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Morning Coffee: Billionaire-maker day in Bitcoin madness. Analysts on the cheap

This may change by the time I've finished writing this sentence, but bitcoin ended at $16k yesterday, following wild swings that hit highs of $20k within 90 minutes on Coinbase Inc's GDAX exchange. Whether you believe bitcoin is a bubble waiting to burst, or an asset class about to go mainstream, yesterday was all about the cryptocurrency. It's now up 600% in December.

One Australian bitcoin entrepreneur became a billionaire - for 45 minutes - the 'Facebook Two' Winklvoss twin's net worth exceeded that of Mark Zuckerberg. It's a crazy ride. “People are looking at a video game as a regular market. And it’s clearly not, otherwise it wouldn’t be where it is already,” Walter Zimmermann, technical analyst at ICAP TA told the Financial Times.

All of this came just before Bitcoin aims to go mainstream. With 10 days, CBOE Global Markets, the US derivatives exchange, is due to launch bitcoin futures. J.P. Morgan CEO Jamie Dimon has described bitcoin as a bubble that will inevitably burst, but many are ignoring the warning signs - not least of all security breaches - that it could all go belly up.

Big banks, generally, still remain unconvinced, as do institutional investors. Goldman Sachs, Morgan Stanley, JPMorgan and Citigroup all signed a letter to the Commodity Futures Trading Commission and lobby group the Futures Industry Association objecting the introduction of bitcoin futures. Goldman Sachs CEO Lloyd Blankfein is on the bubble side of the fence, but hasn't discounted it entirely. Other senior bankers are more vocal about its dangers.

RBS chairman Sir Howard Davies, has likened it to Dante's Inferno. “Put up the sign from Dante’s Inferno – ‘Abandon hope all ye who enter here’ – I think that’s probably what’s needed,” he said speaking on Bloomberg TV, adding that the cryptocurrency appeared to be a “frothy investment bubble”.

Separately, the carnage of investment banks' research ranks is no secret as MiFID II regulation is set to finally come to pass on the 3 January next year. MiFID requires banks to unbundle the cost of research from other trading costs, the result being a brutal thinning of the ranks of equity researchers churning out low-value notes en mass in favour of more star analysts likely to bring in buy-side dollars. But some firms are going for volume recruitment, and are picking up analysts on the cheap.

Swiss bank EFG Asset Management told Bloomberg that it had doubled its research team to 18 people before MiFID II hits, and they're paying them less. "The knock-on effect of ETFs, passive investments, as well as MiFID II means that there are many research analysts out there available at cheaper prices than they were before,” Moz Afzal, the London-based chief investment officer at EFG Asset Management.


Harold Ford Jr, a former Democratic congressman and Morgan Stanley MD, has been fired by the bank for alleged sexual misconduct (Financial Times)

Goldman Sachs is hiring 200 people in Dallas for its personal lending unit, Marcus (Dallas Business Journal)

Goldman has disappeared from the Chinese IPO Market (Bloomberg)

Standard Chartered is already struggling to attract talent because of Brexit says CEO Bill Winters: "Some of the best talent that we can have in the UK marketplace is coming from students that have chosen to study here and then stayed for some extended period afterwards… We've noticed that's been impacted already. (BBC)

Christopher Hohn, TCI Fund Management and LSE activist investor, earned $1m every day last year (Bloomberg)

Female hedge fund manager was awarded $3.8m, but claims she was let go from Baupost on gender discrimination and illness (Business Week)

What to get your billionaire this Christmas (Bloomberg)

I bumped into Lloyd Blankfein, called him Jamie Dimon and asked to have my photo taken with him. I'm starting at Goldman Sachs in a few weeks. (Wall Street Oasis)

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AUTHORPaul Clarke

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