If you’re in a public-facing role in an investment bank, writing research that’s distributed to clients, then you’re always making decisions about how aggressively to express yourself.  If you keep things bland and reasonable, nobody is going to read the product.  But if you go too far the other way, you might offend someone enough that you provoke them to retaliate. 

Analysts have got used to this over the years – you can’t really call yourself “experienced” in equity research until a company has called your boss to try to get you fired.  And emerging markets economists know that governments will sometimes respond aggressively to criticism of their policies. But up until now, nobody has thought that this could be a problem with respect to the USA.

A lot has changed in the last six months, though. Mark Dowding of BlueBay writes a weekly note on economics which, like many such notes, has expressed scepticism about the Trump administration’s approach to global trade.  And now he’s worried that one day he’s going to take a flight to the USA and not make it past the border.  He probably didn’t think that, in the relatively conservative profession of fixed income investment management, he would ever find himself saying that “I know I'm taking a personal risk, but I'm putting myself out there”.

Global bankers are also, apparently, spending more money on US immigration lawyers, to train them on the correct way to speak to border staff, in order to avoid ending up like Jasmina Midzic, the hedge fund investor relations manager who had a “fiery” exchange in May and is now unable to get a visa.  The advice is apparently to avoid any mention of “The W Word” (work), and to consider really exaggerating the abilities of your star bankers in order to qualify them for the “exceptional talent” O-1 Visa.

Unsurprisingly, a lot of bankers seem to be asking themselves whether it’s worth the trouble.  Some Asian hedge funds, in particular, are targeting portfolio managers who are currently working as immigrants in the USA, but who might be getting nervous about whether something they said at a conference might come back to bite them next time they take a foreign trip.

We haven’t yet seen an ICE raid on a trading floor, but increasingly it feels like the sort of thing you can’t entirely rule out happening.  So don’t be surprised if daily economics comment letters start getting a lot more boring to read, and some of the best financial social media accounts quietly disappear.

Elsewhere, between the new Goldman Sachs loyalty oaths and the news that no major private equity firm started on-cycle recruiting in June, it looks like we’ve learned something about the true balance of power between bulge bracket investment banks and their financial sponsors clients.  When Jamie Dimon first announced that it wouldn’t be allowing first-year analysts to accept a job somewhere else, a lot of people thought he was crazy and would be forced to back down.

To begin with, critics said, JP Morgan would never be able to recruit top talent again.  Young bankers only joined Analyst programmes in the first place in order to get an offer from the buy side, so JPM would be left with the dross.  This was always a very arguable assertion as the concept of “top talent” among 23-year old Powerpoint jockeys doesn’t really make much sense.  And even if it did, how much use is “top talent” that leaves the firm before it’s got into any position to add value?

But that brings up a second and more powerful objection – that the reason why investment banks allowed the private equity industry to treat them as a recruitment agency was always that having a lot of alumni on the client side helps you win deals.  If the bankers no longer believe that this is a good enough reason to allow themselves to be inconvenienced in their recruitment process, that’s potentially quite informative.  Lots of bank CEOs are still, publicly, expressing optimism about the pipeline of financial sponsors deals which is going to get moving just as soon as the macroeconomic and geopolitical situation calms down.  But historically it’s been a good forecasting technique to look at what they do, not what they say.

Meanwhile …

They are trying to be polite about it in their morning notes, but forex traders are getting increasingly frustrated by the fact that the current policy environment is so different from anything seen before that none of the usual relationships between currencies, commodities and interest rates seem to work. (Bloomberg)

It seems likely that the next Chair of the Federal Reserve will be a Republican called Kevin, but will it be Hassett or Warsh?  They are not yet being asked to take part in a wacky series of weekly tasks, but the backstabbing and briefing between friends and allies in Donald Trump’s office is apparently giving the whole thing a “reality television feel”. (WSJ)

These days, the new “ESG” stands for “Energy, Security and Geopolitics”, as European bankers begin to pivot toward the defence industry. (The Post)

If you spent Friday tweeting about politics, Monday recording an apology video for Friday’s tweets and Tuesday doubling down with more tweets, then most people might find their friends and employer telling them to put the phone down. Silicon Valley VCs are built different though, particularly when they’re a partner with a close link to Elon Musk. (WSJ)

Down in Miami, Jefferies had to fire a team of financial advisors due to “impermissible wire transfers” and “off-channel communications”.  As if that wasn’t bad enough, it’s also fired another employee, who is now permanently banned from the industry, for demanding payments from the first group to not tattle on them. (Bloomberg)

Giuseppe Lavazza, chair of the eponymous coffee company, thinks that hedge funds are responsible for 80% of the increase in prices. (FT)

Why are there so many TV shows about bankers being existentially miserable and wracked with guilt, when most actual bankers are pretty happy about what they do? (The Critic)

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