Stocks in the construction and industrial sectors are set to soar as a ‘red hot capex cycle’ kicks in, Morgan Stanley says

AP21063708334829
Electronic signage is shown at Morgan Stanley headquarters, Thursday, March 4, 2021 in New York.

  • As demand continues to outstrip supply, Morgan Stanley sees US businesses rushing to fill the breach with investment.
  • The bank highlighted three underlying trends driving long-term capex: “near-shoring” supply chains closer to home, automation, and decarbonization.
  • Analysts named Rockwell Automation and Eaton Corp, two industrial equipment companies, as strong buys.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

As demand continues to outstrip supply, Morgan Stanley sees US businesses rushing to fill the breach with investment, boosting stocks in the construction and industrial sectors, analysts wrote in a note on Thursday.

Analysts described a “red hot capex cycle,” driven by supply constraints and sky-high demand, with investment growth exceeding GDP through the end of 2022. Looking at four decades of data, capex running above GDP has tended to predict robust sales in sectors that build physical structures – like construction, engineering, and industrial conglomerates – they wrote.

But in those sectors, the association between strong capex and stock market performance is less straightforward, in part because cyclical increases in capex can be short-lived.

So to capitalize on booming investment, the bank pointed to three underlying trends that are likely to sustain capex in a more durable way: “near-shoring” supply chains closer to home, automation and digitization, and decarbonization.

Stocks that are in a position to gain from these long-term developments are the best bets for the capex surge. In particular, analysts named Rockwell Automation and Eaton Corp, two industrial equipment companies, as strong buys.

On Rockwell, which sells industrial automation tech, analysts argued that automation tends to far exceed industrial production growth during hot capex periods and that markets are underestimating the business. Eaton, a electrical equipment manufacturer, is set to benefit from a wave of electrical equipment installation as firms invest in capital.

Year-to-date, Rockwell and Eaton are up 17% and 28%, respectively.

Read the original article on Business Insider

Deutsche Bank’s UK boss says she wants investment banking graduates in the office 5 days a week, even as the company moves to flexible working

Deutsche Bank UK and Ireland CEO Tiina Lee next to a picture of a man outside the bank's office
Deutsche Bank UK and Ireland CEO Tiina Lee.

  • Tiina Lee, Deutsche Bank’s UK CEO, told Insider she wants graduates in the office five days a week.
  • The bank is adopting a hybrid work model that lets most employees work from home three days a week.
  • Lee said graduates learn more from speaking to their team in the office, rather than over video calls.
  • See more stories on Insider’s business page.

Tiina Lee, CEO of Deutsche Bank UK and Ireland, wants investment banking graduates to be in the office five days a week, even as the company adopts a hybrid-working model.

“My personal view in terms of grads and interns is that they should want to spend as much time in the office as they possibly can,” Lee said in an interview with Insider.

“Actually, I would like to see our grads in the office five days a week,” she added, specifically referring to those in investment banking. Working from the office full-time will not be mandatory for all these graduates.

As part of its flexible-work model, Deutsche Bank is planning to let most staff work from home for up to three days a week.

Essential staff have been working from the bank’s offices throughout the pandemic. The lender hopes to get more staff back to the office when COVID-19 restrictions ease in England. This was due to happen on June 21, but Prime Minister Boris Johnson delayed the plan by four weeks because of rising infections.

Some staff in Deutsche Bank’s investment banking sector, including traders, would be expected in the office every day once coronavirus restrictions lift in England – this includes graduates, Deutsche Bank confirmed to Insider.

Other investment banking staff aside from traders may not have to come into the office full-time, Deutsche Bank said, adding that the rules depended on government guidance. When asked, it declined to say which departments this policy covered.

For graduates in these departments, coming into the office every day would not be mandatory, it said. Graduates in departments working under a hybrid model would work at least two days a week in the office.

Lee, who has worked at the bank for around 24 years, said investment banking graduates can benefit more from the scheme and mentorship of senior staff if they’re in the office.

Graduates learn more if they’re able to talk and directly ask questions to their boss and colleagues, compared with doing so over video calls, Lee said.

But Lee said some graduate training sessions worked better over video calls, especially in their first year, Lee said. “I think it’s super important for our junior population to be in the office, but it’s only helpful if they’re around seniors that are able to oversee what it is they’re doing,” she said.

“Where there are opportunities to speak to business leaders and infrastructure leaders, I think those types of conversations are always best done in person,” she said.

Citing a survey of Deutsche Bank’s summer interns in the UK, Lee said 75% of the respondents wanted to be in the office. The remaining 25% wanted to be in the bank but couldn’t because of travel restrictions, she said.

