How to answer a question about what's going on in the market?

I recently had an interview where one of the guys asked me to tell me about what's going on in the market and what I do to follow the market. What is the best way of answering this question? Do I need to be reading the WSJ everyday or can I pick an article that interests me the most and talk about that?

 

How you go about answering such a question depends on your interpretation of the market activity. Ideally you should be following the markets closely by going through the Bloomberg, FT and WSJ etc everyday for at least a week or two prior to your interview. If that is not possible and you're constrained for time, try and get your hands on some sell side daily briefing prepared by the bank's strategists and ramble that stuff in your interview.

 

Vontropnats, SB for the website. It's a pretty free cool resource for market commentary.

Mob, my advice to you is to sit and learn the absolute basics of each key market (Equities, Bonds, Credit, FX and Commodities, Derivatives) like what is traded on the markets, an overview of each market in the basic sense, and understand that everything is interrelated. After that, I would pick up something like the WSJ, Investor Business Daily, The Financial Times or Barrons (which is a weekly paper), and read it daily as Macro suggested, just to get a feel for the market. While I'd recommend reading it cover to cover, I'd just skim it to get a pretty good gist of things unless you find an article you want to read outright.

I'd also brush up on the markets since 2007 as well. I know it's a lot of reading - particularly going back to 2007 with the Subprime Crisis, but having a fundamental understanding of where we were a few years ago and how the bailouts and quantitative easing programs work and shape the current landscape is important when you look at how the market is acting now. I'd also know about Greece because this issue is not going away and may have an affect on Portugal, Ireland, Italy and Spain. I would definitely read up on the Eurocrisis without any hesitation. I realize that this is a little more specific, but I would also look up and stay current with Argentina's nationalization of YPF. This is going to have major investment and political ramifications that will tie right into dealing with the WTO and an economic impact on both Rensol YPF and Argentina.

 

Post what you have so far and others can fill in what you’re missing. You’re going to retain more by doing your own research. Check bisnow, wsj property report, research on brokerage companies website (CBRE, cushman).

You can also google some offering memos from major brokerages to learn about more submarket specific things (I’ve done this with HFF).

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That is a very broad question. Whatever your outlook may be, just make sure you have a valid reasoning behind.

If they ask this question, may be specify it down to a certain sector or have some general points about each sector and how you would allocate the investments across the board with those assumptions.

Ex: At the beginning of October, Bill Ackman stated his fund had a long 10% stake in CMG and gave a great investment thesis behind his investment. Even though, on 10/25 CMG dropped around 10% due to poor earnings release.

Just give solid, quality answer around your assumptions and thesis and how it could affect a PWM fund.

 

I agree with the above... it’s all about your reasoning.

Personally, I think the market is getting dangerously expensive but believe the run could continue for awhile if tax reform gets passed and monetary policy stays fairly accommodative. To stay invested for that upside but to minimize downside, I’m sticking to higher quality and/or value stocks.

 
Best Response

While knowing the facts is great, you should have an opinion on the possible outcomes of these events. For example:

-Do YOU think the Fed should hike interest rates at its next meeting?

-How do YOU think a surprise Le Pen victory will affect the global bond, stock, derivative, etc. markets?

You get the point. Further, connect it to how that will affect the ECM/DCM division at the bank where you are interviewing. For example:

1) Fed hikes rates, which makes it more expensive for corporate clients to borrow.

2) While that can reduce M&A activity or bond issuances, you think it will lead to more equity offerings as companies look for new ways to raise capital, for example. Further, you see higher rates as a good thing for banks overall because it boosts their bottom lines as they collect higher interest on loans.

Before anyone starts saying this is the wrong way to approach it, I have had interviews where senior bankers asked about what I thought about certain market developments. Key is to connect it to the division which you are interviewing for. While I do not have any experience with ECM/DCM interviews, as I only interviewed for more traditional IB groups, I would assume they are looking for something along these lines. Someone with more experience can chime in and add to what I have said.

And remember: sound confident while answering these. The last thing they want to hear is uncertainty and second guessing.

 

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