Morning Coffee: Deeply mixed messages on coming Goldman Sachs bonuses. James Gorman's promise to Ted Pick at Morgan Stanley
It's bonus season, not quite yet but very soon. Goldman Sachs announces its fourth quarter results next week, and around the same time it will let its people know the size of their bonuses. The uncertainty lies heavy.
Our own bonus expectations survey showed that Goldman people have very high hopes for their bonuses this year. They expect a 29% rise, second only to the 30% rise expected at HSBC. There's a reason for this. "Last year was absolute Armageddon," says one Goldman insider of his previous bonus. Amends must be made.
And yet, as the date approaches, the portents are confusing. On one hand, Financial News reported before Christmas that Goldman is planning a 10% bonus hike for dealmakers despite a year of limp performance, and the Financial Times said at the same time that Goldman was planning to increase bonuses for traders. On the other, the New York Post said last week that miserable bonuses are coming at Goldman in an effort to make poor performers go away.
The implication would seem to be that some people at Goldman might be paid very well, many might be paid tolerably, and some will be paid terribly and leave in a huff. The US-based insider, is not hopeful. "I just don't see how they have the cash to pay us," he says. "I fear they'll pay us in something like far-dated carried interest in funds that have yet to be deployed." Goldman said in November that it plans to pay top performers in its asset management division a higher proportion of carry in the future.
Separately, James Gorman has left his job as CEO of Morgan Stanley after 14 years and has been giving all sorts of interviews and appearing in articles as an extended encomium. In these interviews, he divulges things like his approach to getting things done (write a checklist on the first day of the year), his battles with Moody's as it attempted to impose a three notch downgrade on Morgan Stanley debt, and his habit of writing Morgan Stanley's revenues and his resultant stock price predictions on pieces of paper every night and keeping them in a box.
To the Wall Street Journal, Gorman also divulges a promise he's made not to desert his successor. The SEC is still investigating Morgan Stanley's block trading business, which is accused of tipping off large hedge fund clients ahead of share sales. Gorman says he promised Ted Pick he'd resolve this before Pick took over as CEO. That didn't happen. Gorman is still trying to resolve it for Pick in his new role as executive chairman. It's one way to stay employed.
BlackRock is announcing Q4 results this Friday and plans to cut 600 people. (New York Post)
Bob Diamond is urging radical action with regard to Barclays' investment bank. “They need to be radical — either invest in it or exit.” (The Times)
A Goldman Sachs recruiter says she won't hire you if you seem bored and apathetic in an interview. (CNBC)
Citi plans to launch a China-focused investment bank this year and wants to hire 30 people for it. (Reuters)
Bobby Jain's hedge fund is offering teasing deals: investors who commit $250m this month will only pay 10% fees. (Bloomberg)
BlueCrest was up 20.3% last year. This is less than the 153% it was up in 2022. (Bloomberg)
The Children’s Investment fund was up 33%. (Bloomberg)
Brevan Howard's master fund lost 2.1%. Brevan Howard's digital multistrategy fund was up 44%. (Bloomberg)
Daiwa hired Guy Trust, Jefferies’ managing director and head of US equity distribution in Europe. (The Trade)
Swearing is now more acceptable because it's not just used to insult people. (Guardian)
Stick to a plan and compare yourself to the median person. (Ian Leslie)
First Ever Recording Of Dying Human Brain Shows Possible "Life Recall" Activity. (IFL Science)
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