance, including SoftBank chairman Masayoshi Son and JPMorgan chief executive Jamie Dimon.
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Bankers in Europe have discussed pooling resources across different institutions for some years, as the threat from bigger US rivals has become painfully obvious.
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The retirement of Goldman Sachs securities co-head Marty Chavez leaves trading veteran Ashok Varadhan looking isolated.
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Questions about Deutsche Bank's restructuring multiply with each tactical shift, increasing the premium placed on any areas of real success – such as its Autobahn platform.
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Deutsche employees who have recently been fired or face the axe will no doubt take comfort in the successes of fellow alumni such as Sajid Javid.
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The Bank of England and Federal Reserve begin to build the bulwarks against Facebook's cryptocurrency Libra.
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The field of contenders in the race to succeed Mark Carney as governor of the BoE is widening to include some unlikely names.
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Veteran investor Carl Icahn has filed a lawsuit accusing Occidental Petroleum chief executive Vicki Hollub of being played by Warren Buffett in accepting aggressive terms for a $10 billion financing from Berkshire Hathaway to complete an agreed bid of around $56 billion for Anadarko.
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As technology spending escalates, financiers now face a temptation to reframe costs as an investment in future growth, safe in the knowledge that it is extremely difficult to check their assertions.
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Citigroup president Jamie Forese and his Morgan Stanley counterpart, Colm Kelleher, are bowing out after contrasting quarters for their investment banks.
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Bank of America is reportedly excited about the potential of a tool it calls the Predictive Intelligence Analytics Machine, or Priam.
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Germany may conduct a strange experiment in state-sponsored investment banking if a merger between Deutsche Bank and Commerzbank proceeds.
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The news that Garth Ritchie, head of investment banking at Deutsche Bank, is being paid €250,000 a month for extra responsibility 'in connection with the implications of Brexit' has been condemned in Germany, where politicians and union leaders are preparing to oppose a potential merger with Commerzbank and associated job cuts.
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The rationale to accelerate cuts in its US investment bank is obvious, but an orderly withdrawal will be hard to execute.
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JPMorgan is trying to advance its master plan for global fintech domination with a discipline that is often lacking in a sector better known for wildly over-promising than actually delivering practical solutions.
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Bank shares have bounced back from recent lows in early 2019, but investors tempted to bet on a sustained rally risk yet another year of disappointment.
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President Donald Trump has pulled off the almost impossible task of making America’s banks look good, if not exactly great, again.
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The successor to Mario Draghi as president of the European Central Bank (ECB) may provide more support than expected to corporate credit markets if borrowing conditions deteriorate.
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As Mario Draghi begins his victory lap before stepping down as president of the ECB in October 2019 and his colleagues get down to the serious business of competing for the succession, they will no doubt give thanks that they do not face trial by Twitter in the same way as Federal Reserve chairman Jay Powell.
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Jon ‘Mystic Mac’ Macaskill looks ahead at possible highlights for markets in 2019.
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Saudi Arabia’s central bank governor recently gave international banks a clear signal that they will not be punished by a loss of fees for avoiding an investment conference in Riyadh due to public outrage over the murder of journalist Jamal Khashoggi.
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Ken Moelis lived up to his nickname ‘Ken of Arabia’ when he showed up at the Saudi Future Investment Initiative conference in Riyadh in late October in his brave pursuit of future fee income despite the risk of international opprobrium.
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Wall Street is turning into a self-driving market, long before automation transforms the physical experience of transportation.
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Jon Macaskill profiles the two new co-heads of investment banking at UBS.
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As the 10th anniversary of the failure of Lehman Brothers arrives, I have been asked to share my reminiscences of when I realized a global credit crisis was looming and why so many senior financial figures ignored my warnings.
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Delusional clients are complicating the business of collecting fees for advising on mega trades for customers such as Saudi Aramco and Tesla.
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The smooth chief executive transition at Goldman Sachs will increase scrutiny on the potential succession to Jamie Dimon at JPMorgan.
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If JPMorgan CFO Marianne Lake becomes the banker most likely to succeed Jamie Dimon as chief executive before mysteriously deciding to pursue interests outside the group, she will be in good company.
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It is 10 years since Rajeev Misra left his position as head of credit and commodities at Deutsche Bank in a move that came a couple of months ahead of the failure of Lehman Brothers and a global financial crisis.
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Deutsche Bank’s failure of the recent Federal Reserve stress tests drew attention, but while the regulator was happy to kick the battered European bank while it is down, this was in stark contrast to its treatment of favoured home-town players Goldman Sachs and Morgan Stanley.
