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Morning Coffee: Bill Gross’ Trump reality check. Goldman Sachs banker’s “throwback” new job

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Bill Gross didn’t vote for Trump or Clinton, but he’s got a message for anyone thinking this post-Trump market surge is the new normal – it won’t last.

“There is no new Trump bull market in the offing. Be satisfied with 3-5% globally diversified returns. The Wall Street, finance-led hegemon is fading. The populist sunrise has barely broken the horizon,” he said in a note to investors today.

Investment banks have been enjoying huge trading volumes since the vote, and the expectation that Trump’s will roll back Dodd Frank regulation has ensured that banks’ stocks have exceeded analyst expectations for the first time since 2009.

“I write in amazed, almost amused bewilderment at what American voters have done to themselves,” added Gross.

Scrapping Dodd-Frank would allow banks to prop trade again and, potentially, make the industry “fun” once again. However, dismantling a 2,300-page complex piece of regulation is not simply a good way of allowing banks to spread their wings.

Adair Turner, the former head of the Financial Services Authority, and Jean-Claude Trichet, the former president of the European Central Bank, have both warned that rolling back the regulation could make the entire banking system much more fragile again.

“Tighter controls of capital, and particularly capital as it relates to trading book activity, [have been] agreed on at global level… there should be no rollback from that,” said Turner.

Separately, senior bankers continue to trade jobs at bulge brackets for boutiques. In the case of John S. Weinberg, who left Goldman Sachs to become Evercore’s chairman, the decision is more surprising because he spent 30 years at Goldman Sachs and his family has a rich history of working there.

Perhaps it’s a desire to return to the old investment banking model. Back in 2010, as Financial News points out, Ralph Schlosstein – Evercore’s president and chief executive, said it was creating a “throw back bank”, more like the way Lehman Brothers and Goldman Sachs operated in the 1970s.

Meanwhile:

Jes Staley thinks London will retain its “gravitational pull” even after Brexit (Financial Times)

Jean Abergel, global co-head of media and communications investment banking at Morgan Stanley, thinks Brexit will spark a new wave of M&A (WSJ)

Harvard is the top ranked MBA, and over 30% of graduates end up in financial services (Bloomberg)

Peter Meijer, a former senior investment banker at Moelis & Co, has left to start his own firm advising banks on how to divest non-core businesses (Financial News)

Deutsche Bank is shrinking in the U.S. in order to meet new tougher capital requirements on foreign banks (WSJ)

Hedge funds are expecting bonuses to be up (Reuters)

“All businesses globally, where employees have smartphones, are not getting as many true labor hours as we think.” (Business Insider)

Fintech funding is faltering in the UK after Brexit (Bloomberg)

It costs $434k to take an MBA at Stanford (Bloomberg)

Ex-investment banker Emanuel Macron is the “traditional” French choice for the presidency (CNBC)

Aberdeen Asset Management is staffing up in the Middle East after opening its first office in Abu Dhabi (Financial News)

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