Did Goldman Knock This Down to Pick It Back Up

Two for two on Apple day trades as well, and I think Goldman Sachs may be up to something fishy right now…

Subject to quite a bit of skepticism, this exact scenario actually happens quite a bit…

Nio Incorporated (NYSE: NIO) is up about 100% over the past 30 days. Unless the company internally implodes or markets crash, the sky seems to be the limit for this electric car company.

But what if some financial professionals missed out on any bullish profits on NIO’s massive spike over the past 30 days or simply want to make the same money twice? What are they supposed to do in order to be offered another chance at making some money on NIO themselves?

Now, I’ve said this before and I’ll say it again… Financial professionals can move markets with one click of a mouse or by issuing one press release.

And the fat cats at Goldman Sachs did exactly that about 22 hours ago by issuing a downgrade on NIO. The stock instantly dropped 4%.

But here’s what makes me really interested…

Just yesterday, option players came in and bought $104k worth of call options on NIO, anticipating NIO’s price-per-share rallies to $7 or higher by tomorrow’s closing bell.

Did Goldman knock NIO’s price down only to pick it right back up at a discount? It actually happens pretty often, and we may be seeing that exact scenario play out on NIO right now.

NIO Daily Chart

While moves of this nature do come with some skepticism from retail traders who cannot manipulate a stock’s price-per-share and move money in or out of it at will, I don’t really care too much…

I’m just looking to make a move or two on NIO in the hours or days ahead and make some money on it myself.

Shown in green in the chart above is NIO’s 20-day simple moving average line (20 sma), a critical support level. If NIO holds, I may buy call options alongside yesterday’s $104k option player for a fast-moving trade opportunity.

Below NIO’s 20-day simple moving average line and I’ll follow the money flow prior to making any decisions. Oftentimes stocks like NIO are knocked down in price only to be picked back up at a discount, and I don’t want to be betting against a stock while a six-figure buyer comes in and makes a potential bullish bet.

I’ll be in touch mid-day with updates and a watchlist.

Let me know how YOU do today!

 

Yours for TrackStar trading,

Davis Martin
America’s #1 Options Trader

 

Merrill Lynch Advisors Shook: “…new workstations using AI to spy on us.”

Merrill Lynch formally announced a brand new workstation for advisors that have already been rolled out to 5,500 of the thundering herd so far this year. The other 10,000 or so ‘advisors’ (let’s not have the conversation today about Merrill’s actual broker headcount please) underneath the BofA umbrella will have the new system installed over the coming months. While the new workstation has all sorts of bells and whistles and cost BofA nearly $100M in development cash, advisors are worried about one thing and one thing only – the AI inherent in the system and its ability to hear, see, interpret, and control every keystroke, word spoken, and client interaction.

While Merrill was quick to trot out several promotional quotes from their corporate PR arm, advisors are acutely aware of what this new system is: a modified system to serve as a legal control mechanism that expertly flags any advisor with an eye towards leaving the firm. Here are some of the quotes from Merrill on the corporate side of things:

“The advisor of the future needs to be able to offer highly personalized service, enhanced by a digital experience,” Merrill spokesman Matthew Card said yesterday. “Technology allows advisors to serve clients at greater scale, recapturing for them the capacity they need to spend more of their productive time on client engagement.”

And this particular gem: “What we are able to do is mine activity across the entirety of the banking and wealth relationship. That gives you insight into anything that is important to the client.” – from Kabir Sethi, head of digital wealth management for Merrill Lynch and Bank of America Private Bank.

A clear admission that Merrill Lynch is using advisor input, both active and passive (read that again), to gather data about what is going on in and at the desks of financial advisors at the firm. A frightening specter that two advisors spoke to us about overnight.

An advisor on the west coast had this to say:

“From what I’ve heard there have been some really creepy stuff come from the ‘suggestions’ that this thing will make connected to both client activities and feedback that it is picking up. Two guys I know that were in the pilot program said that there are strange similarities to Facebook and Alexa in that they can be talking about a client before they ever pull up the account in the system, and a few minutes later they will get an alert about that specific client. The system was listening to their conversations. Now imagine if you are having a conversation with your wife or significant other in the privacy of your office?? I guess none of us should assume any semblance of privacy anymore.”

