With the 10-year rising, the yield curve starting to flatten, and major indices starting to tumble, what are the risks of the 2019 FT analyst class losing our jobs before starting in June/July 2019? Are accepted offers legally binding? What was the situation like during the financial crisis a decade ago?
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Your contract probably has a line that says either party can terminate employment at any time. So, yes they can pull the offer if they need to.
I wouldn't spend too much time and energy worrying about something so outside your control.
Unless something major major major happens, you guys are safe. This isn't the first market bump and it won't be the last and banks won't rescind your offers just because the market isn't as hot as they thought it would be.
Aren't we overdue for a major recession?
The stronger an economy is, the more people believe it is unstable. Really is not the case.
Not every recession is like 2008.
There is generally a major shortage of analysts and associates. A falling market can change that, but it would take a lot to reverse it.
Also, markets are correlated with deal activity but not synonymous with it. The true relationship is more complicated. Higher rates mean less capital for deals, but low growth means more incentive for deals. Higher indices mean more available capital for acquirers, but lower indices mean more attractive prices for targets.
I think you should wait for things to get worse before being concerned about your offer.
Can you expand on what you mean when you say there is a major shortage of analysts and associates? Its my impression that there is a massive surplus of undergrads who want to be bankers vs. the amount of spots available.
Sure. I'll start with a settled fact and explain how I extrapolated from there.
Settled fact: IB associate needs have been nothing short of desperate for the last 1-2 years. I left IB a few months ago (I was a VP) to join a small PE shop, but before I did that I was 'on the circuit' talking to recruiters and banks about a lateral IB move. Between those interactions, and talking to my friends at banks, and seeing the recruiting activity at my own bank, it was extremely clear that a trained chimpanzee could get a an Associate job right now.
Now you say, analyst isn't the same as associate. True. But they're related. The banks have lowered the bar so much for associate hires that they're now taking risks on people who they're not fully comfortable with. If they had a good number of analysts, they could just push work down to analysts instead of hiring B-players and C-players at associate. But they're not doing that, because they don't have enough analysts to be able to do that.
Probably sounds like I'm really extrapolating here, but there's some evidence that supports it. I've seen a decline in Analyst quality, I've seen classes come in at below target numbers. I've heard of one BB that is considering ending the MBA Associate program altogether and filling the gap with more analyst hiring, in the hope that they'll keep more Analysts for promotion to Associate than they have historically.
While Associate needs might be more extreme, I think ultimately a junior banker is a junior banker to some degree and it's clear the banks don't feel they have enough junior help.
Lmao there is $1 trillion in dry powder. Valuations are becoming more “reasonable”. This downtrend won’t be a 2008 lol
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