Merger Monday; Inflation Increase; Junior Banker’s Salary To Increase
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We’ve got some BIG news to share. We’re partnering with John LeFevre (the guy behind the @GSElevator Twitter account and author of “Straight to Hell”) to bring you some brand new, insightful and witty content.
First up: we recorded a podcast diving into some of John’s favorite stories from his time as a banker, how @GSElevator came to fruition, his book deal (and the controversy surrounding it) and some advice he has for young professionals. Listen here.
Estimated Read Time: 3 minutes and 59 seconds
MONDAYS ARE FOR THE BUYS
Corporate M&A teams are redefining a case of the Mondays. Nothing shakes off the dealmaking cobwebs quite like close to $100B worth of M&A activity (remember: Sprint and T-Mobile announced a massive merger over the weekend).
- Marathon Petroleum will purchase Andeavor for $23.3B, thus creating the largest US oil refiner. Sucks to suck, Valero. The combined refinery will account for 16% of US oil production.
- Walmart is reshuffling its global footprint. As part of the restructuring, it will sell its UK supermarket business, Asda, to Sainsbury for $10B.
- Marriott Vacations Worldwide will purchase ILG for $4.7B to create the largest timeshare company in the world. No word on if Marriott had to listen to a mandatory 90-minute sales pitch as part of the deal. ILG had been under activist investor pressure to make a deal.
Water Cooler Talking Point: “I’d be lying if I said this didn’t make me cringe a little bit. Not because of the unfathomable amount money changing hands. Or because of the anti-trust repercussions. But because I feel for the lowly analysts sleeping in the office to get this deal done. This one is for you, new hire. *Raises drink*”
WE ARE THE 2%
The Personal Consumption Expenditures (PCE) index, the Fed’s preferred barometer of inflation, shows that consumer prices jumped 2% on a year-to-year basis in March. This matches the Fed’s 2% inflation target. Bottles will be popped.
According to minutes from last month’s Fed policy meetings, this spike in the PCE price index was expected. The rise is mostly attributed to a tightening labor market, increasing wages and salaries, and increased spending from the $1.5T tax cut package. See, we told you it was gonna be YUUUGE.
Fed officials have regularly scheduled meetings today and tomorrow, but a rate hike is not anticipated.
Water Cooler Talking Point: “The happy hour between Tuesday and Wednesday’s Fed Meetings has to be the missionary sex of happy hours, right? And do you think they get a good spread for lunch or are they chowing down on Panera while deciding the fate of the free world’s economy?”
ALL THE WAY UP
Morgan Stanley announced an initiative to raise junior banker salaries by 20% to 25%. The move also includes a shorter promotion period that allows analysts to become associates in 2 years rather than 3, beginning August 1. Finally, there is some justice in the world.
Associate bankers at major investment banks can typically break into the workforce with a starting salary between $100k and $150k. Because how can you pay for the Hampton’s share house with a peasant’s salary?
Morgan Stanley is looking to make itself more attractive to new hires and to be able to retain talent on their banking teams. With more algorithmic and programmatic investing there are fewer jobs in the industry. Exhibit A: Goldman Sachs’ heir apparent highlighted a trading team that was whittled down to three … from 500.
Water Cooler Talking Point: “The banking industry has seen its numbers impacted by technology just like most other industries. After seeing The Big Short, nobody cares though. It’s hard to feel bad for Chad, Brad, and Chadd.”
IN OTHER NEWS
- The White House plans to extend tariff exemptions for US allies including the EU, Canada, Mexico, Australia, and Brazil. Tough break, Iran.
- Chico’s, a women’s clothing store, will partner with Amazon to sell mom-approved “So Slimming” pants on the e-tail giant.
- Finally, you won’t need to start every Alexa command with “Alexa” … which should make day to day conversations in your home entertaining. Other new features will include Alexa’s ability to remember things and have more natural conversations.
- US indices were down yesterday:
- DOW: -0.61%
- S&P 500: -0.82%
- NASDAQ: -0.75%