Morning Coffee: Morgan Stanley launches the analysts’ dream job. Gen Z bankers turn their misery into content

For a certain kind of personality – basically, people who really feel uncomfortable if they go longer than five minutes without giving their opinion – equity research can be one of the nicest jobs in investment banking.  You get to pit your wits against the stock market every day, become a world-class expert on a single specialised industry sector and, best of all, everyone listens to what you have to say.  The only real downside is that you have to put your name on “Buy” and “Sell” recommendations, which can be quite embarrassing if they turn out to be wrong.

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But recently, even that minor inconvenience is being removed.  Morgan Stanley is the latest bank (following JP Morgan and Citi) to initiate coverage on a number of private companies and sectors, moving experienced analysts of quoted companies to “thematic” roles.  Even quite big industry names like Adam Jonas are giving up thankless tasks like trying to predict the latest gyration in the Tesla share price, in favour of having general thoughts about the future of artificial intelligence.

Of course, you can’t get rid of the agony of defeat without also losing the ecstasy of victory. Although “thematic” analysts will no longer have to endure the “walk of shame” down to the trading floor on the morning of a disastrous profit warning, they will also never experience the joy of seeing a takeover bid before the market, or of being the first to uncover an accounting anomaly and watching the company unravel.  Some analysts are adrenaline junkies and will presumably want to stay on the public side.

There is also the question of whether it’s wise to hitch your career to private markets right now, just at this point in the cycle.  The analysts who make the move aren’t taking the biggest career risk of all – that of removing yourself from a direct connection to revenue.  Most of the bulge bracket have always had small private market research operations, to serve high net-worth investors and (mainly) capital markets and advisory teams.  And the level of interest in sectoral themes and insights from outside the quoted sector is high among traditional equities clients. 

But even so … it feels a bit “top of the market” for so many people to be leaving a tried and tested industry segment that has been around in something like its present day form for nearly a hundred years, and moving to work in a much less transparent environment, with companies that often carry a high debt burden.  Let’s hope it all works out for them, or at least that if it doesn’t, the public-side equity research jobs are still there.

Elsewhere, it’s an undeniable fact that the investment banking industry does have issues with its working culture, and that its junior employees in particular are encouraged into unhealthy habits.  But when social media influencers are driving their follower counts with lurid but not very specific stories of hardship, all derived from seemingly quite short careers in banking and often coinciding with plot points from HBO’s “Industry”, it’s hard not to raise an eyebrow.

For example, Jonathan Finkel (“Your Finance Brother” on TikTok) apparently saw colleagues “take their suit jacket into the bathroom, into the stall, and use it as a pillow to go to sleep. At night, the main thing that people would do is just cry”.  And while we’re of course not in a position to gainsay his lived experience, we also can’t help noticing that according to BrokerCheck, he started at Deutsche Bank in New York in August 2019 and left in September 2021.  In other words, most of his banking career overlapped with the pandemic. So unless his flatmates were sleeping on suit jacket pillows in their own bathroom, this can’t have been a regular occurrence.

Perhaps more significantly, these days all the complaints from “post-banking” influencers seem to be about being asked to work long hours, and even then there’s a grudging acceptance that not every job is suitable for everybody, and that some young people like to be competitively exhausted if provided with free pizza. The days when banking horror stories revolved around bullying, harassment and illegal activity seem to be in the past.  So maybe the industry has actually got better.

Meanwhile …

Taking a small interest spread on $180bn of stablecoins leaves you with a lot of profits to reinvest, and even a minor allocation of Tether’s reserves is a lot of money, so they have hired Vincent Domien and Matthew O’Neill from HSBC’s precious metals trading team to manage their gold reserves. (Bloomberg)

Having moved to Texas earlier in the year for family reasons, Walleye’s Chief Strategy Officer, Jonathan Brenner, is leaving the firm.  Walleye doesn’t actually have an office in Texas, so presumably the remote arrangements weren’t working. (Business Insider)

RBC is building up its high-touch European equities sales trading franchise, hiring Imad Frigui from Wells Fargo, former Bank of America trader Malcolm Pratt and Tracey Brown from Oddo. (Financial News)

An as yet unnamed “junior analyst” at Waterfall Asset Management is going to have a story that will embellish their CV for a few years and their late night conversations for the rest of time.  Someone was the first to notice that Tricolor’s loan data had something up with it, triggering concerns and pulled credit lines at JP Morgan, with as yet unknown long term consequences. (Bloomberg)

A folksy farewell from Warren Buffett, who is “going quiet” after his retirement from the CEO post at Berkshire Hathaway.  He will be hanging on to his “class A” shares until shareholders “get used to” Greg Abel as his replacement. (FT)

Despite having spent more than 20 years as a private equity investor, Michael Magliochetti still thinks of himself as an “outsider” because he used to be a scientist.  He’s now written a book of short stories to explain various points of PE jargon to his fellow outsiders. (Northeastern University)

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