🍋 What Happened to Investment Banking?

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Good Morning! Bloomberg Economics’ forecast sees a 100% chance of a recession by 2023. UK finance minister said he’ll reverse the country’s new, controversial tax plans that sent the pound crashing. A new study found NYC minimum wage workers need to clock over 100 hours a week to afford rent - rookie numbers for Goldman’s IB analysts.

Kanye West agreed to buy the social media platform Parler after his Twitter and Instagram accounts were restricted earlier this month. And looks like Zuckerberg is running out of ideas - a new Meta ad took an aim at iMessage - calling it less secure than Meta-owned WhatsApp.

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1. Story of the Day: What Happened to Investment Banking?

It’s been a weird year to be an investment banker. Deal flow has slowed and fees have plummeted, but the long hours and mind-numbing work haven’t gone away... well unless you work at Credit Suisse.

Investment banking revenues are down 30-50% after a record 2021. During bleaker times for IB, banks are prioritizing different divisions to calm investors.

Bank of America announced on Monday that, despite its IB revenue declining 47% in Q3, it won’t cut any jobs - for now. The bank told investors it will focus on its segments that produce recurring revenue rather than investment banking.

Goldman Sachs wants to focus on recurring revenue too, but it didn’t make the same commitment to spare bankers their jobs. The bank cut hundreds of jobs last month - some workers found out they got fired when their badges didn’t let them into the office. Ouch. Both Morgan Stanley and Credit Suisse are also weighing layoffs as banks reshuffle their focus.

Goldman is also planning a massive corporate restructuring. The firm will combine its investment banking and trading divisions, and pair its consumer bank Marcus with its wealth unit.

Takeaway: Banks are cutting back on their reliance on investment banking revenue, which is highly lucrative but volatile. 2023 could be another bleak year for investment banking, and firms want to weather the storm. Some think restructuring will lead to more layoffs and lower bonuses. Goldman’s investment bank could even go private again - the firm IPO’d in 1999. Investment banking ain’t what it used to be and the industry could change even more during a down year.

2. Markets Rundown

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Major indices closed higher as investors look ahead toward earnings.

Movers & Shakers

• (+) Roblox ($RBLX) +20% after strong user growth last month.

• (+) Bank of America ($BAC) +6% after the bank beat earnings.

• (–) Fox ($FOX) -8% after reported merger with News Corp.

Private Dealmaking

• Skydance Media, the Hollywood studio that produced ‘Top Gun’, raised $400 million

• Uniswap Labs, a decentralized token exchange, raised $165 million

• Soli Organic, an indoor farming company, raised $125 million

• Vanta, a cybersecurity compliance platform, raised $40 million

• Ochre Bio, a biotech startup focused on RNA treatments for liver diseases, raised $30 million

• BP will buy Archaea Energy, a renewable gas producer, for $3.3 billion

Top Reads

• With product innovation lagging, Silicon Valley bets on fresh paint of coat (CNN)

• Last chance to lock in nearly a 10% return on your savings (CNN)

• More companies charging employees for job training if they quit (Reuters)

• Moody’s chief economist warns recession could come at end of 2023 (CNBC)

• Elizabeth Holmes makes her pitch for a new trial (YF)

• 98% of CEOs are prepping for a U.S. recession (Fox)

• Credit Suisse pays $495 million to settle legacy case (Reuters)

• Is the small business surge in the U.S. sustainable? (BBC)

• China’s shifting economic storyline (Axios)

• How Starbucks took on Italy’s coffee culture (CNBC)

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4. Book of the Day: The Art of Gathering

In The Art of Gathering, Priya Parker argues that the gatherings in our lives are lackluster and unproductive--which they don't have to be. We rely too much on routine and the conventions of gatherings when we should focus on distinctiveness and the people involved.

At a time when coming together is more important than ever, Parker sets forth a human-centered approach to gathering that will help everyone create meaningful, memorable experiences, large and small, for work and for play.

Drawing on her expertise as a facilitator of high-powered gatherings around the world, Parker takes us inside events of all kinds to show what works, what doesn't, and why. She investigates a wide array of gatherings--conferences, meetings, a courtroom, a flash-mob party, an Arab-Israeli summer camp--and explains how simple, specific changes can invigorate any group experience.

The result is a book that's both journey and guide, full of exciting ideas with real-world applications. The Art of Gathering will forever alter the way you look at your next meeting, industry conference, dinner party, and backyard barbecue--and how you host and attend them.

“In a world of infinite choices, choosing one thing is the revolutionary act.”

5. Short Squeez Picks

• Why Sheep Meadow is the best picnic spot in Central Park

• 10 of Bezos’ business frameworks to make better decisions

• How to turn a wasted day into a successful one

• How to keep your clothes looking expensive with these hacks

• Read this to maximize health and wealth between 18 and 56

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6. Daily Visual: S&P During Presidents' Tenure

Percentage change from the last trading day before inauguration through October 14 of the following year

Source: Axios

7. Daily Acumen

"As Aldous Huxley writes, “Man has an almost infinite capacity for taking things for granted.” The goalposts of success constantly shift. A new innovation can go from unfathomable luxury to baseline necessity in a few months.

So, progress is always a step ahead of contentment. That fuels the need to keep innovating, which is great. But it creates a world where people who are exponentially better off than their ancestors have little added happiness to show for it."

Source: Morgan Housel

8. Crypto Corner

• Mastercard will help banks offer crypto trading

• Bitcoin prepares to produce one block for over an hour

• How a crypto alchemist created an accidental billionaire

• Binance launches $500 million lending project, will support crypto miners

• Bitcoin higher to start the week, continues holding sideways pattern

• What crypto traders are doing with volatility trading gone

9. Memes of the Day

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