An advisor who was in the pilot program was even more explicit about what he thinks is going on and how he dealt with the spying aspect of the new system:

“It was obvious to me that the system was listening to every word I was saying and every single keystroke. After one week I didn’t take any personal calls from my office or make any. I would leave the office and nearly the building altogether. I would either wait until I was out to lunch or out of the office altogether. It is really fucked what they are doing. I’m sure there is legal language somewhere in Merrill’s policies that allows for this and removes any assumption of privacy. They may not have opted out of the protocol, but this may actually be worse.”

This isn’t necessarily new to the industry. Just last year UBS’s new leadership touted the ability of the platform to pick up all manner of communication that advisors are having with clients under the guise of ‘better serving clients’ by monitoring the activities of advisors via the firm’s CRM. Creepy as fuck.

Prediction – two of them actually; this will drive more big producers away from BofA/Merrill and into the arms of rival firms, but this isn’t the end of spying systems within the world of wealth management. They will become more prevalent and ubiquitous under the guise of client service. We’d recommend being careful and retaining your own personal counsel.

Rockefeller Continues Recruiting Rush; Lands Another Whale In Texas ($15M Deal!)

Rockefeller remains on a recruiting tear as it launches new locations and lands massive teams from what should be considered rivals now, like UBS, Merrill, Morgan Stanley, and Wells Fargo. The latest trade has Rockefeller landing another big team in Texas for the second straight weekend. As you may recall we predicted this streak and are aware that it will continue: Rockefeller Set To Win Big Over The Next Three Weeks

The details of their latest hall read like this: Rockefeller Capital Management on Friday landed a three-broker team headed by Shay Scruggs,  that generated $5  million in revenue. The group, which includes junior partners Kevin Wright and Trenton Hollas, who have four and five years of experience respectively, oversaw $500 million in AUM.

The group will be part of a cadre of advisors in Houston that are set to open up another flagship office for Rockefeller in Texas. Rockefeller continues to expect to add more and bigger teams in both Houston and Dallas, respectively.

There continues to be a strong drumbeat for three issues that make Rockefeller intriguing. The name itself, Greg Fleming’s leadership, and the tech platform they seem to have nearly perfected. Every single contact we have with anyone engaged with Rockefeller mentions those three points. Everyone.

Recruiting in wealth management is as hot as it has ever been right now. Deals are sky-high if you are a ‘Tier 1’ advisor or team. Competition is absolutely fierce across several levels of the wealth management spectrum.

As an example, what could a $4M team at Merrill Lynch expect to be able to demand from the recruiting market place right now? Assuming they laid their fleece out to Wells Fargo, Morgan Stanley, UBS, Rockefeller, and First Republic? At a minimum the package would ring the bell at $12M; and maximum with deferred matched and back ends met (wait for it…) $20M. In other words, a team situated like that should expect no less than a bidding war and not a penny less than $15M. Yes, the recruiting landscape is on fire.

And Rockefeller is as hot as any name.

 

Morgan Stanley Push: Recruiters Make Claims “…they are being very aggressive.”

Morgan Stanley re-entered the recruiting sweepstakes, post protocol exit, late last year with a bang. After leading the wires (along side Wells Fargo) in losing headcount to the resurgent regional space over the past two years Morgan Stanley has been very aggressive in recruiting large teams away from their rival wires. They’ve had specific success in recruiting away large teams from Wells Fargo and UBS.

There is a good reason why those teams are listening to Morgan Stanley’s pitch. Besides the requisite largess of the firm as a global investment bank that competes directly with the likes of Goldman Sachs and JP Morgan – the firm *dolla dolla bills y’all* recruiting deal is massive. If you play your cards right you cash in to the tune of 250% in the first 4-6 months at your new desk. All in, the firm has been known to pay the biggest and most visible teams more than 350% when you count deferred comp recovery payments. Huge.

Doing a little math – if you are a $3M dollar team in, say, Washington DC the numbers quickly skyrocket. You walk in the door and receive a check for $6M dollars (200% upfront). Transfer 50% of your assets in the first 180 days and you will be handed another $1.5M dollars. By the time you’ve hung a few pictures in your office and have finally figured out how to use the firms CRM software you are $7.5M dollars to the good.

That puts butts in the seats. The total of 250% within your first 180 days at the firm is an eye opener and sets the wirehouse apart from rivals. The low barrier of entry on that extra 50% is a dealmaker as well. Big teams find themselves intrigued by it and finding ways to justify tethering themselves to the firm for the rest of their careers.

