Has the second quarter of 2015 been a good or bad one for investment banks? That depends upon who you ask. Ask J.P, Morgan's banking analysts and it hasn't been great. Ask Morgan Stanley's CEO and it's been pretty fine.
“We are witnessing a slowdown in investment banking revenues in the second quarter of 2015, potentially more than normal seasonality, driven by weakness in rates following a strong first-quarter 2015 performance,” said J.P. Morgan's analysts in a note yesterday. Nor is this 'slowdown' expected to be moderate: J.P. Morgan's pessimistic banking team is predicting a 30% quarter-on-quarter reduction in fixed income currencies and commodities (FICC) revenues at Deutsche Bank in the three months to June.
James Gorman seems to have missed these portents of doom. The CEO of Morgan Stanley also declared yesterday that market conditions have remained 'solid' amidst fears of a Greek eurozone exit and rising US interest rates. In normal conditions, both factors might derail banks' revenues but in the current climate Gorman said they would be a "positive" as banks benefited from resulting volatility.
Who's right? We won't know until July, when banks report their results for the second quarter.
Separately, spot FX sales and trading might seem a good area to go into if you're a young markets professional today. After all, most of the old guard was wiped out by the FX-fixing scandal. Unfortunately, however, Bloomberg suggests spot FX sales and trading isn't what it used to be. Firstly, most of the trading is now done by computers, with electronic trades accounting for 66% of the total in the year to May, up from 50% in 2010. Secondly, salespeople are forbidden from giving clients any 'market colour' and spend most of their days acting as glorified data-input professionals, adding client orders to electronic exchanges. Suddenly working at the cutting edge of FX trading isn't so exciting after all.
38.6% of investors voted against executive compensation packages at JPMorgan. (Financial Times)
Deutsche Bank just hired Sebastian Raedler from Morgan Stanley as its head of equity strategy. (Financial News)
Christian Bittar, Deutsche's incredibly high earning ex-LIBOR trader, has launched a case against the FCA for naming him in a recent report. (Financial Times)
There is an ‘unusually high level of (staff) turnover’ in Barclays’ prime brokerage business. (WSJ)
'Affiliated managers group', a manager of fund managers, is expanding fast and about to enter Europe, It may be hiring. (Financial Times)
30% of finance professionals earning more than $500k have witnessed dodgy goings on at work. The situation is worse in London. (NY Times)
Bankers who already have Porsches are escaping to become private school teachers. (Financial News)
How to remain employable in the age of machines. (HBR)
A reminder that the average MBA earns a starting salary of $100k and is in big demand. (Bloomberg)
What to do if you got a stupidly low score in your practice CFA exam. (300 Hours)