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Goldman Sachs delivered strong first-quarter trading results that were followed by a reorganization of the management of its securities division.
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The coming move towards a Volcker Rule 2.0 that relaxes monitoring of proprietary risk taking by bank dealing desks has been portrayed as a result of president Donald Trump’s administration finally placing its preferred officials in key regulatory positions.
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An unusual move by a US regulator threatens to widen a conflict over potential manipu-lation of Hovnanian default swaps by Blackstone’s credit arm GSO.
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If the Securities and Exchange Commission (SEC) does decide to weigh in on the issue of whether or not Blackstone’s trading in Hovnanian debt and default swaps constitutes market manipulation, it will revive questions about SEC chairman Jay Clayton’s ties to Goldman Sachs.
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A sale of NEX will generate close to a billion dollars for brokerage founder Spencer. Will it also bring him closer to the aristocratic title he craves?
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If Michael Spencer manages to sell NEX at a price that places a high value on its core FX and electronic bond dealing platform, he will have pulled off an impressive slow-motion brokerage trade.
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An investment of around $10 billion in shares of a reinsurance firm does not seem like an obvious move for a technology conglomerate like SoftBank, but its founder Masayoshi Son relishes any opportunity to surprise the markets.
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Outsiders struggling to make sense of the investing tactics of SoftBank founder Masayoshi Son can take some comfort: his own directors often seem just as puzzled.
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Blackstone-owned GSO Capital’s provision of financing for building firm Hovnanian, on condition that it defaults on debt in order to trigger a payout on default swaps, highlights the reputational risks for investors as they supplant banks in setting the agenda for the credit markets.
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The recent disclosure that rare wine worth more than $1.2 million was stolen from Goldman Sachs co-president David Solomon, allegedly by a personal assistant, raises questions about which other Wall Street titans may have suffered the indignity of losses they would rather not discuss.
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The search is on for masters of the bitcoin universe to rival the bond traders who appalled and fascinated the public in the 1980s.
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An important step to confer respectability on trading in bitcoin and other cryptocurrencies was taken in mid December when analysts from Deutsche Bank highlighted the role played in the emerging market by male leveraged foreign exchange investors from Japan.
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Jon ‘Mystic Mac’ Macaskill looks ahead at possible highlights for markets in 2018.
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The conviction of former HSBC trader Mark Johnson for front-running a customer FX order could transform the way dealers hedge client trades – and how they communicate with each other.
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Barclays CEO Jes Staley has staked his future on the ability of four markets veterans to produce a fast turnaround in performance at the firm’s investment bank.
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The departure of SoFi founder Mike Cagney as CEO should serve as a warning against believing the hype about fintech firms without testing the self-interested assertions of their managers.
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It is a truism that technology is set to transform banking.
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Norway’s sovereign wealth fund has decided to steer clear of corporate bonds, which will help it to avoid the reputational traps that loom for some other large investors.
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Hurricanes, electric cars and pollution rules are bringing volatility back to the commodity markets.
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There was an air of mild incredulity in some quarters of the City of London when John Varley, the former CEO of Barclays, was charged with fraud alongside the bank he once headed and three ex-colleagues.
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The UK’s Serious Fraud Office (SFO) charged Barclays and four former managers with fraud in June, alleging misconduct relating to two capital raising deals in 2008 and a loan to Qatar.
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A survey released by index provider Coalition on May 24 revealed the grim state of FX business lines.
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Following news that Barclays chief executive Jes Staley and Bank of England governor Mark Carney were fooled by spoof emails purporting to come from their chairmen, Euromoney’s Jon Macaskill has uncovered more misleading messages from the top.
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Goldman Sachs badly underperformed other US banks in first-quarter fixed income results, setting off a frenzy of speculation about trading positions that could have led to the disappointment.
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The news that former president Barack Obama has agreed to speak at a Cantor Fitzgerald healthcare conference for a fee of $400,000 raises two important questions.
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Goldman Sachs CEO Lloyd Blankfein seems to be on a comfortable glide path towards maximizing the value of the performance stock units that will provide most of his future compensation.
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Goldman's new incentive scheme for its top management has some curious quirks.
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SoftBank’s $3.3 billion purchase of Fortress Investment Group could mark a shift into shadow banking that is as important as its much-hyped plan for a $100 billion technology fund.
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A US federal appeals court ruling on February 21 effectively ended a legal attempt by a group of hedge funds to stop the government from collecting billions of dollars of profits made by Fannie Mae and Freddie Mac in recent years.