Speaking to a long tenured recruiter about Morgan Stanley’s current push:

“They are being aggressive in specific markets with teams that are north of the $2m dollar mark. The aggression largely has to do with the funds added on the deferred comp end of things, but also moving hurdles around to make the deal more ‘gettable’ in the short term. Teams are responding to the flexibility that comes with a 350% deal, most of which you essentially get up front. My guess is that they will remain aggressive coming out of the pandemic and try to scoop up some headliners. I know that is what the current thinking is with Saperstein.”

The pandemic issues have brought a uniqueness to recruiting with a particular set of circumstances that can be exploited. In some specific locations clients are still locked in quarantine and much easier to reach. Reaching them, though, has its challenges as advisors can’t get face to face to process ACAT documentation. Still, the narrative has been that transfers have been swifter based on clients availability and lack of distractions.

Clearly, Morgan Stanley is focused on capitalizing in whatever way they can.

UBS Set To Reduce COVID-19 Restrictions For Employees; WFH Policy To Be Optional

UBS is set to tell it’s global staff that the era of enforced ‘work from home’ is about to come to an end. Not that employees (traders, advisors, admin and operations staff) will be forced to return to office buildings and trading floors, but rather be encouraged to return as they deem reasonable and comfortable.

A limited number of employees in jobs that have risk-management aspects will be allowed, but not required, to return to the bank’s skyscrapers in the U.S. city, a person familiar with the matter said. The Swiss lender joins rival Morgan Stanley in allowing some employees to return to work after the pandemic’s spread eased.

The bank’s trading floors in New York are being reconfigured to comply with physical distancing guidelines, the person said. UBS is also considering staggering and assigning departure and arrival times for its staff to avoid lines forming at entry points and elevators, as well as when employees should wear masks and have their temperature checked, according to the person.

“The health and safety of our employees and clients remains of the utmost importance. As we monitor the relaxation of lockdowns across the U.S., we are beginning to prepare our workplaces and our teams for a gradual and safe return to the office,” UBS spokeswoman Erica Chase said. “Our approach will be coordinated across our entire regional footprint, taking into account the relevant local conditions, as well as the guidance of government and public health authorities.”

In Switzerland, UBS workers beyond essential staff will return to offices starting in the middle of the month, with the speed of their return depending on capacity to maintain social distancing.

Morgan Stanley And UBS: Non-Protocol Firms Aggressively Stalk Private Banking Teams

A clear narrative is shaping up amongst wirehouse rivals Morgan Stanley and UBS. As both firms exited the broker protocol within weeks of each other their recruiting strategies have begun to mirror each other as well. Both firms have decided that aggressively pursuing private banking teams at the likes of Goldman Sachs, Bernstein, Bessemer Trust, and even J.P. Morgan is a pathway to stability and revenue growth in their all-important wealth divisions.

Over the first six months of 2020, even with the coronavirus pandemic and civil unrest, UBS continues to announce large team acquisitions that hail from the private banking sector. Managers across the US, at the swiss-based firm, have confirmed to us that deal negotiations no longer include private banking discounts – rather, UBS is paying full freight, and then some, for private banking teams of scale. This is a dramatic shift from years of recruiting teams that may include employment contracts laced with non-compete, non-solicit, and even garden leave language. UBS has decided that it is worth the legal risk.

Morgan Stanley isn’t far behind and is quickly learning from its rival that leaning into the private banking space makes a lot of dollars and sense. Morgan Stanley has begun to back away from any discounting of private banking team deal dollars and treating advisors and their teams no differently than an elite level Merrill Lynch recruit. Again, a major shift in both philosophy and execution.

It now looks like the unrest in markets and potential larger-scale disruption to books of business is on hold, but the impetus to switch firms looks to be at or near all-time highs. Why? The nearly 40% haircut that occurred in a furiously fast downturn spooked a lot of advisors and woke them up to the long-term value of monetizing their hard work right now. Adjusting policies around recruiting deals and the who/what/where/why matrix seems to have shifted at both UBS and Morgan Stanley.

So far, UBS is seeing real dividends in landed recruits. We expect Morgan Stanley to follow suit as the year moves forward.

