🍋 A Tale of Two Banks

When investment banking revenue across the street dropped by 50% in 2022, Morgan Stanley was able to pivot to grow its stable income. Goldman wasn’t as lucky, but it seems every major bank is chasing consistent fees in 2023.

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“Your capacity for gratitude is inversely proportional to your sense of entitlement.” — Mark Brooks

Good Morning! Twitter is so behind on rent that the company is auctioning off its office espresso machines and kegerators. Meanwhile, Elon Musk is in court this week defending his infamous 2018 "funding secured" tweet.

China’s population fell for the first time in 6 decades, and this demographic dip could put a damper on the country's economic growth. Apple just revealed their products of 2023, including the strongest chips they've ever sold.

Gen Z is driving growth in luxury sales — everything from designer handbags and shoes, to watches, jewelry, apparel and beauty products — at age 15, 3-5 years earlier than millennials did.

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1. Story of the Day: A Tale of Two Banks

Banks are starting to release their year-end financials, and it's looking like investors are over the inconsistent rollercoaster ride of investment banking revenue. As dealmaking dries up, they're opting for the comfort of steady income. Goldman Sachs and Morgan Stanley released their year-end results yesterday, leaving investors with mixed reactions.

Morgan Stanley had investors swooning over their steady and reliable income from managing other people's money - it may not be exciting, but it's dependable. Morgan Stanley snagged up a handful of investment management firms like Eaton Vance and E*Trade over the past few years. It seems the investment-management fee game is paying off big time - it's raking in more than half of Morgan Stanley's total revenue.

Meanwhile, investors gave Goldman Sachs the cold shoulder for their focus on risky ventures in volatile trading and investment banking. While Goldman has focused on steady revenue over the past year, investors think they’re too late to the game.

When investment banking revenue across the street dropped by 50% in 2022, Morgan Stanley was able to pivot to grow its stable income. Goldman wasn’t as lucky, but it seems every major bank is chasing consistent fees in 2023.

Takeaway: Goldman’s investors have traded in their love for big wins in trading and hefty deal fees for the steady, reliable returns of repeatable revenue. Goldman has always been a top dog in the banking industry, but it might be playing catch-up with its peers in the future.

2. Markets Rundown

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The Dow and S&P 500 closed lower as earnings season picks up.

Movers & Shakers

  • (+) Roblox ($RBLX) +12% after December bookings increased.

  • (+) Carvana ($CVNA) +4% after the company adopted a 'poison pill' plan to prevent a hostile takeover.

  • (–) Goldman Sachs ($GS) -6% after the firm's worst earnings miss in a decade.

Private Dealmaking

  • Belharra Therapeutics, a cancer treatment startup, raised $130 million

  • Chronosphere, a data observability platform used by DoorDash and Zillow, raised $115 million

  • Impel, a digital engagement platform for auto dealers, raised $104 million

  • Caban Systems, an energy storage developer, raised $51 million

  • Aerones, a startup that uses robots to clean wind turbines, raised $30 million

  • Welcome Homes, a luxury homebuilding platform serving the New York area, raised $29 million

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3. Top Reads

  • The states that have banned TikTok on government devices (YF)

  • What one finance professor thinks about crypto (NYT)

  • How to pick and stick to your yearly work goals (CNBC)

  • Tech’s next big fights (Axios)

  • How Adobe became one of America’s most valuable tech companies (WSJ)

  • Goldman reports it’s biggest earnings miss in decades (YF)

  • Longevity can have a greater impact on retirement money than inflation (CNBC)

  • Just how common is corporate fraud? (NYT)

  • How Bed Bath & Beyond stock buybacks undermined the company (YF)

4. Book of the Day: The Good Life

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Relationships in all their forms—friendships, romantic partnerships, families, coworkers, tennis partners, book club members, Bible study groups—all contribute to a happier, healthier life.

And as The Good Life shows us, it’s never too late to strengthen the relationships you have, and never too late to build new ones.

“If you had to make one life choice, right now, to set yourself on the path to future health and happiness, what would it be?”

5. Short Squeez Picks

6. Daily Visual: China's Population Now Moving in Reverse

Source: Axios

7. Daily Acumen

"While walking is certainly not the most efficient way to see a city, it is the most pleasant, insightful, and human.

I don’t think you can know a place unless you walk it, because it isn’t about distance, but about content."

8. Memes of the Day

 

 

 

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