I am currently an incoming 2019 summer analyst for a BB.
Due to the cyclical nature of IB and news of a possible recession in the next 3-5 years, how worried should I be about the impact an economic downturn could have on me should I pursue a FT role in IB after the 2019 summer? What were the typical cuts seen in 2008?
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Recession starting in the next 3 to 5 months, but not as bad as 2008
Even if stocks are overbought we should not forget our Federal Reserve Managers that so strongly believe in their ability to save the world, that they do not understand that all they do is create a much larger monster as a result of non-stop printing of money. They are so arrogant that they can not even call their actions an honest name. What they do is nothing more than printing money (MP). But instead they call it quantitative easing (QE). This absolutely ridiculous title is designed to hide the inadequacy of their policies, and also to deceive people. Nobody understands what QE means, and this, of course, was done deliberately. They simply confuse the public and mislead it, forcing people to think that their hocus-pocus is in fact an alchemical formula that creates eternal prosperity.
These central bank executives are now so confident in their control over the situation that they are replacing QE with QT (quantitative tightening). And in this fact we can see their absolute arrogance is manifested. The QE program did not work. All she did was turn a fragile financial system into the biggest bubble in human history. Even with zero or negative interest rates combined with a large-scale MP, real GDP does not grow (if you calculate this figure using real inflation figures). In addition, it takes several dollars, euros or pounds of credit expansion to create only one dollar, euro, etc. GDP growth. Because QE, MP, or whatever you call it, did not work, why the hell does it appear that QT will work? You seem to take away the drink from a chronic alcoholic who is about to die from drinking, or he will die because of a hangover. This is happening to the world economy. It will collapse either due to the continuation of QE or due to QT. So, both QE and QT mean the end of the game. Most luckily the recession will be greater than ever and mostly touch US economy, we will see a recession that will go for years, meanwhile it will probably touch countries with their own Central Bank's very badly as well. But still maybe they will still figure something out, I dunno.
What I am wondering is would cryptocurrency market rise in such case scenario, as this can be a very good start for crypto usage worldwide. Just my 2 cents.
English? This is wild conjecture
First day on the job? In a very very very simplified way, all the government did was issue bonds to expand the money supply given the liquidity crunch. Now that the economy is moving fast enough for their liking, they've been issuing less. When those bonds expire as they're paid off, POOF, less money floating around. Problem solved.
Crypto is an accounting tool, like SAP reports....you wouldn't buy and sell those, you shouldn't waste your time with crypto.
Ciao
From my former colleagues and other professional contacts I know who were entering the industry around that time, they told me entire intern classes were cancelled at some banks.
I looked through some of the threads on here from the summer analyst classes around 08, definitely was not a delightful read
Can you share some of those threads?
You will be fine. It's hard to replicate decades of American overspending on mortgages, especially after 2008. With that said, I foresee crippling student debt being an issue in the long term.
Agreed, student loans may arise as a potential problem in the future.
Important to remember that the 2008 recession was not your run-of-the-mill recession, so it's unlikely the next one will match that magnitude. Regardless, hard to really base career choices on something that may happen may not happen in who knows what magnitude... also hard to say what industries will be most/least impacted by this theoretical future recession. I wouldn't wholly base your career outlook on it until it's real.
Just keep some skill flexibility if you're truly worried (pick up some extra knowledge in your free time, pursue an additional major, etc.)
Subprime auto
4321
a car is much easier to resell for lower severities quickly... and subprime auto debt is not thrown into abs cdos or have cds backed by them. no subprime auto bonds defaulted. and there is WAY more other types of consumer debt outstanding than subprime auto it is small compared to others. this causing a recession on its own is absolutely not possinle.
26bps separate 2 year and 10 year treasuries. Once the curve inverts, banks have no incentive to give loans, because the rate they can get is less than what they have to pay on deposits. This next recession is going to be purely technical driven by the yield curve
Agreed. And then we will see correction. I don't think it's going to be nearly the same magnitude of 2008's. And as noted above, you can't base your career decisions off something so uncertain.
I think there is more wiggle room. NIM is expanding, boosting profits for banks. The rate they have to pay on deposits hasn't really increased. Add to that low default rates and you won't see a slow down in lending. Commercial loans are increasingly profitable with the increase in Libor as well.
Assuming we can get some trade concessions that would allow the US to stop the tariff tit for tat, the economy will continue to chug along. Tax cuts have provided real, measurable lift and repatriation will continue. Most of it will go to dividends or share buy backs (both of which are good), but a sizable amount will go to M&A, capex, etc.
Many 10+ year IBs have never had to handle assets in a recessionary environment. If you're good at what you do, or show promise that you will be good at what you do, you should have no worries. In fact, as long as the concern for which you work is reasonably well established, they will be able to ride through the recessionary period and you will have had the added bonus of having the practical experience of learning your role during a recession. Many people can be successful when the economy is firing on all cylinders. A recession separates the wheat from the chaff.
The Fed did so well in 2008, people don’t even know how big the victory is. Art of War. As for a repeat of that, probably unlikely in the near term.
Bro its gonna be a bull market forever cause of the big D #makeamericagreatagain
I will make our country great again, btw can someone vote for someone else, its getting hard for me to keep topping up my spray tan without getting cancer.
personally i see the decade of low interest rates, increase in sovereign and junk corporate debt with a majority cov lite being the issue. with rates rising and having to refi with higher rates when companies havent been this levered could cause issues in a few years. maturity wall is coming up
Recession? Largest tax cut in history was just implemented. I don't get this type of chatter, people just overthinking things...
Unfortunately you don't get to pick the economic conditions you graduate into. Nobody knows when the next recession will start, you just have to focus on what you can control and what you want to do.
Word for word what I was going to say. One of my favorite expressions is "we'll cross that bridge when we come to it". Worry about what you can control and make changes on the fly. Can't let your decisions today be dictated by the what-ifs of tomorrow.
Furthering my comment above regarding tax cuts. I can't believe how underpriced everything is. Trump literally cut the taxes in half for most companies and that is a yearly stipend that keeps giving for more m&a, capex, or hiring. I see GDP being well above 3% for coming future.
Economy taking off until it gets repealed. Further I'm hoping he cuts individual rates to 25% as well. It really isn't fair that Apple pays a lower rate than me. we are a consumer nation and things would go insane as far as growth if he did that. Here's hoping to that...
I'm convinced 99% of people would rather talk about how terrible the economy their job or whatever is rather than be positive. If a recession hits it's solely based on fears and not fundamentals.
There is a problem with your premise here. Most of what has been done with the corporate tax cut has been stock buyback. The only evidence of capex thus far is increasing automation, which decreases hiring and depresses wages. The M&A point is probably correct, but it is large companies buying slightly slightly-less-large companies (Disney-Fox, ATT-TimeWarner, etc). That's good for bankers, lawyers, and accountants, less so for the average consumers that are the actual drivers of the US economy.
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