In the US, 92% of summer interns elected to work from one of the bank’s offices, according to an internal memo to US employees seen by Insider.

Deutsche Bank is encouraging all its staff to spend as much time in the office as they can, Lee said. She works from home once a week.

In a separate internal memo to UK employees seen by Insider, Lee said being back in the office “will be an opportunity to meet, manage and learn in person and further develop all-important contacts across the organisation, particularly with our summer interns and other new joiners to the bank.”

Read the original article on Business Insider

JPMorgan could make its first bitcoin fund available to private rich clients as soon as this summer, report says

Screenshot 2021 04 26 at 12.32.43
JPMorgan CEO Jamie Dimon.

JPMorgan is in the process of offering an actively-managed bitcoin fund to its private wealth clients for the first time, CoinDesk reported on Monday.

The fund could roll out as soon as the summer of 2021, the report said, citing two sources. Crypto-focused financial services company NYDIG is said to serve as the bank’s custody provider.

An actively-managed fund implies that money managers would supervise specific decisions about how the fund’s investments are carried out. Passively-managed funds, like those offered by Pantera Capital and Galaxy Digital, simply track a crypto market index without being touched by a money management team.

JPMorgan, the largest US investment bank by assets, has gradually shifted its stance on cryptocurrencies after labelling them as fraudulent four years ago.

CEO Jamie Dimon said in a 2018 interview he doesn’t “really give a s–t” about the digital asset and didn’t expect it to rival fiat currency. More recently, he listed fintechs as one of the “enormous competitive” threats to banks in an annual shareholder letter released this month.

The bank now frequently publishes research reports about bitcoin, and said last week the worst of the recent liquidation have likely passed. “Bitcoin liquidity is likely to remain robust and resilient; depth on major exchanges has continued to drop less and recover faster than other asset classes,” JPMorgan strategists said in a note.

Bitcoin rose 10% on Monday to trade near $53,000 after tumbling to its lowest level in nearly two months.

JPMorgan declined to comment on the report when contacted by Insider.

Read the original article on Business Insider

Out of 1,548 Goldman Sachs US executives, 49 are Black

David M. Solomon, President and Co-Chief Operating Officer of Goldman Sachs, speaks during the Milken Institute Global Conference in Beverly Hills
David Solomon, CEO of Goldman Sachs, speaks during the Milken Institute Global Conference in 2017.

  • Out of 1,548 top executives at Goldman Sachs in 2020, 49 were Black, the bank said Tuesday.
  • The 49 Black leaders represented 3.2% of all executive leadership at the bank, a slight rise from 2.7% in 2019.
  • Goldman Sachs CEO David Solomon said he would make improving the diversity of the bank’s workforce a “personal priority.”
  • See more stories on Insider’s business page.

Goldman Sachs said on Tuesday that out of its 1,548 senior executives in the US, 49 were Black.

Out of those 49 Black executives, 25 were Black women and 24 were Black men, according to its 2020 sustainability report.

The 49 Black executives represented 3.2% of all executive leadership at Goldman Sachs in 2020, which was a slight improvement from 2.7% in 2019.

The bank employed a total of 21,040 people across the US in 2020. Tuesday’s report showed that 1,425 of these workers were Black, including 649 men and 776 women.

This means they made up 6.8% of the bank’s US workforce – a step up from 6.6% in 2019. Census data shows that 13.4% of the US population is Black.

In the executive summary of the report, CEO David Solomon said there was “still a long road ahead” on improving the diversity of the bank’s workforce, adding that he would “continue to make this effort a personal priority.”

Read more: Which Wall Street banks and private-equity firms are handing out special bonuses and pay bumps to junior talent

He added that Goldman Sachs has “set additional goals for retaining and promoting talent at the vice-president level.”

Goldman Sachs didn’t immediately respond to Insider’s request for comment.

The report comes one month after the bank announced it was set to invest $10 billion in an initiative called “One Million Black Women.” The project aims to reach 1 million Black women by 2030 through investment in healthcare, jobs, education, and access to capital.

Goldman Sachs has a higher proportion of Black employees in senior executive positions than Morgan Stanley, which revealed in its 2020 Diversity and Inclusion report that it had 37 Black leaders out of 1,705 executives in the US.

Bank of America’s 2020 Human Capital Management report showed that 201 out of its 4,191 executives were Black, while Citigroup’s 2019 Diversity report said that out of 108 executives, four were Black men, but there were no Black women.