RUMOR: UBS Set To Land Massive Goldman Sachs Team; Could Be $15M+ Rev, $5B+ AUM

There are rumors swirling within the wealth management world that UBS is about to land a massive Goldman Sachs private banking team. Sources at UBS have passively confirmed the potential move with a wink and a smile via text and signaled that we should keep a sharp eye out for a pending announcement.

UBS has taken considerable interest in Goldman Sachs advisors and larger teams over the past six months and ‘leaned in’ to those recruitments inside of the COVID-19 pause in the industry. The expectation is that this particular transaction is pending and will trade in less than 30 days.

As UBS pursues private banking teams they’ve also taken an interest in Alliance Bernstein, and J.P. Morgan. Private banking teams of scale have engaged with UBS often because of the largess of the deal being offered.

Historically these types of teams have been offered discounted deals based on the perceived stickiness of the assets that they manage at their current firm. UBS has decided that those rules don’t apply anymore and are offering ‘wire to wire’ traditional deal terms to pry away the biggest teams.

When this deal finally closes we could be looking at a number larger than $50M in total bonus dollars.

Goldman Sachs Botches Response; Emails Passive Denial Of Details Of Sexual Harassment Claims

Goldman Sachs attempted to reach out to us yesterday in hopes of reducing the interest that our story garnered regarding two individuals that had dealt with differing degrees of sexual harassment at the global investment bank. The denial was both weak and soft and didn’t remotely speak to the veracity of the allegations themselves, but rather to the release of the information and whether or not it was appropriate to leak the nature of ‘sealed agreements’. Saying that again, their response was weak.

The specific email that we received asked us to remove the article on the basis of privileged legal information that was agreed to by all parties at the time. (Should they really be sending an email with the term ‘privilege’ in it right now?) No denials of the claims made by the women, no denials of the existence of the women and their circumstances, no denials that there is potentially a systemic issue among some managers in the wealth division, and no commentary that the firm is doing its part to clean up the problem. Just threats.

A reminder of what was alleged in the article regarding sexually charged claims that were settled at the firm and how those claims were viewed by the victims themselves. A quick look back at one quote that sums up, in comparison, how weak Goldman’s response was late yesterday:

“During the investigation, which took more than 8 months, I was passed up for a promotion that, per the criteria, should have been a foregone conclusion. It was right there that I decided to leave the firm. When GS offered me a settlement I agreed and left the firm 90 days later. Easy decision. I wasn’t about to let those fuckers stunt the growth of my career.”

One of the victims chose to stay at the firm for 8 months, no doubt enduring being ostracized and whispers as the investigation dragged on. She should be celebrated. And having the will to leave one of the most powerful firms on Wall Street is a real act of courage. Goldman asking us to take the article down was a gift to us, so thank you for giving us the opportunity to print a follow-up article on this issue.

A quote that sums up the other victim’s reality and further proves the ‘weak hands’ of Goldman’s legal team:

“It took me a week to report it and the trauma of dealing with a snake that masqueraded as a friend was traumatic. Ultimately I stayed here because I thought remaining was the more important choice than walking away. Needless to say, my ‘friend’ was fired.”

And bravo to her for staying at the firm, fighting for her rights, and probably fighting for change as well. We can assume that nobody is going to be stupid enough to fuck with her going forward.

We do expect to get another email/letter of some sort from Goldman regarding this story as well. Please send it – we will simply post the screenshot of it and provide the much-needed context.

Merrill Lynch Smoke And Mirrors; Effort To Boost Sliding Advisor Headcount Falls On Support Staff ‘Pathways’

Merrill Lynch remains a constant loser in the world of wealth management recruiting. They’ve continued to retreat as rivals like Morgan Stanley, UBS, Wells Fargo, and the likes of Rockefeller and First Republic clean up. When was the last time you saw a meaningful Merrill Lynch recruiting headline announcing the arrival of a new team? Exactly.

So what seems to be the go forward to keep advisor headcount steady and sinking an additional 10-20% over the next few years? Simple, add as many Merrill Edge brokers as possible, reclassify BofA ‘in-branch’ advisors as Merrill Lynch, and create a new pathway for admin staff to become advisors themselves. At this point, Merrill Lynch has officially become the IBM of the wealth management game. Old, out of ideas, shrinking, but willing to play cheap parlor tricks to feign the illusion of growth.

