🍋 Wall Street's Job Cuts

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Short Squeez
July 19, 2022

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"You cannot micro-manage your way out of macro problems." — Wilbur Ross

Good Morning! Just in case you didn't have enough social media in your life, Snapchat is now launching a desktop version of the app, available to US subscribers of Snapchat+. Also unexpected was Goldman's Q2 results, easily beating analyst expectations thanks to strong bond trading results. While Goldman's making money from bonds, they, and Morgan Stanley, are saying that stocks haven't bottomed out yet. Self serving advice much? Here's some free advice: go to Europe ASAP if you can! Investors believe the euro will drop to $0.90 because of geopolitical headwinds.

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1. Story of the Day: Wall Street's Job Cuts?

While the pandemic resulted in crazy times for plenty of reasons, one unexpected one was the flux of M&A activity. After Wall Street firms hired like crazy to not drown in deals, they're now looking to bail out some of the extra weight that was brought on board.

Equity capital markets desks are preparing for a wave of cuts as deal flow has sunk. Don't feel too bad if that applies to you, as M&A and leveraged finance jobs are in the crosshairs too.

Thanks to fears of a recession, red hot inflation (there's gotta be a group of Northwestern Mutual guys that named their cover band that somewhere), and the Russian invasion of Ukraine, markets are preparing for one of the biggest deal-making slumps since the Great Financial Crisis.

According to people familiar with the matter, execs at Bank of America, Citigroup, and UBS, have already held discussions about whether they're overstaffed for the dreary deal flow ahead. Dismissals are expected across the industry after the summer, unless there's a miraculous increase in activity.

Citigroup CEO, Jane Fraser, wanted to make some of y'all feel better, and said the firm wouldn't overreact to a slowdown. They've hired "some very strong bankers" to take business from rivals, and I bet that's y'all since you read Short Squeez every morning.

Fraser went on to say, "It always takes a few years to build share and build out the client relationships and to see the full fruits of those investments. You're going to see us take a strategic look at this and a long term look rather than just shooting from the hip."

Short Squeez Takeaway: No offense to any of our readers at Northwestern Mutual, or readers in cover bands. Honestly, I think Great Financial Crisis would be a pretty cool band name. Plus, it seems like y'all have the right idea having a back up plan if this whole finance thing doesn't work out.

Lucky for y'all, banking is just one of the many lines of work in this industry. One man's leftovers could be another mans best bite ever, so stay tuned to be aware of industry trends and where to pivot to next.

2. Markets Rundown

Stocks fell after early gains today after Apple announced it's slowing hiring and capital spending in the face of growing economic headwinds. Crypto was up after action in the crypto market signaled there may be some risk appetite.

Movers & Shakers

  • (+) Coinbase ($COIN) +9% after DNB Asset Management bought shares of the exchange and Bitcoin hit a monthly high.

  • (+) Delta Air Lines ($RAD) +3% after the company announced it will buy 100 Boeing 737 Max 10 planes, its first new Boeing order in over a decade.

  • (–) Cowen ($COWN) -9% because it has been discussed as a potential acquisition target, and other investment banks reported revenues down YOY.

Private Dealmaking

  • Monolith Materials, a producer of clean hydrogen, raised $300 million

  • Delfi Diagnostics, a cancer bloodtest start-up, raised $225 million

  • Great Minds, a company that focuses on K-12 digital learning, raised $150 million

  • Euromoney Institutional Investor accepted $2 billion takeover

  • Hero, a French B2B start-up, raised $12.4 million

  • Medusa, an e-commerce platform for Javascript developers, raised $8 million

3. Top Reads

  • How a former Lehman banker built a pandemic-proof business (CNBC)

  • The Andy Jassy way at Amazon (NYT)

  • A recession would be worse than this (Axios)

  • Musk adds new twist to the Twitter saga (YF)

  • Deserted stock market shows it can sway any way at any time (BB)

  • Porsche pushes for record sales ahead of IPO (Reuters)

  • College students in the crosshairs of a new financial fraud (CNBC)

  • Baby boomers most likely to boycott activist companies (Axios)

  • Jim Cramer trolled before ringing the opening bell on Monday (MW)

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4. Book of the Day: Dark Horse: Achieving Success Through the Pursuit of Fulfillment

For generations, we've been stuck with a cookie-cutter mold for success that requires us to be the same as everyone else, only better. This "standard formula" works for some people but leaves most of us feeling disengaged and frustrated. As much as we might dislike the standard formula, it seems like there's no other practical path to financial security and a fulfilling life. But what if there is?

In the Dark Horse Project at the Harvard Graduate School of Education, bestselling author and acclaimed thought leader Todd Rose and neuroscientist Ogi Ogas studied women and men who achieved impressive success even though nobody saw them coming. Dark horses blaze their own trail to a life of happiness and prosperity.

Yet what is so remarkable is that hidden inside their seemingly one-of-a-kind journeys are practical principles for achieving success that work for anyone, no matter who you are or what you hope to achieve.

This mold-breaking approach doesn't depend on you SAT scores, who you know, or how much money you have. The secret is a mindset that can be expressed in plain English: Harness your individuality in the pursuit of fulfillment to achieve excellence.

In Dark Horse, Rose and Ogas show how the four elements of the dark horse mindset empower you to consistently make the right choices that fit your unique interests, abilities, and circumstances and will guide you to a life of passion, purpose, and achievement.

“Sometimes a dimension of ability that appears to be a weakness becomes a strength in the right context.”

5. Short Squeez Picks

  • Twitter's stock has been on a roller coaster ride this year with Elon flirting with the company and eventually turning it down. A long legal battle awaits us, but what will happen to the stock price? Model it out yourself! Daloopa is giving Short Squeez readers access to Twitter's detailed financial model. Download TWTR's Model for FREE here

  • Why air travel is broken

  • These six European countries are best for American expats

  • Can you make up for lost time?

  • Why desparate car thieves are now drilling for gas

  • Small home decor for an instant visual boost

6. Daily Visual: US Retail Spending at Gas Stations

Source: Axios

7. Daily Acumen: Lessons to Learn from Children

Never be sad for too long: When you feel down, commit to behaving like a child. Children dust themselves off, jump back up, and find happiness in something else. Look around and find something that interests you.

Don’t be afraid to try new things: Being afraid to try new things is the reason for our failures. Children learn new things every day. They don’t know what is not possible. They end up doing things.

Be curious: Question everything. Children are very curious. Adults seem to lose the sense of curiosity; it prevents them from using every moment for something great. Learn new things, take risk, visit new places, and take advantage of your time.

Never give up: Children keep trying until you tell them to stop. Believe nothing is impossible. Kids always believe that “everything you imagine, you can do. And whatever you dream will come true.”

8. Crypto Corner by Bonkalytics.com

For more crypto-focused content, sign-up here.

9. Memes of the Day

 

 

 

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