Morning Coffee: Goldman Sachs bonus confusion, while Morgan Stanley staff cuts before payouts. Worst career for the academic elite

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Amidst all the speculation about Deutsche Bank bonuses, there's some other more immediate (given that its bonuses are announced next week) contemplation about bonuses for 2018 at Goldman Sachs.

Last time Goldman Sachs paid bonuses they weren't great, and this comparative paucity was blamed for the exit of several traders in the months that followed. This time, traders at the bank are already worried that new CEO David Solomon will reward investment bankers instead. It doesn't help that money set aside for compensation at the firm was low last year, even before Solomon took over. 

Now Business Insider says Goldman traders have a new worry. They're concerned that fines from the 1MDB scandal will eat into their bonus pool. Malaysia is thought to be seeking around $3.3bn from the firm, and even though nothing has been paid yet traders are acutely aware of the looming threat to pay. "They'll find any excuse to cut comp," one told Business Insider. 

And yet, 1MDB may also have some upside for Goldman traders' wallets. Barrons notes that the 1MDB scandal has depressed Goldman's share price by around 20% since October, and that the firm's shares are expected to rebound if Goldman reaches a settlement with the DOJ. Given that many of this year's Goldman's bonuses will be paid in these depressed shares, recipients could get a 20% uplift as the year progresses...

While Goldman Sachs traders worry about the size of their bonuses, some Morgan Stanley traders are worrying about finding new jobs.  Business Insider also reports that Morgan Stanley is cutting "dozens" of sales and trading staff before bonus time. Those cut are unlikely to receive bonuses for last year.

Separately, and following an anguished complaint from an overworked millennial on Buzzfeed at the weekend, Noah Smith at Bloomberg thinks he's spotted the problem. Far too many of them want to become academics, says Smith, but academic careers aren't what they were and the best and brightest end up, "low-paid adjuncts or precarious postdocs as their student loans go unpaid". Maybe more should think about going into banking instead? 


Amazon's Jeff Bezos is divorcing his wife whom he met whilst working D.E. Shaw, but who always wanted to be a writer. (Business Insider) 

Contrary to expectation, UBS will enforce a full six months of gardening leave for Andrea Orcel who therefore won't be able to become CEO of Santander until April 2019. (Bloomberg) 

Simon Holden, who spent 18 years in Goldman Sachs' investment banking division and held a key relationship with SoftBank, has left. (Business Insider) 

Irrespective of the Khashoggi murder, BNP Paribas, Citigroup, HSBC, and JPMorgan are helping Saudi Arabia issue a new set of debt. (Financial Times) 

U.S. law firm Kirkland & Ellis keeps poaching lawyers in London. Its latest hire is Adrian Maguire, a private equity specialist from Freshfields, who's reportedly joined on a package worth several millions of dollars. (Financial Times) 

Former UK prime minister Gordon Brown is becoming an advisor to a Swiss private equity firm. (WSJ) 

Philippe Jabre, old-school trader: "Financial markets have significantly evolved over the past decade, driven by new technologies, and the market itself is becoming more difficult to anticipate as traditional participants are imperceptibly replaced by computerised models.” (Financial Times) 

It will soon be possible to travel to London's City airport by boat. (The Times) 

How Facebook used artificial intelligence in 2018. (Facebook)  

I was injecting heroin whilst working for the Financial Times. (Vice) 

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