The middle classes are being squeezed. The 1% are seizing all the benefits of growth and the machines are inveigling their way in everywhere. So far, so Piketty.
Strangely, therefore, at least one large bank seems to be betting on ‘mass affluence’ as a source of revenue growth in future. The Financial Times reports that Bank of America is busy expanding its wealth management business, both for super-wealthy customers and for the ‘mass affluent’ man and woman with a bit of money to spare.
In its quest for growth, BofA reportedly hired 165 wealth management graduates this year – the highest number ever. Cynics might suggest the sudden enthusiasm for wealth management hires has more to do with banks’ interest in increasing deposits as a stable source of funding than any revenue opportunity. Either way, it looks like good news if you’re a 20 year-something who wants to advise baby boomers on how to invest the proceeds of selling the family home.
Separately, Business Insider has stumbled upon a former Barclays and Wells Fargo executive who's devoted himself to making the world a better place, using Bitcoin. “I wanted to get involved with something that made a demonstrable difference,” Anthony Watson, a former senior technologist at the two banks, told BI, “I’m at that age now, I’m 39. I wanted to give back."
Watson’s working for Bitreserve, a start-up aiming to create an “internet of money” using bitcoin technology. He says he met Halsey Minor, Bitreserve’s founder in London’s Ivy Restaurant, and “knew what I wanted to do. His vision to transform the broken financial system and integrate legacy fractured systems of today with the future of money, and how that benefits everybody in society, just spoke to me."
Lay-offs Slow At BAML (WSJ)
The pace of layoffs is slowing at Bank of America: the bank cut fewer employees during the third quarter than during any quarter for the past three years.
A Good Quarter for Traders (WSJ)
Trading revenues fell 3.8% at Bank of America. A month ago, Brian Moynihan warned they could fall by 5-6%. Profits in the global markets group tripled.
If interest rates rise, banks' revenues will increase and cost problems will go away.
Houlihan Lokey just bought Banca Leonardo, the important Italian banking boutique you may not have heard of.
Short-term Problem for Short-Sellers (Bloomberg)
A lot of big hedge funds have been shuttered this year: “There’s an inherent flaw in the hedge fund business model. A lot of investment themes for hedge funds are of a longer tenor than the investor is committed to the fund.”
'Labelling hedge funds as “risk-loving” is to ignore their primary mandate, for which they are named. Hedge funds by their nature are unlikely to beat equity indices during bull markets, because they normally hedge away part of their returns. The goal is to beat indices over a full cycle.'
Get Over It (Quartz)
Stop complaining about banking hours: you picked a career that demands you more or less hand over your 20s and 30s so that you can retire by 50. (Quartz)
Morning Glory (WSJ)
Investing in the market at 10 a.m. Eastern time and selling at 11 a.m. has turned out to be the best way to make money this year.
Quote of the Day:
"Everyone in our company is very familiar with each other and gets along very well. The compartment case] is just a way of celebrating the completion of their first flight and there is no malicious behavior of any kind," the rite of passage at this Chinese airline – getting stuffed into the overhead compartment.