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.