Opening Bell: 7.18.17
Bank of America beats on earnings after record quarters in global banking and wealth management (BI)
"Against modest economic growth of 2 percent, we had one of the strongest quarters in our history. All of our businesses delivered strong results, with several setting new records," Bank of America CEO Brian Moynihan said. "The investments we made to transform how we serve clients produced 500 basis points of operating leverage in the quarter."
Goldman Sachs Reports Surprise Profit Increase (WSJ)
The Wall Street firm reported earnings of $3.95 a share. Analysts had expected $3.39, on average, down from $3.72 a year ago. Revenue of $7.89 billion fell from $7.93 billion in the second quarter of last year, and beat analyst expectations of $7.52 billion. BUT ALSO: Goldman quarterly trading revenues dive 40%
Robotic Hogwash! Artificial Intelligence Will Not Take Over Wall Street (WSJ)
High-frequency systems may get enough examples of changing trading regimes to run on their own, but can’t deploy much capital. Applying machine learning to longer-term investment is tricky when many of the new data sets being deployed only go back a decade or two. Computers with no knowledge of history are doomed to repeat its mistakes.
Citigroup is staffing up for a new center that will unleash robotics throughout the bank (BI)
Citigroup is staffing up for the robotic revolution. The New York-based financial services giant has plastered online jobs boards advertising roles at a new automation center that will deploy new robotic technology throughout the bank.
KKR’s succession plan puts pressure on rivals to follow suit (FT)
KKR thus has become the first among the big listed private equity groups to map out an implicit succession plan, though Jon Gray, the rainmaker of Blackstone’s real estate arm, will clearly follow Steve Schwarzman as head of that company in the future. By contrast, Apollo has yet to figure out a succession plan for the trio at the top there. At Carlyle, the politics are still intense when it comes to replacing Bill Conway who is in charge of that group’s investments, (even though the face of Carlyle is co-founder David Rubenstein).
In the crypto world, you can get something for nothing (FT Alphaville)
Block.one’s initial coin offering is different. There’s a token, but it can’t actually be used for anything. This is from the FAQs: “The EOS Tokens do not have any rights, uses, purpose, attributes, functionalities or features, express or implied, including, without limitation, any uses, purpose, attributes, functionalities or features on the EOS Platform.” You might want to read that over a couple of times, keeping in mind that investors have spent over $200m buying these “EOS Tokens”.
Can Anyone Bury Bloomberg? (II)
Large-scale shifts in banking and money management – including compressed margins and, correspondingly, shrinking information-service budgets – are causing a mature Bloomberg more pain than copycats ever did. Its terminal count has barely risen over the last five years. And last year, for only the second time in the company's 25-year history, the terminal total shrank.
Please Don’t Text Your Employees at 9 p.m. (NYMag)
In an otherwise fairly innocuous interview with the New York Times last week, Barstool Sports CEO Erika Nardini revealed that she perpetuates one of the many terrible manager behaviors that drive workers to feeling undervalued and overworked. When asked about her hiring process, Nardini said this: “Here’s something I do: If you’re in the process of interviewing with us, I’ll text you about something at 9 p.m. or 11 a.m. on a Sunday just to see how fast you’ll respond.”
Wall Street Profits by Putting Investors in the Slow Lane (David Swensen, NYT op-ed)
Institutional brokers are legally obliged to execute trades on the exchange that offers the most favorable terms for their clients, including the best price and likelihood of executing the trade. The 12 exchanges are supposed to compete to offer the best opportunities. But that’s not what is happening. Instead, brokers routinely take kickbacks, euphemistically referred to as “rebates,” for routing orders to a particular exchange. As a result, the brokers produce worse outcomes for their institutional investor clients.
Investor punched out 18-year-old at ritzy Hamptons bash (PageSix)
The private-equity investor who owns the Southampton mansion featured in the Showtime TV show “Billions” broke a kid’s nose there during a charity fund-raiser for special-needs children, The Post has learned. Michael Loeb, 62, punched out 18-year-old Avery Arjang in a rage after a friend of the teen got drunk and passed out in Loeb’s garage, Arjang claims. “Michael was furious because this kind of ruined his event,” he said.
