While You Were Working - February 2
Everything is awesome
More than 80% of companies have bested analysts’ expectations thus far this earnings season; and three out of four have raised their profit guidance. It is amazing what tax reform geared toward corporations and the rollback of regulations can do for corporate earnings!
Speaking of rolling back regulations
When everything is awesome, that means it is time to crank up your risk appetite, amirite?
I talked before about how Congress and the Trump administration don’t actually have to repeal Dodd-Frank and other post-crisis regulatory reforms in order to rollback regulations. You just gotta have the regulators stop … well … regulating.
This story is about how Wall Street firms no longer fear the regulatory repercussions of cranking up their leverage levels. This is comment from Richard Farley, the head of the leveraged-finance practice at Kramer Levin Naftalis & Frankel, is – by far - my favorite quote of the day:
“If the cops say you can have open containers in Central Park, what do you think is going to happen?”
The article shines a spotlight on Blackstone’s recent deal to snag the data unit at Thomson Reuters, so a second quote from Farley is also quite telling.
"I tend to think large players in this marketplace have good information on what regulators are thinking, and I think there’s a consistent view that they’re not going to be punishing you on the basis of leverage levels.... It isn’t just navel gazing. it’s informed decision-making."
Seeing as how a certain someone is often at President Trump side, I wonder who Farley could possibly be referring to? With that in mind, do you really think regulators are going to go after Blackstone?
The German people are gonna love this
Seeing as how Deutsche Bank lost considerable amounts of talent after going skinny on bonuses last year, I guess this is the phase of John Cryan’s turnaround plan where he desperately resorts to retention-style bonuses.
More on Zelle
Yesterday I noted how the big banks are finally getting serious about marketing Zelle, their new competitor to PayPal/Venmo. Here is an example of just how hard the banks are working to position Zelle as the “cool” new payments option. You know you are cool when you have a Super Bowl ad, especially since most millennials will be watching the game for the ads and not the football.
Makes me wonder if PayPal will soon have the same cache as Facebook does in this viral video about job interviews for millennials.
The team at the New York Fed’s Liberty Street blog did a nice job of summarizing the recent report on Structural Changes in Banking after the Crisis put forth by the Basel-based Committee on the Global Financial System.
The report is worth a read. Especially since one of the conclusions from the NY Fed is something that probably ain’t gonna happen:
“If lower profitability represents the “new normal,” banks and their investors may need to adjust their profitability expectations accordingly by taking into account the structural and regulatory changes since the crisis that make banks more resilient, and presumably their shares less risky to invest in.”