Morning Coffee: Donald Trump tempts Jamie Dimon with possibility of doing a Gary Cohen. HSBC's new chief executive is a trader
Donald Trump likes Jamie Dimon, but it's not clear whether the feeling is mutual. When Trump spoke to Bloomberg yesterday, one of his revelations was that he'd consider Jamie Dimon to serve as secretary of the department of the treasury. It's not the average headhunter call.
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Dimon is not the first banker to catch Trump's eye. During his first time as US president, Trump selected former Goldman Sachs Gary Cohen to be director of his National Economic Council and assistant for economic policy. Cohn duly took the call, but as we observed at the time, he wasn't entirely motivated by altruistic servitude.
When someone leaves banking to serve in senior roles in the federal government, they must sell all their stock to avoid a conflict of interest. Normal vesting schedules don't apply, and stock that would have vested years in the future is suddenly available all at once. In Cohen's case, this meant leaving Goldman Sachs with around $285m, of which around $100m was the result of accelerated vesting.
Even better, under so-called "divestiture rules," stock sold by an executive joining the federal government isn't subject to capital gains tax if it's reinvested in treasuries or diversified funds.
If this was an incentive for Gary Cohen, it may be an even bigger incentive for Jamie Dimon. Dimon holds circa 7.7m shares in JPMorgan, which are currently worth around $1.64bn. In 2021, he received an option grant of 1.5m shares, which cliff vest in July 2026 and must be sold before expiration in 2031. That alone is worth more than $320m at current stock prices.
Last time Trump was elected, stock prices rallied. Gary Cohen was able to sell his Goldman shares at close to their highest price for a decade. Since then, though, Goldman's stock has more than doubled, so maybe Gary should have stuck around? Cohn then resigned as Trump's economic advisor in early 2018 after opposing Trump's tariffs policy. It probably didn't help that he was known by some in the administration as "globalist Gary." Democratic Dimon could yet regret it if he has his head turned.
Separately, HSBC has chosen its new chief executive and it's Georges Elhedery, the former head of the investment bank who had a six-month sabbatical not so long ago.
Elhedery looks like a good candidate for HSBC's salespeople and traders. A graduate off École Polytechnique in Paris, he has a markets background and worked for Goldman Sachs before joining HSBC nearly two decades ago.
Meanwhile...
JD Vance wasn't a successful or failed VC. Namely because he didn't have enough time, spending just six years at three different firms. (Axios)
Nomura is cutting jobs in Asia. Patrick Kwan, head of investment banking for Asia excluding Japan, is leaving the firm after more than two years. (Bloomberg)
Equities and equity derivative traders are back in the game. “It continues to be an equities world. You see it in the asset price momentum in the US. You see now the potential for that to broaden to more names and more sectors,” said Ted Pick at Morgan Stanley. (Bloomberg)
"There's a significant amount of geopolitical and election uncertainty around the world, but that tends to be an environment where clients reposition, and that tends to be a reasonably good environment for our sales and trading business." (Yahoo)
Net new assets in wealth management at Morgan Stanley were the lowest since 2020 across the first six months of the year. Profit margins in that business have also shrunk, as wealth clients have been able to leave money in cash and other more liquid products that offer a greater return in a higher interest rate environment, but which are less lucrative for banks. (Financial Times)
With electronic equities trading continuing to rise, a notable proportion of US low-touch desk expect to expand their teams over the next 12-18 months. (The Trade)
Citadel Securities hired Andrew Pidgeon, who was recently Segantii’s global head of treasury and financing. He's expected to start at Citadel in mid-August. (Bloomberg)
Banks in Europe have been fighting back against the ECB's edict that they must hold more capital against potential leveraged loan losses and it seems to be working. (Bloomberg)
Tiger Global would like to acquire more shares in Revolut. (Sky)
Gen Z no longer wants to work in tech. (Quartz)
Night owls have superior cognitive function. (Guardian)
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