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Morning Coffee: Investment banking doom after Black Monday. Or not

black Monday

As stock markets have tanked over the past ten days, investment bankers may have been concerned about their sinking share options or cancelled holidays, but regulatory intervention on banks’ trading positions should have made them less susceptible to volatility spikes.

China’s ‘Black Monday’ wiped another 3.9% off the S&P index and 4.6% off the FTSE yesterday. If the chills continue, expect the consequences to mount for big investment banks. For a start, their trading customers – including hedge funds – will disappear, which will hit revenues, banking analyst Dick Bove told Business Insider.

More concerning for investment bankers, perhaps, will be the knock on affects. M&A divisions, equity capital markets and debt capital divisions will also be affected as companies put their plans on hold until the market picks up.

“The last 10 days certainly could put a chill into big deals for the balance of the year,” said one M&A banker.

Or maybe it’s not that bad. For a start, there’s the new research suggesting that hedge funds have actually – generally speaking – fared pretty well throughout the market turbulence of the past few days. Even driven strategies were flat while macro funds were down by 1.2%, according to Lyxor Asset Management.

Then there’s the confidence oozing out of investment banks’ ECM teams even now. August has been very slow for IPOs, with just $53m worth of deals emerging. However, investment bankers have cancelled their holidays in anticipation of a surge in new deals over the course of September and October.

Meanwhile:

Barclays wants recruiters to “think outside the box” to ensure greater diversity at VP level and above. Its targets are gender, multi-generational, multicultural, disability, and lesbian, gay, bisexual and transgender (Financial News)

“Inhale, exhale. Then repeat. Then watch ESPN.” How to switch off your emotions when your portfolio is tanking (New York Times)

Only rich people own stocks anyway (Money Beat)

Men looking very concerned on trading floors (Tumbler)

“It would be wrong to suggest that pigeons are the only organisms in Shenzhen capable of leaving a deposit on a Range Rover Evoque. Predictions of a fast-growing western-style middle class were overdone, though. In this context, I should explain that when we wrote Burberry shares were ‘to die for’ we were hinting it was career suicide to invest in them.” Stockbroker apologises to fund managers for its recommendations. (Financial Times)

After hiring a Brevan Howard trader with interests still at the firm, the Bank of England will have to review any conflicts of interest very carefully (Telegraph)

What happens after you’re made the star of a Michael Lewis book. “I thought I could kind of blend in. You know, Asian guy, normal haircut.” (Bloomberg)

Starbucks staff have been told to be extra nice to customers who could be feeling “an increased level of anxiety and concern” about the stock market crash (Fusion)

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