Morning Coffee: Goldman Sachs bankers' varying opinions on recovery in 2024. Citadel Securities hiring a new species of person from banks
When the dust has settled on winter festivities and the days are again getting longer in January, then what will happen to banks in 2024? This is the kind of question that occupies anyone trying to budget for next year, and it's the kind of question banks are busy discussing as they allocate bonuses and deliberate on headcount requirements.
As might be expected, not everyone's crystal ball is saying the same thing. Senior Goldman Sachs bankers' differing prognostications are an example of the difficulty of deciphering the mists.
Speaking at a Reuters conference yesterday, Stephan Feldgoise, the co-head of global M&A at Goldman Sachs, declared that he'd looked into the mists and was reasonably "bullish." Despite the wars, higher rates and regulatory changes, Feldgoise said 2024 could be ok for deals. "CEOs and corporate boards do not need to have a very clear picture of what the future will look like, but they need a degree of stability," he declared. Deals will return, albeit in "fits and starts."
Somewhere at the same conference, though, Feldgoise's boss was also disclosing his vision of the year to come. Jim Esposito, co-head of global banking and markets at Goldman Sachs told Reuters 2024 will be difficult for dealmakers but ok for traders. "For the medium term, the dealmaking environment will indeed be a little bit less robust," said Esposito, blaming macroeconomic conditions. Weary private equity investors are partly to blame.
In trading, though, Esposito thinks conditions are ripe for making money. "We're sitting on what is one of the more interesting trading environments in my career," he opined, citing volatility fueled by rates, inflation and geopolitics.
It all implies a tough bonus round. Feldgoise will be pushing for payments for key members of his team on the basis of his bullishness. Esposito will be more inclined to make the firm's fixed income traders feel loved.
Separately, if Goldman is looking for an excuse to pay its fixed income traders, Citadel Securities is conveniently providing it. Bloomberg reports that the electronic market making firm is on yet another hiring spree and that banks are its preferred source of talent.
Citadel Securities has had a habit of hiring from Goldman in the past. As it builds a fixed income market making business split between electronic and voice trades, however, it's so far been poaching from elsewhere. Bloomberg reports that Citadel Securities' recent fixed income hires include Matthew Micheli and Jimmy Stewart from Morgan Stanley, Vishnu Murthy from HSBC, and Tucker Roberts from Citi. Still, if you're a Goldman fixed income executive trying to explain why your people need to get paid, Citadel Securities' build comes at a convenient time for strengthening the argument.
JPMorgan is bullish about M&A. "Our (deal pipelines) are at one of the largest levels that you've seen in five-six years. Some (companies) will come out and take the lead." (Reuters)
UBS hired 200 investment bank managing directors from Credit Suisse. (Financial News)
Ray Dalio's career began when, as a golf caddie, he was invited to take the pot-smoking, heavy drinking, long haired grandson of a New York socialite to Europe for six weeks to straighten him out. As a reward, he was given a clerkship at the New York Stock Exchange by the socialite's husband, who happened to be a titan of Wall Street. (Financial Times)
Bridgewater staff allegedly went into the woods to take calls as there were cameras throughout the office, but then they thought cameras were watching themselves in the trees. Bridgewater says this is not true. (Business Insider)
Jefferies spies an opportunity to replace Credit Suisse in leveraged finance. (Global Capital)
UBS issued some new AT1 bonds and there were $36bn of orders, even though when Credit Suisse went under AT1 bondholders were wiped out and it was thought no one would buy AT1 bonds again. “People are slowly but surely recognizing that that event in March was an idiosyncratic event,” said Sergio Ermotti, adding that the bonds have "very attractive terms." (Bloomberg)
American Airlines is offering $250k bonuses to poach FedEx and UPS pilots who are currently piloting cargo carriers. It wants them as captains on its passenger planes. (New York Post)
It's getting difficult to talk to clients about potential transactions in Hong Kong. The SFC is proposing that banks use a script for market-sounding conversations, that they monitor any potential breaches and record all calls or meetings. Specific staff members will need to handle market soundings. (WSJ)
It's not about how long you sleep but how consistently you sleep. Sleeping six hours every night on a consistent schedule, with few interruptions, is associated with a lower risk of early death than sleeping eight hours with very irregular habits. (WSJ)
Stacy Polley, a star of fixed-income sales at Goldman for almost 25 years, is now appearing in a cabaret about her retirement. All kinds of senior Goldman people are going to see her. (Bloomberg)
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