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The rally in bank stocks seen after Donald Trump’s election victory had stalled by the time of his inauguration as president on January 20. Fourth-quarter results from US banks were also announced in January, giving bank heads a chance to pitch their prospects relative to competitors.
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Blythe Masters had what seemed to be a Hillary Clinton-on-election-night moment when Digital Asset, the firm where Masters is CEO, failed to win a role in the most significant blockchain application yet announced.
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Jon 'Mystic Mac' Macaskill takes a look at the year ahead in banking and trading
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Bank stocks rallied after Trump’s victory in the US election on hopes that higher trading revenue will outweigh potential disruption to global trade. A second act for traders now beckons.
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Donald Trump vilified Wall Street during his presidential campaign in stump speeches and an advert that featured an image of Goldman Sachs CEO and chairman Lloyd Blankfein as a symbol of the “corrupt machine” that needed to be overthrown.
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A recent $17.5 billion bond issue by Saudi Arabia was hailed as a resounding success by capital market participants who have a strong interest in further fundraising by the kingdom, including an expected IPO of Saudi Aramco that could break records with a size around $100 billion.
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It seems $100 billion is the new benchmark fundraising target for firms looking to make an impact.
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Deutsche Bank and Wells Fargo should make clawbacks of executive compensation a priority as they try to manage crises that threaten their viability.
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It has been over a month since Eric Ben-Artzi publicly declined his half share of a whistleblower award of $16.5 million for telling regulators about Deutsche Bank’s inflation of the value of a $98 billion credit derivatives portfolio during the financial crisis.
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Goldman Sachs almost certainly made a good investment when it paid Hillary Clinton $675,000 for three speeches.
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Unlike the contrarian investors who would welcome some creative disruption to market certainties, most bankers seem to fear the turmoil that could well follow an election victory for Donald Trump.
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The case against two HSBC employees for front-running a foreign exchange order from a client could hasten the death of the principal model for FICC trading by banks. A shift to an advisory-based approach is possible, but banks will struggle to make up lost revenue.
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When HSBC’s former head of global FX cash trading Mark Johnson learned that he had a window of just over 30 minutes to move the sterling exchange rate and profit from an approaching client trade, he said: “Ohhh f***ing Christmas,” according to US prosecutors.
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Traders claiming to have profited from the Brexit vote were slow to identify themselves in the wake of the historic decision for the UK to leave the European Union.
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Brexit will deal a mighty blow to the international and diverse City of London that has thrived for 30 years – but investment banks have bigger worries than the location of their EU offices.
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SoFi is becoming increasingly reliant on former Deutsche Bank staff as it seeks to expand the use of complex financing structures to fuel growth in its loan sales.
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Cheerleaders for marketplace lending took comfort from two events in late May that seemed to signal a potential recovery in a sector that had been rocked by the near failure of Lending Club, the leading listed specialist in online lending.
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As Goldman Sachs released the worst first quarter results by a leading US dealer in April, it placed a video discussion with Game of Thrones co-creator David Benioff in prime position on its corporate website.
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Goldman Sachs had a logical, humdrum reason to acquire $16 billion of deposits from GE Capital to boost its fledgling online retail operation, GS Bank.
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A botched move to take the distressed credit out of Credit Suisse and an ‘acceleration’ of the strategic plan give the impression the bank’s new leader is making it up as he goes along.
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The European Central Bank’s announcement that it will extend its debt purchases to corporate bonds has given a boost to the region’s investment banks.
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Deutsche Bank’s co-chief executive John Cryan may find the bonus obsession of his investment bankers hard to understand. He will need to keep them motivated if he is to have any chance of pulling off a hugely challenging turnaround plan for the bank, however.
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Deutsche Bank’s co-CEO John Cryan should follow the playbook of Standard Chartered CEO Bill Winters and mount a public campaign to claw back bonuses from former managers.
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The Basel Committee on Bank Supervision released long-awaited guidance on a new capital regime for market risk in January. It did not, however, solve the mystery of which bank was the outlier in a study of the potential effect of a change in trading risk evaluation.
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The film of The Big Short provides a welcome reminder of the glory days of Morgan Stanley’s fixed income franchise, when Howie Hubler managed to lose $9 billion on botched structured credit tranche trades.
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The European Central Bank meeting in December provided a reminder that it is tough to make predictions – especially about the future. Goldman Sachs’s chief currency strategist Robin Brooks was forced to admit that he had dropped his crystal ball on his foot in predicting euro parity to the dollar by year-end and revised his forecasts for 2016 before 2015 was out. Undeterred, Euromoney’s Jon Macaskill makes his own predictions for the coming year in investment banking.