What looks to be a new initiative to be announced in September, client service associates will be given a new pathway to moving from general admin positions to advisors filling the roles that their bosses do. Yes, welcome to 2020 Merrill Lynch. It seems that the era of ‘Mad Men’ may slowly finding its end at the thundering herd division of Bank of America. (commence eye roll).

There will be a set of qualifications for support staff to join the new ‘pathway’ at Merrill – candidates will have had to be at the firm for three years, be licensed with FINRA, and then complete a 9-12 month training course. We also expect 99% of these new candidates to either join the current team they are working with/for as opposed to starting from scratch. With that reality, is this really a pathway to becoming the next Barron’s 100 advisor? It feels more like a pathway to boosting ‘registered’ headcount that is capable of inputting orders when the big boss is out on vacation or playing golf. We are happy to be proven wrong, but until we hear of this program turning aspiring support staff into advisors in control of their own destiny at the firm, consider us skeptical.

Otherwise, the IBM and Merrill references will continue.

Goldman Sachs Or Goldman ‘Sex’; Rumors Of Off-Book Settled Claims At Firms Wealth Division

Goldman Sachs seems to have a problem on its hands in their wealth division with women that have either been harassed, reported abuse by superiors, or as seems to be the most common complaint, the pressure to ‘cozy up’ when called upon by management. Over the weekend we had an illuminating discussion with two women (one who continues to be employed by the firm, and one who has since left) that both settled claims against their employer. Both discussed the nature of the environment in which they were asked to do things ‘differently’ than make colleagues, and were willing to give us details on the condition of anonymity.

Some initial context to these discussions – both instances and victims worked in the Dallas office of Goldman Sachs. One was an advisor in the firms wealth management division and the other was an executive assistant on one of the larger teams in that same location. Niether woman claimed (independently, as we honored the anonymity even within the conversational cross reporting) to have any knowledge of other reports or settled claims at their location; they simply wanted their info to find the light of day, versus buried in off book settlements.

“The environment within the financial services industry is always going to have an inherent bias towards masculinity. It is risk and high energy and performance based compensation that draws the interest of men at a larger percentage than women. I get that and understood it from day one. But what ultimately ended up being the reason I walked away from the firm was much deeper than just understandable bias and a little locker room talk – it was the belief that ‘eye candy’ was an active part of my resume’ and should be used as such with both clients and colleagues. I didn’t appreciate it and it finally came to the point where there was an incident. Look, management wasn’t dumb enough to make advances on site – but the magic of messaging apps exists in 2019/20. An individual in a leadership position was savvy enough to become a friend, and that turned into something else altogether over time. When the messaging began outside of the any verifiable GS tech, I tried to be cool about it but wasn’t comfortable with it. Once I made that clear the attitude toward me in the office turned ugly and I was asked, consistently, to do things professionally that were below my pay grade. I was asked to ‘entertain’ clients; usually the requests came on behalf of single male clients. I ended up reporting the inappropriate advances via messaging apps, as well as the treatment after I turned him down.”

“During the investigation, which took more than 8 months, I was passed up for a promotion that, per the criteria, should have been a foregone conclusion. It was right there that I decided to leave the firm. When GS offered me a settlement I agreed and left the firm 90 days later. Easy decision. I wasn’t about to let those fuckers stunt the growth of my career.”

The above come from one of the women we spoke to, but we aren’t going to identify which of the two positions she held, per the requests that were made of us. Obviously, the behavior that she dealt with was wrong and ultimately settled by the firm. The next disclosure is a little darker, so be warned.

“I really don’t want to go to deep on this but it needs to be out there and any of my female colleagues need to understand that this can happen to anyone. Someone that I thought was a genuine friend and held my same position – we even went through training at the same time – spiked my drink and attempted to take advantage of me. The spiking attempt didn’t have the full effect or else I could have been raped by someone that I thought was a friend. It took me a week to report it and the trauma of dealing with a snake that masqueraded as a friend was traumatic. Ultimately I stayed here because I thought remaining was the more important choice than walking away. Needless to say, my ‘friend’ was fired.”

Two different situations in one location at Goldman Sachs, over the past two years. Much could be written about the role of gender and workplace decorum on these pages, but a simple rule generally solves most issues from every happening in the first place: if you wouldn’t say it or do it with the CEO standing directly in front of you, you shouldn’t say it or do it at all. To take it a step further, the understanding of right and wrong is pretty basic – or as both of these women uttered during our conversations – just don’t be a fucking douchebag.