When I first started writing this newsletter, I included data on the jobs reports each month with the thinking that, well, this is a newsletter about jobs. I stopped a few months back after realizing – finally – that the reports do little in helping shine light on the labor market on Wall Street.
First off, the reports from the Bureau of Labor Statistics and ADP differ wildly, even after ADP changed its methodology. As of last month, the average difference between the reports was around 42,000 jobs over a seven-month span. I wrote a sunny newsletter in January based on ADP numbers only to have the mood soured the next day when the BLS report came out.
Plus, the revisions, which are announced a month after the initial reports are issued, are often statistically very significant, altering the conclusions that we originally deemed from the numbers.
But more importantly, employment on today’s Wall Street just doesn’t follow the arc of the overall market. Heck, the numbers don’t even correlate with the balance sheets of big banks.
Profit on Wall Street is up. The $6.6 billion the securities industry in New York City pocketed during the first quarter almost reached the city’s estimate for the first half of the year, the New York State Comptroller’s office just announced. Still, Wall Street has only recovered one-fifth of the jobs lost since the recession, one of the lowest totals of any industry. All the while, the private workforce in New York City has increased more than 10% since the recession, recently topping pre-crisis employment totals from 2007, according to Bloomberg.
It’s a none-too-quiet reminder that employment in the securities industry isn’t in some type of temporary lull caused by market conditions. Wall Street is smaller because it has to be to survive impending regulations, and that’s not changing anytime soon.
Former Merrill Lynch Chief Executive John Thain said that he regrets taking the job in the first place. He’s equally repentant about spending tens of thousands of dollars to redecorate his office during the financial crisis, a move that blew up on him when the news went public.
Gleacher fired its entire intern class two days before they were supposed to start. The struggling boutique just announced it is shuttering its investment banking division while naming a restructuring expert as its chief executive. The short of it is that Gleacher is a mess.
Things are running no smoother at SAC Capital. With the future hanging in the balance amid an insider trading probe and billions of dollars in potential outflows, Steven Cohen’s beleaguered hedge fund may still be interviewing junior candidates while panicked employees race to recruiters with resumes.
Despite the insider trading scandal, KPMG plans to make only small changes to its internal safeguards and monitoring systems, which the accounting firm says are “first class.” One of KPMG’s senior partners was recently charged with trading market-moving client information for cash and gifts.
Generally speaking, Wall Street isn’t a huge fan of incoming regulations born from the financial crisis. Former J.P. Morgan investment banking head Jes Staley, now a partner at BlueMountain Capital Management, feels differently, noting that better defined capital structures create unique opportunities for smart investors who can take advantage of mispricing.
If you’re smart, senior and have a good understanding of international banking policies, the Bank of England wants you. The BOE is blaming its lack of monitoring capabilities on a dearth of talent. The pay might not be very good though.
J.P. Morgan lost $6.2 billion due to the London Whale trading scandal. In a slightly less sexy debacle, the bank will see as much as a $1.6 billion drain from an Alabama sewer system deal that went south.
Buzz Around the Office
A North Carolina postal worker pleaded guilty to fraud charges this week after her employer saw her on television, spinning the huge dollar wheel on “The Price is Right.” She was on worker’s comp at the time due to a shoulder injury.
List of the Day: Hiring Smart
If you want to hire the right person – fast – do this.