Morning Coffee: The biggest bonus increases for 10 years are (apparently) coming. Goldman Sachs partners think only of others
If you've got some things that you want to buy next year, then fortune is your friend. Another bonus forecast is out, and it also says that bonuses will be significantly up.
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This forecast is from Options Group, the financial services search firm. Bloomberg has seen it (we haven't, yet); Options Group says equity traders' bonuses will rise 14% to their highest level for 10 years and that investment banking bonuses will rise by 12%, which is the fastest they've risen for 12 years. Whether bankers will also have the highest bonuses for 10 years is questionable because Options Group also says that their bonuses fell by 22% last year, so they're still not even.
Options Group isn't the only bonus oracle to look into the waters and see gold. The Wall Street Comptroller also saw shimmering last month, and so forecast that the average bonus for bankers in New York this year will rise to $300k from $245k last year. Johnson Associates has also been issuing some wild forecasts, and suggested in August that equities bonuses might rise by 30% (Johnson's updated forecast will be out tomorrow).
Why the enthusiasm? Options Group says it's because banks are "very cognizant" of the fact that people want to be paid, but also because "private equity, private credit and all these second-, third-tier institutions," want to pinch banks' talent.
In equities, it helps that revenues have risen by more than 30% at the likes of Morgan Stanley and JPMorgan. In M&A, it helps that veterans like Leon Kalvaria at Citi say they've never been busier in 40 years and that David Solomon at Goldman Sachs says CEOs feel "unleashed" to do big deals. In fixed income, however, there are no such primal forces and Options Group thinks bonuses will only increase by 2.9%. This might be disappointing in areas like FX, where revenues per head are apparently up 70% on last year.
Separately, if you're looking for a selfless person whose primary concern is the wellbeing of everyone else, then the Goldman Sachs partner pool may be full of them.
Business Insider spoke to two Goldman Sachs partners - Meena Lakdawala-Flynn, the co-head of Global Private Wealth Management and One Goldman Sachs, and Asahi Pompey, the global head of the Office of Corporate Engagement and the chair of the Urban Investment Group. They both said the same thing. Their primary concern is "talent" and "people" and specifically "their people."
As a partner at Goldman Sachs you hold "the careers of all these individuals in your hands," said Pompey. She said she lies awake at night thinking whether she's doing her best to "amplify their talents."
Meanwhile...
Millennium sold a 15% stake in itself, and this is the first time Izzy Englander parted with any equity in the hedge fund in its 36-year history. The fund is valued at around $14bn. Before selling the stake, Millennium changed its fee structure so that investors always pay 1% of assets or 20% of investment gains, according to which is higher. (FT)
Millennium founder Izzy Englander likes to go to France, where he owns two homes and buys his glasses in a shop near the Palais Royal in Paris. He's now aged 77. Englander is the son of Polish immigrants and grew up in a modest home in Brooklyn. (Bloomberg)
Nick O'Kane, Macquarie's top oil trader, left after earning $39m. Then 12 other oil traders left, including David Hochberg, who's now at Jain Global and Macquarie's oil trading business isn't doing so well. Compliance is playing a bigger role and trade authorizations have slowed. (Bloomberg)
Point72 has got a new equities unit called Valist Asset Management and says it's “meaningfully increased both team count and capital allocation in our fundamental equities strategy.” (Bloomberg)
Schroders wants more people for its private markets team. (Financial News)
The chief operating officer for UBS's investment bank says: “I’m not sure that AI will reduce the number of junior bankers, because in theory you want to be doing more deals and covering more clients.” (Financial News)
Barry Duong was once a portfolio manager at Balyasny Asset Management and an analyst at Citadel. Now he works for AI start-up Hebbia and generates AI prompts for financial service firms. He says everyone should do the same. It helps that Hebbia isn't covered by his non-compete. (Business Insider)
Headlands Technology trader Richard Ho says he didn't steal the source code and that it's not even clear what he's supposed to have stolen, so the case against him should be dismissed. (Bloomberg)
Systematic credit investing is growing fast. In May 2024, Barclays analysts estimated that there were about $90-140bn deployed in systematic strategies in the US corporate bond market. Now it's closer to $200bn. (Alphaville)
Dark night of D-Sol: David Solomon listed his hobbies and they didn't include being a DJ. "I play golf, I play tennis, I play padel, I kitesurf, I road bike. I have all sorts of active things that I like to do. I do not sit on the couch. I do not sit still. I’m either working or I’m active and trying to enjoy the people that I love. I’ve got so many hobbies. I’ve got too many hobbies." (Alphaville)
Going into “the City”, George Orwell remembers his young self realizing, meant a life of suburban drudgery. (J'accuse)
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