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European Central Bank president Mario Draghi has been dropping further hints that he is considering unconventional measures to combat deflationary pressures in the region. This sets the stage for potential central bank buying of European corporate bonds, which in turn raises the question of whether there will be opportunities for nimble investors to game a new ‘Draghi Put’ for corporate credit.
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Jes Staley can add an entry to his ‘to-do’ list for December 1, his first day as CEO of Barclays: send all staff an email about how to send emails.
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Deutsche Bank co-CEO John Cryan took a clear-headed approach to most of his management overhaul in October. There are unresolved issues in the global markets unit that remains the bank’s revenue engine as well as the source of most of its reputational problems, however.
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Jon Macaskill imagines how the star fund manager ruminates over his legal assault on his former Pimco colleagues.
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UBS CEO Sergio Ermotti may just have ‘Done a Diamond’ with his widely reported message to bankers at the firm that they should take more risk and not be afraid to make mistakes.
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China’s struggle to communicate effectively with markets was demonstrated by its scapegoating of journalists for supposedly worsening the crash in local stock prices.
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The return of market volatility in late August put a focus on asset managers, with investment banks for once ceding the spotlight during a period of turmoil. There will surely be some bank trading mishaps, but the main threat to revenues is likely to come from diminished demand for investment products rather than dealing room blow-ups.
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The dismissal of Martin Wheatley, head of the UK’s Financial Conduct Authority, by Chancellor George Osborne was widely interpreted as a step towards less intrusive regulation of the financial industry
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A scathing report by German regulator BaFin on interest rate rigging by Deutsche Bank will no doubt give any potential employer of former co-CEO Anshu Jain pause for thought.
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Deutsche Bank’s failure to acknowledge the enormity of the change it needs to return to health was demonstrated by the strange spin it gave to the departure of co-CEO Anshu Jain.
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It is now a mark of the serious individual in finance to issue a dire warning about the threat posed by a lack of market liquidity. What climate change is to the young liberal (or young person), so liquidity has become to the ageing plutocrat, secure perhaps in his own billions, but with a furrowed brow as he contemplates the potential havoc that could be wreaked by diminished liquidity.
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If the movie version of The Big Short does prove successful, it could spur the commissioning of other banking-themed films.
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There was virtual dancing on Wall Street after investment banks unveiled their first quarter results.
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A series of reports by regulators around the German bank’s $2.5 billion fine raise more questions than answers, while serving up embarrassment to remaining senior management.
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Bill Winters has some big decisions to mull while he prepares to start his new job as Standard Chartered chief executive.
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Soon after Bill Winters was appointed CEO of Standard Chartered, his highest-profile protégé from their shared days at JPMorgan also announced a new job.
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CEO Stuart Gulliver helpfully explains HSBC’s former practice of using a Swiss bank account in the name of a Panama registered corporation to take bonus payments for the Hong Kong bank.
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Before revelations about HSBC’s private bank, its chairman and CEO were seen as a winning combination. As the fallout becomes increasingly political, could their relationship be coming under threat?
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Is Deutsche Bank contemplating a secret Götterdämmerung trade that would hive off sections of its investment bank and offer senior executives an escape route?
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New COO Jonathan Moulds will bring a straightforward and sensible approach to the challenges facing Barclays. Will he end up pulling the strings more than CEO Antony Jenkins?
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When JPMorgan CEO Jamie Dimon delivered the welcome news to employees that he had been given the all clear after a recent bout of throat cancer, senior managers in attendance rose to applaud.
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Confusion around US insider trading laws has led to a series of recent reverses of insider trading convictions. Perhaps US authorities should look across the Atlantic for inspiration.
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The main charge against Goldman Sachs by the US Senate committee investigating commodity market practices was that the bank effectively controlled actions by its metals warehouse subsidiary, Metro International, that created a bottleneck in aluminum supply, and that Goldman could have profited from associated trades in its securities arm.
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Paul Simon sang that there are 50 ways to leave your lover, and Goldman Sachs has reminded us that there are just as many ways to sneak a trade through, even when conflicts of interest threaten to drag your reputation back into the mud.
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Blackstone and Pimco are talking a good fight when it comes to possible credit market dislocation. The widening in high-yield debt spreads that accompanied a bout of panic in global equity markets in mid October prompted displays of bravado from the investment firms.
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Jon Macaskill imagines how the star fund manager might have recorded the reasons behind his shock move from Pimco to Janus Capital. Item one: update his enemy list.