Read the original article on Business Insider

Canada’s second-biggest bank is giving staff a subscription to meditation app Headspace and an extra day off

President and Chief Executive Officer of the Royal Bank of Canada, Dave McKay, addresses shareholders at the bank's 146th annual meeting, in the Metro Toronto Convention Centre.
President and CEO of the Royal Bank of Canada, Dave McKay, addresses shareholders at the bank’s 146th annual meeting, in the Metro Toronto Convention Centre.

  • Royal Bank of Canada CEO Dave McKay said the bank is giving an extra day off to “exhausted” staff.
  • Employees also get a free one-year subscription to the meditation app Headspace.
  • Toronto-Dominion Bank, Canada’s largest, has also offered its workers an additional day off.
  • See more stories on Insider’s business page.

Royal Bank of Canada is giving its employees an extra paid day off this year to avoid burnout from the COVID-19 pandemic – as well as a one-year subscription to the meditation and sleep app Headspace.

RBC’s CEO Dave McKay on Thursday said in a company memo that workers were the most exhausted they have been at any point in the pandemic. He said the bank needs to “eliminate the stigma associated with asking for time to focus, concentrate, and in some cases, log off and recharge.”

McKay told employees in the memo they should speak to their managers to book the extra day off and encouraged them to take the time to go on vacation. He said the few vacations he’d taken in the pandemic had allowed him to read, play his guitar, and spend more time outside.

Canada’s second-biggest bank also offered its global workforce of around 86,000 workers a free one-year subscription to Headspace, which usually costs $69.99.

“Beyond this extra day off, we recognize the ongoing pressures of the pandemic, especially for those in regions that have reverted back into lockdown,” McKay said. Canada is currently in a third wave of coronavirus infections which has mainly hit the province of Ontario, where RBC headquarters are. The province has introduced new restrictions to stop the spread.

“I encourage all of you to prioritize your personal time and continue to be mindful about work-life boundaries wherever possible,” McKay told staff in the memo.

Toronto-Dominion Bank, Canada’s largest bank, has also told staff they would get an extra day off work. CEO Bharat Masrani said in a memo to staff, seen by Bloomberg, that they should take the day off when they need it the most.

“After a year of sacrifice and disruption, we must all endure these challenging circumstances for a bit longer,” Masrani said in the memo. “I know that this has not been easy, and everyone is tired.”

The bank’s decisions to give staff an additional day off come after Goldman Sachs was criticized for making junior bankers work 100-hour weeks in “inhumane” conditions, leading to poor mental health.

Citigroup also launched a “Citi Reset Day” on March 28 – a company-wide holiday to relieve stress on staff. CEO Jane Fraser also banned video calls on a Friday.

Read the original article on Business Insider

Goldman Sachs bosses reportedly sent snack hampers to junior staff after a survey revealed brutal 100-hour weeks. Rival banks sent their staff bonuses or Peloton bikes.

David Solomon
Goldman Sachs CEO David Solomon.

  • Directors at Goldman Sachs sent one-off fruit and snack hampers to overworked junior bankers, the Guardian reported.
  • It follows a survey in which junior staff described “inhumane” 100-hour work weeks.
  • Other banks have offered much larger gifts, including Peloton machines and Apple devices.
  • See more stories on Insider’s business page.

Bosses at Goldman Sachs have sent snack hampers to London bankers in response to a survey that revealed the “inhumane” working conditions junior staff faced at the bank in the US, according to a report by the Guardian on Tuesday.

Managing directors, not the company, were paying for the one-off fruit and snacks hampers, the report said, adding that Goldman Sachs hadn’t directly offered any gifts or bonuses to junior bankers following the survey.

In the survey, leaked on March 18, 13 first-year analysts in the US described their declining mental and physical health, 100-hour work weeks, and a lack of sleep. UK staff told the Guardian they too faced burnout.

Some junior bankers told the Guardian they appreciated the gesture of the hampers. But staff at other banks have received much larger gifts.

Investment bankers at Credit Suisse are getting a one-time $20,000 bonus for dealing with an “unprecedented” workload during the pandemic, while Jefferies is offering 1,124 of its junior workers Apple products and workout equipment including Peloton bikes worth nearly £2,000 ($2,750), per the Guardian.

Citigroup CEO Jane Fraser banned internal video calls on Fridays and introduced a company-wide holiday on March 28 called “Citi Reset Day.”

Read more: Confessions of Wall Street’s burned-out junior bankers: 5 current and former analysts from firms like Goldman Sachs and Credit Suisse explain their daily schedules

One Goldman Sachs employee told the Guardian that the bank should be doing more for the junior bankers who have to work gruelling hours.

“What we need is not a gesture from [managers], but from the firm,” one London banker told the Guardian.

