Morning Coffee: The immense IQ of managing directors at Goldman Sachs. Delicate operation at Credit Suisse
Goldman Sachs partners and managing directors (PMDs and MDs) may not have achieved the best results in the past 12 months and may need to do some more thoughtful strategising about where the firm goes next, but let not their IQs be doubted. Faced with a complex intellectual challenge, they rule supreme.
Or at least they ruled supreme on Saturday night, when at 1.55am Goldman's finest minds wiped the floor with the best a range of rival banks and hedge funds had to offer.
The event in question was "Compass", formerly known as "Midnight Madness" - a nocturnal charity scavenger hunt of complicated puzzles scattered across New York City. This year's included something to do with making graphs in canoes, something to do with decodifying songs from Kool and the Gang, something to do with Fibonacci sequences buried in a film of people playing sports, and sniffing scents on pieces of cotton wool.
Goldman's teams were the indisputable victors. They came in first, second and third places, beating teams from Bridgewater Associates (fourth and fifth), Barclays, BlackRock, Citigroup, JPMorgan Chase and Bloomberg. Bloomberg suggests the teams were comprised of some of Goldman's top people: the winning team featured Sarah Gray, a partner (thought to be from the strats division) and Theo Lubke (chief regulatory reform officer), the third place team featured Elisha Wiesel (Goldman's CIO).
On this basis at least, therefore, it looks like the intellectual capabilities of Goldman's people exceed those of the rest. Even Bridgewater's radically transparent quants were vanquished. Of course, it's always possible that Goldman's teams had a covert advantage - many of the puzzles were set by Goldmanites and were therefore 'attuned' to the Goldman mindset. With Goldman's past history of long hours and all-nighters, it's equally feasible that Goldman people function better than the rest at 2am.
Separately, Credit Suisse hasn't done too well in M&A this year. In the first six months, M&A revenues fell 8% year-on-year compared to rises of 11% at UBS and 13% at Deutsche Bank. This might be one reason why the bank decided to replace Marisa Drew and Mark Echlin, its former co-heads of EMEA investment banking and capital markets (appointed in 2013, who were only last year talking about their strategy for overhauling the division) with some new blood. Neither are leaving: Drew is off to head a new unit focused on impact investing and philanthropic advisory services; Echlin is going the traditional route of the senior investment banker and becoming a divisional chairman.
Morgan Stanley analyst says FICC revenues will decline 24% year-on-year in the third quarter. (Seeking Alpha)
Analysts cautions Goldman Sachs: Trying to "muscle-in" to highly competitive businesses dominated by bigger companies is not typically a formula for success. (Seeking Alpha)
After promising to hire in IBD, Goldman just recruited a pipeline banker from Citi. (WSJ)
10,000 finance jobs will be shifted out of the UK in the first wave of Brexit. (Reuters)
John Cryan needs to justify his strategy to Deutsche Bank's board. (Reuters)
The psychological toll of keeping a secret. (BPS)
Barack Obama for hire. (Bloomberg)
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