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Banking industry analysts are not to be deterred in their quest to quantify the unquantifiable. The new philosopher’s stone for the modern day alchemists of analysis is finding a way to estimate the size and impact of future fines for misconduct by banks. This may not be quite as challenging as transmuting base metal into gold, but it presents difficulties nonetheless.
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The aftermath of a £250m accounting scandal that led to a £2bn drop in the value of its shares might not seem like the best time for UK retailer Tesco to think about ramping up its activity in banking.
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It’s hard out there for a short, even with a multi-year credit and equity rally looking increasingly fatigued.
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Hedge fund manager Bill Ackman’s desperate attempt to push down the stock of nutritional supplement provider Herbalife provides the highest profile recent example of the challenges faced by short sellers.
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There is a vogue among senior investment bankers to look for a switch to a job with one of the private equity firms that are morphing into shadow finance players with an appetite for assets of all kinds.
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The partial withdrawal by Barclays from investment banking is starting to look disorderly – more retreat from Moscow than Dunkirk-style retrenchment.
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Summer is upon us and with it the lull of the Second Great Moderation. The First Great Moderation, in the half decade to 2008, was a disappointment, given that it ended with the worst market crisis since the crash of 1929 and a global recession.
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Deutsche Bank finally managed to sell its Las Vegas casino – The Cosmopolitan – a few days before announcing a €8 billion capital raising that it will use to double down on its bet that it can make a viable return from a full-service global fixed-income business.
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The Las Vegas casino that Deutsche Bank finally managed to sell just before announcing its most recent capital increase – The Cosmopolitan – uses the catchphrase “Just the right amount of wrong” to tempt customers.
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Apple has reopened the market for jumbo bonds as it steps up its share buyback plans and other borrowers are likely to follow suit as mergers and acquisition activity revives.
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If Pimco did manage to score a $375 million profit by securing an allocation of $8 billion of the Verizon $49 billion bond that delivered roughly $2.5 billion of paper gains to investors after it was launched last September, then it was a rare bright spot in a tough year for Mark Kiesel, global head of corporate bonds at the fund management firm.
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The decision by Mike Cavanagh, co-CEO of investment banking at JPMorgan, to move to private equity firm Carlyle should not be viewed as a surprise. Cavanagh has taken himself out of the running for the role of successor to JPMorgan group CEO Jamie Dimon in order to make a late entry in the stakes to follow Carlyle founders David Rubenstein and Bill Conway.
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Will Blythe join Bambi and Godzilla at Mercuria to create a new commodities trading dream team? The fate of Blythe Masters, head of commodities at JPMorgan, is in the spotlight now that the sale of the bank’s physical commodities business to Mercuria for $3.5 billion has been confirmed.
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Emerging markets have bounced back impressively from an early-year slump that had threatened to turn into a full-blown crisis. But there are still plenty of questions about prospects for emerging nations and related banking revenues.
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Vikram Pandit, the former Citigroup CEO, who was ousted in 2012, is casting his net wide as he looks for ways to stay busy.
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The hedge fund industry is coming off another year of substantial underperformance to market benchmarks in bizarrely rude health. Total assets in the industry rose to $2.01 trillion in December to set a new record total above the previous peak of $1.95 trillion in June 2008, according to data firm Eurekahedge. Other monitors put the current total as high as $2.41 trillion.
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Stock analysts have long been mocked for their fawning attitude towards bank CEOs and CFOs on earnings calls. The phrase ‘great quarter, guys’ as an opening gambit became such a cliché that most analysts eventually toned down their approach, and some – led by self-appointed scourge of Wall Street Mike Mayo – have even started showing open scepticism about the corporate bromides delivered by bank executives.
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As the World Cup shapes up to be the main sporting event of 2014, Euromoney columnist Jon Macaskill looks at comparisons between investment banks and football teams for clues to competitive match-ups in the year ahead.
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The final version of the Volcker rule is unlikely to give posterity phrases that echo through the ages in the style of the King James Bible, but the details of its wording are important to financial market participants, which helps to explain the extended bickering.
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Litigation cost estimates for investment banks are being revised sharply upwards after JPMorgan shocked peers by revealing that it had set aside $23 billion of legal reserves, then agreed a $13 billion settlement of outstanding mortgage claims with the US authorities.
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Forward-thinking branding experts are already adjusting their plans for 2014 and beyond: Yahoo recently unveiled a new logo designed to symbolize its fresh start under CEO Marissa Mayer; and the Republic of Iran is reportedly considering a change to the slogan ‘Death to America’ that has been in place since the revolution in 1979.