Insider reached out to Goldman Sachs for comment, but did not immediately receive a response. Goldman declined to comment on the snack boxes to the Guardian.

Four days after the survey came out, CEO David Solomon said that the bank would work harder to give junior bankers Saturdays off.

He added the long and busy work hours were down to working from home and a boom in business during the pandemic.

One unnamed analyst said in the survey that “there was a point where I was not eating, showering, or doing anything else other than working from morning until after midnight.”

Read the original article on Business Insider

Credit Suisse is overhauling its asset management business and has suspended bonuses after Greensill collapsed

Credit Suisse
The logo of Swiss bank Credit Suisse is seen at a branch office in Bern, Switzerland October 28, 2020. Picture taken October 28, 2020.

  • Credit Suisse is shaking up its asset management business following the collapse of Greensill.
  • Ulrich Körner will become the new CEO of the bank’s asset management business from April 1.
  • Three senior asset management employees have temporarily stepped aside.
  • See more stories on Insider’s business page.

Credit Suisse is overhauling its asset management business as it faces regulatory investigations into its dealings with Greensill Capital, warning on Thursday that its results and client confidence could be hit by the finance firm’s collapse.

Switzerland’s second-biggest bank and its asset management arm are reeling from the implosion of around $10 billion of funds related to British supply chain financier Greensill, heaping pressure on CEO Thomas Gottstein.

Credit Suisse said in its annual report that Swiss regulator FINMA was looking into the matter and reviewing its impact in relation to the bank’s so-called Pillar 2 buffer, which is capital banks hold against risks.

“We can confirm that we have also imposed a Pillar 2 buffer in this context as stated by the bank in its annual report,” FINMA said, adding it was in contact with other authorities.

Credit Suisse stuck to its guidance on capital and said plans to buy back at least 1 billion Swiss francs ($1.1 billion) worth of stock this year were still on.

The bank named Ulrich Koerner as its new head of asset management and said it would separate the business into its own division from April 1. It has been part of the international wealth division run by Philipp Wehle.

Koerner will return to Credit Suisse from arch-rival UBS, where he most recently served as adviser to the CEO from 2019 to 2020. He ran UBS Asset Management from 2014 to 2019. Koerner was previously a senior executive at Credit Suisse Financial Services and ran the Swiss business.

Current asset management head Eric Varvel, who is also chairman of Credit Suisse’s investment bank and head of its U.S. holding company, will focus on his other roles.

Credit Suisse’s annual report said some unidentified fund investors had threatened litigation over the Greensill affair and the ultimate cost may be “material” to operating results.

“The portfolio manager has been informed that certain of the notes underlying the funds will not be repaid when they fall due,” it added.

“We might also suffer reputational harm associated with these matters that might cause client departures or loss of assets under management,” it said.

Three senior asset management employees who helped oversee the Greensill funds have temporarily stepped aside.

The annual report showed the bonuses for a number of senior employees involved, “up to and including Executive Board members”, had been suspended.

Credit Suisse shares gained 2.5%.

The new structure bucks a trend for blending Credit Suisse products and services in a seamless offering to its wealthy clients. It could, however, help address suggestions that the model lent itself to internal conflicts of interest.

Asset Management lost 39 million Swiss francs ($42 million)before taxes last year after a hefty writedown on an investment in a U.S. hedge fund.

Read the original article on Business Insider

HSBC has closed its main office in Hong Kong after an outbreak of COVID-19 at a gym

A worker wearing PPE guards the entrance of HSBC bank main Hong Kong office after it was closed until further notice after three people tested positive for Covid-19 amid a recent wave of infections among the citys business and expatriate community in Hong Kong on March 17, 2021.
A worker wearing PPE guards the entrance of HSBC bank main Hong Kong office after it was closed until further notice after three people tested positive for Covid-19 amid a recent wave of infections among the city’s business and expatriate community in Hong Kong on March 17, 2021.

  • HSBC has temporarily shut its main Hong Kong office after three workers tested positive for COVID-19.
  • There has been a wave of infections in the city following an outbreak at a local gym.
  • In an internal memo seen by Bloomberg, HSBC said the bank can reopen when staff have been tested.
  • See more stories on Insider’s business page.

HSBC closed its main office in Hong Kong until further notice on Tuesday after three people working there tested positive for COVID-19.

The region’s Centre for Health Protection (CHP) published a formal notice asking people who spent more than two hours in the building between March 3 and 16 to be tested at a government-approved center by March 19, according to an internal memo HSBC sent to staff on Wednesday seen by Bloomberg.

The new infections followed a COVID-19 outbreak last Thursday at a gym in Sai Ying Pun, which has spread to the region’s financial district.

