Trading ‘Rout’ Means Trouble for Goldman, Morgan Stanley
The mini freak-out over third quarter earnings continued on Friday with a rather gloomy forecast from Bernstein Research analyst Brad Hintz, who said the typically soft quarter appears to be turning into a “full scale rout” in capital markets.
Weak activity and limited risk taking will likely contribute to a 20% to 25% dip in fixed income trading, Hintz said. Institutional equity trading will also take a substantial hit, though not a quite the same level. Hintz cut Goldman Sachs’ third quarter earnings per share estimate by 15%; he sees Morgan Stanley taking a 20% hit.
Investment banking revenues look to be equally soft, according to Hintz. Despite the massive Verizon/Vodafone deal, M&A revenues are down 23% compared to Q2. ECM and DCM activity is equally sluggish.
The report isn’t revolutionary – several banks have warned of plummeting FICC revenues – but it adds another log to the fire. Jefferies, which often acts as a barometer for the industry as a whole, just reported that its fixed-income sales and trading revenue plummeted an astounding 88% year-over-year.
Fortunately, the word on the Street is that FICC activity picked up in September, so a bad quarter may not make a bad year if the positive momentum continues into Q4.
Too Much Experience? (eFinancialCareers)
Here are some concrete tips on how to go about the job search when you’re overqualified – from networking to resume writing to the critical interviews.
Tom Hayes, the former UBS trader who one of the key players in the Libor rate-fixing scandal, had an aggressive suitor back in 2008: Goldman Sachs. The U.S. bank offered him a $3 million guaranteed pay package and the title of managing director. UBS outbid Goldman to keep Hayes with the Swiss bank.
Asset Management Hiring (eFinancialCareers)
If you’re looking for a new opportunity in asset management, here are where the jobs are emerging currently.
Mary Mack, head of Wells Fargo’s WFA Financial Services Group, has been named the new head of the bank’s entire brokerage unit. She will succeed Danny Ludeman on Jan. 1.
The Evolution of Goldman (Financial News)
Goldman Sachs is on pace to generate more revenue from debt capital markets and loans than from mergers and acquisitions or equity capital markets since 1995.
The Light Side (Business Insider)
George Anson, managing director of private equity fund HarbourVest Partners, appears tired of the bad reputation associated with his industry. Private equity contributes to society by "encouraging productivity and competitiveness,” he said. It’s a “force for good.”
Bob Diamond is bullish on Barclays and plans to buy new shares. Maybe that’s because he doesn’t work their anymore.
Lazard Going Nowhere (NY Post)
Lazard Capital “has no plans to shut the firm down,” according to a company spokesperson responding to speculation that company executives are looking for new jobs. The brokerage firm is still exploring its options, including a sale.
Buzz Around the Office
The designer of famed 1990s video game "NBA Jam" grew up a huge Detroit Pistons fan. How would you know? He programmed a special code that caused the Chicago Bulls to miss every single buzzer-beater they ever attempted. A likely byproduct was a lot of unhappy children.
List of the Day: Interview Questions
When interviewing, do your best to avoid these types of questions.
- Questions that can be answered online.
- Questions that imply you think the job is a stepping stone.
- Questions about salary (during the initial interview).
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