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Ashok Varadhan might well be the most unpopular man at Goldman Sachs as bonus time approaches. The global head of macro trading at the firm oversaw a third-quarter collapse in revenues in his product lines – which include foreign exchange and rates – that was dramatic enough to threaten lower annual compensation levels for everyone else at Goldman Sachs.
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Regulatory sanctions are coming thick and fast at JPMorgan, with a record $11 billion fine for mortgage-market abuses in late September drawing the most attention. But reports accompanying JPMorgan’s $920 million penalty for failures surrounding its $6.2 billion London Whale loss also shed new light on the distrust and paranoia within the bank.
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There has been widespread condemnation of the manipulation of Libor settings by employees of interdealer broker Icap, and rightly so. But the time has surely come for defenders of former Icap employee Colin Goodman, aka Cash Broker A, aka Lord Libor, aka Lord Bailiff, to step forward.
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The untimely death of an intern at Bank of America prompted a spate of headlines about the long hours worked in the City of London and Wall Street. Forcing junior staff to put in exceptionally long hours is clearly counterproductive in any sector of banking, as it is in other industries. But the practice reaches a peak of pointlessness in corporate finance, where the Bank of America intern worked. Pure corporate finance, such as mergers and acquisitions or advisory work, is the area in the City where the greatest nominal effort is applied to the least practical effect.
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The recently discovered regulatory zeal for a focus on gross leverage ratios at banks, rather than capital assessed on risk-weighted assets, is creating a new set of problems for some of the biggest dealers. Barclays and Deutsche Bank in particular have been put on the back foot by the regulatory bait and switch, which comes at an awkward time – just as key engines of their profitability, such as rates trading, are sputtering.
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The end of the commodities super-cycle of rising prices is being accompanied by a series of humiliating reverses for some of the biggest bank traders in the energy and metals markets. These banks might struggle to retreat to a sustainable, client-based commodities business model, given over-ambitious former revenue targets, the over-sized egos of some of the main players involved, and the extent to which they have alienated customers and regulators.
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The bond market tremors of late June maybe do not signal an impending fixed-income earthquake, but they do demonstrate the challenges banks face in maintaining revenue streams as investors adjust to the prospect of higher rates.
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The jump in treasury yields in late June prompted the two highest-profile US bond gurus to make public pronouncements designed to calm the nerves of their acolytes.
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Bloomberg brought a knife to a gunfight when it tried to pry information out of Goldman Sachs by using details gathered from the data and media firm’s terminals about the bank’s employees. An enquiry by a Bloomberg reporter about whether a partner had left Goldman, given that his terminal was not in regular use, set alarms bells ringing at a bank that has a well-deserved reputation for paranoia.
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Jamie Dimon comfortably survived an attempt to split his combined chairman and CEO role at JPMorgan, which will allow him to set the terms of his eventual departure from the bank. He should start by appointing a president to give a potential successor a trial run.
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Standard & Poor’s met its late-April deadline for a response to a US Justice Department suit accusing the agency of fraudulently rating CDOs with an energetic rebuttal of the case for the prosecution.
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In a July 2007 email exchange cited in the US government’s current case accusing Standard & Poor’s of defrauding investors with its CDO ratings, a recently hired analyst told an investment banking contact about the view among many employees that senior management at S&P had prevented downgrades to avoid alienating clients.
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The annual report for 2012 released by UBS in March demonstrated that its management continues to flounder, while offering perverse hope that the disaster-prone bank might be stumbling towards a sustainable business model.
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Euromoney columnist Jon Macaskill imagines how Doug L Braunstein, the former chief financial officer of JPMorgan, chronicled his testimony at last week's Senate hearing.
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The currency war that many feared as an inevitable accompaniment to the credit crisis played out as more of a paint-ball contest until the recent sharp slide of the yen. The violence of the yen fall of roughly 20% reawakened fears of a wave of competitive devaluations.
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Regulators are belatedly showing signs that they are thinking about potential market abuses from first principles. The broadening of the Libor investigations into the role played by interdealer brokers, a case against Nymex and two employees for divulging flow information and the pursuit of insider-trading allegations against employees of hedge fund SAC are all examples of regulators tackling potential abuse from the important principle that if it looks like a duck, swims like a duck and quacks like a duck, it may well be a duck.
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The new CEO of Barclays takes on the role of chief slogan and acronym officer, and, unfortunately, RISES to the challenge by highlighting the bank's Purpose and Values, while ignoring how it will all work in practice.
