CEO Goes Off The Rails On Earning’s Call; JPMorgan Plans Silicon Valley Expansion; Things Aren’t Good In Italy Right Now

The Water Coolest

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THE HEADLINES

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NON BENE

Moody’s Investors Service, which evaluates the likelihood that an organization or governmental body will be able to pay back the value and interest of bonds it has issued, announced that Italy’s bond rating is being cut to just above junk. The Baa3 rating for a sovereign nation is the equivalent of a D health rating at a restaurant. Won’t kill you, but you definitely shouldn’t eat there.

The downgrade comes after Italian bond prices fell sharply on Thursday. The reason? Concerns stemming from a draft budgetary policy that didn’t meet certain rules of the European Union. Italy’s government seems to have no qualms about increased spending and a growing budget deficit, despite all of this being an egregious EU rule violation.

Of course, EU leadership’s concerns are justified. Political in-fighting is dividing the country as the home of Roman ruins and regional cheeses falls into fiscal disarray. And did we mention that Italy’s government debt outstanding represents 130% of GDP … more colloquially referred to as a f*ckton.

Venice, Italy

Candré Mandawe / Unsplash


Water Cooler Talking Point: “I enjoy a mid-day nap just as much as the next guy, but with work hours like that it is going to be tough to revive the bustling Italian economy that … never existed.”

 

U MAD BRO?

“I came here to do two things: answer analyst questions and kick some ass … and it looks like we’re all out of analyst questions.” – Cleveland-Cliffs CEO, Lourenco Goncalves on Friday’s earnings call

Just when you thought Elon Musk had, for lack of a better word, secured his position as the most outspoken CEO, here comes Lourenco from the rafters. The legendary diatribe during Friday’s investor call bordered on Charlie Sheen circa 2011. Lashing out at his company’s haters, Lourenco suggested short-sellers “commit suicide” after he proves them wrong.

And Loure-y (mind if we call you that?) seemed to have a particular bone to pick with Goldman Sachs analyst Matthew Korn (the “r” isn’t backward, we checked with his people). Korn who didn’t ask a question during the call actually praised the company after the earnings dropped. Goncalves went so far as to threaten that he would find Korn at an upcoming conference and that “it will be a lot worse if you are alone.”

For anyone who cares about Cleveland-Cliffs earning (read: no one not on that call), shares were down 6% after a slight earnings miss.

(BTW, Goncalves “rebuttal” on CNBC is a must-see)

Water Cooler Talking Point: “My favorite line of the entire ordeal is when Goncalves tells an analyst you’re “an embarrassment to your parents” after the analyst simply asks about a stock buyback plan.”

 

GOIN’ BACK TO CALI

JPMorgan is making moves to California, just like that kid you grew up with that always said “there’s nothing going on” in your hometown. The company purchased a plot of land in the Stanford Research Park in Palo Alto, and plans to build a 1k person fintech hub.

The reason for the new office, according to JPMorgan, is to make it easier for employees across business lines to host events and collaborate on new products and services. The move is part of a larger effort by JPMorgan to go all in on fintech. Last year, JPM acquired WePay in an effort to make accepting payments faster for its 4M small business customers. They’ve also partnered with Bill.com and On Deck Capital.

Ground will be broken early next year with an estimated completion date sometime in 2020. The company will move all 275 fintech employees from its current Redwood City home to the new digs. There’s no telling if this means Jamie Dimon will grow out his hair and start wearing more Patagonia vests to work.

Water Cooler Talking Point: “If the rent is too damn high, just build your own campus.”

 


IN OTHER NEWS

 

  • Thanks a lot, Geoffrey. The maker of Nerf guns and Disney Princesses, Hasbro, plans to lay off roughly 10% of its workforce. Toy makers are struggling to figure out how to fill the void left by Toys R Us. Here’s a hint: Amazon.

 

  • Goldman Sach’s new CEO, David Solomon, must’ve promised Lloyd that he’d “hit the ground running” when he took over as chieftain. Just weeks into the new gig, DJ D-Sol has already replaced Goldman’s CFO and shaken up the trading business. Next up? Goldman’s APAC investment banking chiefs, Andrea Vella and Kate Richdale, who have been “shifted out” of management roles. For what it’s worth, Vella was embroiled in the 1MDB scandal … and also worked on a derivative sold to Libya that went awry.

 

  • We’re sorry. Consultancy, McKinsey, is reportedly “horrified” to find out that they may have played a role in Jamal Khashoggi’s death and other Saudi dissident’s arrests. As part of an engagement, the consulting firm provided the country with a detailed report identifying several citizens that were hating on the country via social media channels and were subsequently arrested by the Saudi Arabian government.

 

 

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