The CHP said Tuesday it was investigating 18 additional confirmed infections of the virus, taking the total number of cases in Hong Kong to date to 11,340.

The CHP also extended the current social distancing measures until March 31.

“It is our understanding that HMB can return to normal business when virus testing of colleagues and deep cleaning of the facility are complete,” HSBC said in the memo. “The exact timing is yet to be confirmed.”

Around 30,000 HSBC employees now have no access to the lender’s flagship office, located at 1 Queen’s Road Central, in the center of Hong Kong’s business district.

Guards wearing masks, face shields and protective clothing were standing in front of the building’s entrances and a poster stuck on the door told customers to visit another HSBC branch in the local area, Bloomberg reported.

Insider approached HSBC for comment but did not immediately receive a reply.

A spokeswoman from the bank told Bloomberg that HSBC was following advice from health authorities and taking the necessary steps so the building can reopen when it’s safe.

“For banking services, we have well-developed contingency measures that ensure our services and critical processes continue to be maintained,” she said.

Hong Kong, with a population of 7.5 million, has kept coronavirus cases low thanks to strict contact tracing, testing and quarantine measures. There have been 203 deaths in the city, according to the CHP data.

With a total of 292 cases between March 2 to March 15, the latest outbreak is the second largest since a surge in November.

Read the original article on Business Insider

Revolut is operating as a bank in 10 Central European countries, and hopes to do so across the continent

Revolut
Revolut has been operating as a bank in Poland and Lithuania since last year.

  • Revolut has launched as a bank in 10 Central European countries using a Lithuanian banking license.
  • The startup has also applied for a UK banking license and hopes to achieve profitability this year.
  • Revolut broke even in December and was valued at $5.5 billion in 2020 after raising $500 million.
  • Visit the Business section of Insider for more stories.

Revolut has started operating as a bank in 10 Central European countries.

Using a license issued in Lithuania, Revolut Bank will operate in Bulgaria, Cyprus, Croatia, Estonia, Greece, Latvia, Malta, Romania, Slovakia, and Slovenia.

The British-born startup and financial app has been operating as a bank in Poland and Lithuania since last year while maintaining its services in other European countries using its e-money license.

Revolut started 15 years ago as a service for withdrawing money outside users’ home country without commissions, exchanging currencies at a more favorable exchange rate than with banks, and making payments between friends.

In February last year, Revolut was valued at $5.5 billion after raising $500 million from TCV, a Silicon Valley growth fund.

The neobank has been adding to its services with more insurance options, a cryptocurrencies news feature, and the ability to split bills with non-Revolut users.

The advantage of a banking license is that it allows Revolut to be used for deposits, while e-money licenses mean Revolut serves as more of a wallet for its users.

After Brexit, the company moved its license from the UK to Lithuania in order to continue operating in European markets. However, Revolut has also applied for a UK banking license to improve its profitability.

“Revolut is now the fastest growing fintech company in Europe because we put the customer at the heart of everything that we do. Our product design is second to none, we have no hidden fees, and we are constantly building new and innovative financial products,” Revolut Bank CEO Virgilijus Mirkės said in a statement.

“Launching the bank in ten new European markets will provide a greater level of security and confidence for our customers, and will enable us to launch a host of new products and services in the near future,” he added.

In December 2020, the company broke even following a 40% revenue decrease earlier in the pandemic, suggesting that profitability may soon be on the cards.

Read the original article on Business Insider

Jack Dorsey’s Square kickstarts in-house banking services nearly a year after receiving conditional approval

Screenshot 2021 03 02 at 11.03.56

Digital payments processor Square said on Monday it has launched in-house banking operations after completing the approval process with a US insurance agency and Utah’s financial regulator.

Square Financial Services, the industrial bank based in Utah’s Salt Lake City, is now ready for business after receiving conditional approval nearly a year ago.

“Moving forward, Square Financial Services will be the primary provider of financing for Square sellers across the US,” the company said in a statement.

The first few actions for the bank will include underwriting and offering business loans for Square’s existing lending product. Its primary purpose is to offer business loans and deposit products.

“Bringing banking capability in-house enables us to operate more nimbly, which will serve Square and our customers as we continue the work to create financial tools that serve the underserved,” Square CFO Amrita Ahuja said.

Square is headed by longtime cryptocurrency advocate Jack Dorsey, who is also chief executive of social media platform Twitter. With a product line that includes the Cash App and Square Point-of-Sale, the company is known for its easy-to-use mobile payment services.

Shares in the company rose 3% to $248.80 in pre-market trading on Tuesday.

Read the original article on Business Insider