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The doubling of Lloyd Blankfein’s bonus for 2012 and the halving of Jamie Dimon’s payout was a sign of a return of the natural order of things on Wall Street. Goldman Sachs’s CEO Blankfein was rewarded for a year when the bank finally seemed to get its mojo back, while JPMorgan CEO Dimon was punished – fairly lightly – for his failure to deal with a monumental risk-management blunder in the form of the London Whale credit derivatives trading loss of over $6 billion.
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Euromoney columnist Jon Macaskill takes a look at the year ahead when investment banks go back to the future.
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The decision by UBS to perform elective surgery on its own investment bank can be partly attributed to pressure from bank-stock analysts. It might be premature to hail the dawning of a new age of the analysts, but a group who had become best known for astonishingly inaccurate stock forecasts and fawning attitudes to bank CEOs has at least begun to redeem itself.
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Long-suffering shareholders of UBS can take comfort that JPMorgan’s bank-stock analyst Kian Abouhossein feels their pain. Abouhossein, who is consistently at or near the top of industry rankings of bank analysts, has been an owner of UBS shares while he has touted UBS as his number-one bank-stock pick in recent years and produced price forecasts well above the prevailing market value.
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Goldman Sachs insiders were relieved by the dearth of damning allegations in Greg Smith’s tell-all book about his time at the firm.
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Greg Smith’s memoir about his career at Goldman Sachs could have been subtitled ‘The curious incident of the dog that didn’t bark’.
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The business of selling out your employer for a cash reward is still in its infancy. But the slow grinding of the wheels of regulatory justice is throwing up increasing numbers of employees who are providing evidence against employers to dodge or mitigate punishment.
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The award of $104 million to UBS tax whistle-blower Bradley Birkenfeld in September showed that there is still good money to be made in banking. It just may come in the future from turning in your former colleagues and bosses to the authorities.
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Life as an investment banker has always had its drawbacks. Colleagues try to steal your business, senior managers expect obeisance, and clients put your ideas out to tender with competitors.
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The credit boom is serving the real-money investment community well, but many supposedly smart-money hedge funds and investment banks are missing out on the party.
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The recent publication of email exchanges from 2008 between the Bank of England and the British Bankers’ Association about Libor reform cast both in a poor light.
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Estimates of the impact of the Libor scandal have so far focused on potential direct costs in the form of fines and litigation expenses, tied to speculation about which investment bankers will be forced to follow Bob Diamond and Jerry del Missier of Barclays into unscheduled retirement.
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If German credit default swaps continue to rise – pricing in rising liabilities on Berlin’s balance sheet – Deutsche Bank’s historic funding advantage will take a knock. But, for the likes of Bill Gross and John Paulson, the great sell-Germany trade has to deal with a looming ban on naked shorts and will only pay off if the cash market cracks.
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The bank's chief executive Brady Dougan is under sustained attack internally and from disaffected shareholders amid financial pressure, a three-notch credit downgrade and a projected wave of job cuts.
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The JPMorgan credit derivatives trading farce is set to extend its run. Rival market players will have plenty of tactical opportunities for profits, but a bigger question for peer-group banks is whether they will be able to win back investment banking market share that was lost to JPMorgan after 2008.
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Jamie Dimon’s failure to control the traders gone wild in JPMorgan’s chief investment office has dealt a serious blow to the standing of group CFO Doug Braunstein and investment bank head Jes Staley.
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As JPMorgan's losses in credit derivatives are revealed, Euromoney columnist Jon Macaskill reveals just how the CIO division worked and the positions it took - and warns that other houses on Wall Street could try to make their rivals' losses worse.
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Media coverage of the staff in JPMorgan’s chief investment office turned up nuggets that ranged from the banal (credit derivatives trader Bruno Iksil has a penchant for wearing black jeans) to the comical (London head Achilles Macris had a picture of a missile on his apartment wall, in brave defiance of stereotypical assumptions about dealers).
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As Greg Smith snags a $1.5 million advance for the rights to his memoirs, Euromoney columnist Jon Macaskill imagines what the former equity derivative specialist might reveal about his career at Goldman Sachs.
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UBS chief executive Sergio Ermotti has taken a giant step back in the latest attempt to revive the ailing firm by hiring his former Merrill Lynch colleague Andrea Orcel as co-head of investment banking.
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As Greg Smith snags a $1.5 million advance for the rights to his memoirs, Euromoney columnist Jon Macaskill imagines what the former equity derivative specialist might reveal about his career at Goldman Sachs
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UBS chief executive Sergio Ermotti has taken a giant step back in the latest attempt to revive the ailing firm by hiring his former Merrill Lynch colleague Andrea Orcel as co-head of investment banking.
