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Morning Coffee – The “psychopath” former banker earning $68k in a fortnight. Three different banks can claim they won 2023.

As a new year wipes the slate clean from a lacklustre 2023, bankers are temperamentally inclined to look for reasons to be more optimistic.  And although many of us are a bit tired of hearing global heads and co-heads talking about “dry powder” and “money on the sidelines”, even a relatively objective look at the indicators gives some reasons to be cheerful.

Surveys of corporate CEOs are showing more optimism than for a long while, for example.  The US interest rate cycle appears to have peaked.  Deal pipelines are showing some signs of building back up.  But there’s a somewhat more unconventional – and sightly disreputable – indicator which also might be showing good news for the first time in a long time.

Which is to say – Mia Lee is claiming to have made $34,000 a week in the first half of December working in New York City strip clubs.  Historically, those venues have been even more leveraged to the investment banking industry than more conventional professional services firms.  As a high value discretionary item which can no longer be claimed on expenses, bankers tend to spend money in strip clubs only when they are feeling both rich, and secure enough in their employment to not be bothered with the career risks.

And although the diary is frankly alarming, it’s apparently been cross-checked with Venmo receipts and the like, so there is at least one performer earning somewhere near a junior banker’s basic salary in a month.

This might not be the typical industry experience, and it certainly seems that Ms Lee is unusual in a lot of ways.  She claims to be a psychopath, and that this allows her to navigate the complexities of her work, lifestyle, open marriage and side-hustle as a financial literacy influencer.  She also says that she “worked on Wall Street” for ten years, although is somewhat vague about what capacity or for which bank.

Nonetheless, she doesn’t seem to be harming anyone.  And as long as they aren’t discussing business or putting undue pressure on junior employees to join them, arguably nor are the people throwing money at her.  Which means either that a lot of banking rainmakers are a lot more confident about the near future than they’re letting on, or that some other mystery industry has developed which allows its employees a lifestyle where they can spend extraordinary amounts of money.

Elsewhere, that same sense of renewed optimism is usually what drives the pep-talks given by CEOs and heads of division to their staff at the start of every New Year.  Anyone who’s been in banking for a few years will recognise the formula.  Management’s goals are partly to fire the revenue producers up to make a strong start, partly to reset morale after a disappointing bonus season and partly to build team spirit.  Consequently, it’s the season in which executives will be looking around for a good news story to tell.

For Goldman Sachs, it’s likely to be something along the lines of “look at the scoreboard”.  After some speculation earlier in the year that 2023 would see them lose the number one position in global M&A revenues, a strong showing in Q4 has kept them at the top for the seventh year running.  Expect lots of talk about the strength of the franchise, trusted advisory relationships with clients and not much concentration on the actual revenue numbers compared to previous years.

For JP Morgan, the theme might be “we’re the best because we’re the biggest”.  After some well-timed acquisitions, JPM now makes 20% of all the profits of the entire US banking industry.  When you’ve got a mindboggling statistic like that to hammer home, there’s no need to trouble too much over questions like “how much of that is the investment bank exactly?”.

For Bank of America, it’s “look at the market share”.  The trading arm has continued to put up solid growth in a falling market, taking clients and avoiding mishaps.  Don’t ask questions like “how much does the stock market really care about trading earnings?”.

But for the other two bulge bracket banks, the January rhetoric is more likely to take the “everything to play for” theme.  Morgan Stanley has a new chief executive, Citi is close to completing its reorganization.  Expect to hear a lot of “we’re focused on the future – the past is irrelevant”, and don’t ask “but is it, really?”.

Feel free to use these as a template if you find that you’re called on to do a quick impromptu booster speech, and best of luck for 2024.

Meanwhile …

A case can be made that the Goldman Sachs partnership is too small, not too large – it’s stayed roughly the same for ten years as overall headcount has grown.  The number of former GS partners is now almost 80% larger than the active ones. (Reuters)

Korean FX traders will be singing “In The Midnight Hour” and “On The Night Shift” as the onshore won trading day will now finish at 2am. (Bloomberg)

Sheila Bair, former chair of the FDIC, has a side hustle writing finance-themed children’s books like “Billy the Borrowing Blue-Footed Booby”.  Apparently one of them is based on Sam Bankman-Fried, called “Daisy Bubble” (FT)

A former NBA star founded a private equity partnership to make investments in AI technology and called it “Bluestone Partners”.  Wonder where he got the idea for the name from? (Business Insider)

Mainly engineering and back office jobs, but Dallas now has campuses for Goldman, JP Morgan and Bank of America and is a bigger financial centre than Chicago by some measures. (Bloomberg)

Some litigation involving a firm co-founded by Lazard’s Peter Orszag and run by his brother shows how much money is at stake in the niche consulting industry of providing economists to testify as expert witnesses in court cases.  As in banking, “clients hire the expert, not the firm”. (FT)

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AUTHORDaniel Davies Insider Comment

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