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Ronald Reagan once joked that the nine most terrifying words in the English language are: “I’m from the government and I’m here to help.” Wall Street traders tend to share the view that the business of profiting from capital flows works best with minimal interference, but the government in the form of the Federal Reserve recently gave the moribund market in mortgage-backed securities a big boost.
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Credit Suisse maintained its reputation for bonus structure creativity when times are tough with its recent move to make payments to some staff in the form of bonds linked to its own derivatives counterparty exposure. The paper will offer healthy coupons of 5% in Swiss francs or 6.5% in dollars, but without the upside offered by the original Partner Asset Facility (as it was dubbed) from 2008, which delivered a return of 70% by giving staff exposure to toxic mortgage and high-yield debt assets that had collapsed in price but later recovered value.
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David Einhorn’s £7.2 million ($11.3 million) fine by the UK’s Financial Services Authority for insider trading in Punch Taverns stock should make some hedge fund managers and investment bankers very afraid.
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When David Einhorn was sanctioned by the UK’s Financial Services Authority at the end of January he was described in one newspaper profile as “self-effacing”, which was an odd phrase for a hedge fund manager who relishes the spotlight, at least by the standards of the industry.
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More coals were heaped on the head of Johnny Cameron after the details in December’s FSA report on the failure of RBS revealed how little he appeared to understand the mechanics of structured credit when he was head of global banking and markets at the firm.
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Banks face tough decisions on how hard they should fight to retain sales and trading market share in different sectors, as the great deleveraging drive of 2012 gets under way.
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The decision by Congressman Barney Frank not to seek re-election to the US House of Representatives next year could result in an unexpected financial windfall for some employees of Goldman Sachs.
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Bank of America recently issued a footnoted warning in a regulatory filing about $11.5 billion of additional collateral payments on derivatives it faces because of rating agency downgrades. At the end of September the bank was on the hook for $4.9 billion of extra collateral that it might be required to pay but had not yet posted, including $3.2 billion linked to its September 21 downgrade by Moody’s.
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When Richard Moore was leaving Citigroup after two decades at the bank, in roles including global head of foreign exchange, he told colleagues he was considering a career shift to professional poker player.
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MF Global’s spectacular failure could have a knock-on effect on confidence in another mid-sized firm with ambitions to join the investment banking elite: Jefferies.
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Central bankers seem to have had just about enough of Jamie Dimon’s spittle-flecked rants about the dangers of increased regulation. The JPMorgan chief executive lambasted Federal Reserve chairman Ben Bernanke over the costs of regulation in a public debate in June, then followed up by arguing with Bank of Canada governor Mark Carney during the recent IMF/World Bank meetings in Washington. Dimon has also warned that some reforms are “anti-American”.
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The run on Morgan Stanley’s stock and credit default swaps in the final days of September had alarming similarities to the collapse in confidence in the bank during 2008.
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CDS spreads balloon as fears grow over potential flight of funds; Did US firm mis-time ramping up of risk in fixed income markets?
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Warren Buffett’s stick-up of Bank of America in late August was a classic piece of opportunistic investment. The $5 billion deal marked an evolution in Buffett’s signature approach of renting his reputation to troubled financial companies in return for a near-extortionate fee. Rather than waiting for a firm such as Salomon or Goldman to come to him begging for protection, Buffett this time foisted a deal on Bank of America.
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Bank of America’s acceptance of Warren Buffett’s extortionate investment terms represented at best as a gimmicky decision to pay for an endorsement and at worst a disregard for the bank’s existing shareholders
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The collapse in fixed-income revenues at Goldman Sachs in the second quarter might accelerate the war of succession between rivals for the role of next chief executive.
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Growing concern in the US that a Greek default could prove to be Europe’s equivalent of the Lehman Brothers collapse threatens to exacerbate trans-Atlantic tensions and spoil trading prospects for global investment banks.
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JPMorgan did a fine job in downplaying the significance of its recent payment of $153.6 million to the SEC to settle accusations of fraud over a mortgage-backed CDO squared product from 2007. The SEC had alleged that JPMorgan was negligent in failing to disclose the role that hedge fund Magnetar played in selecting the mortgages in the synthetic CDO, then taking the short side of the credit derivatives trades used to create the portfolio.
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The oil markets generate plenty of accusations about skulduggery, ranging from allegations of bribery surrounding production to speculation about suspicious developments in the timing of physical delivery of supplies. But these have been overshadowed recently by conspiracy theories surrounding trading of both precious and base metals.