JPMorgan is poaching Google tech whizzes; Square is working with a select group of CBD startups; inside the growth plans of Aperture Investors
Hey, readers!
I can't believe it's already June and that we're nearly halfway through the year.
To everyone who thought we'd see a summer news slowdown, remember that Donald Trump is in power.
This week the American president again threw the economy a curve with a further escalating of the global trade war. In a tweet Trump said the US would impose tariffs of 5% on Mexican imports starting June 10.
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Trump said these tariffs would be in place "until such time as illegal migrants coming through Mexico, and into our Country, STOP." Trump said he'd boost the initial 5% tariff all the way up to 25% if the border isn't controlled.
Our investing editor Joe Ciolli breaks down the effects the tariffs would have.
In the US, JPMorgan estimates that new tariffs will reduce third-quarter gross domestic product by a quarter point, from 1.75% to 1.5%. The firm warns that a much bigger downward revision may be necessary if a corporate spending slowdown affects hiring, which could hurt consumer spending.
There's been ongoing speculation that Trump's recent tariffs are serving as an indirect tax on the average person. After all, when a tariff is imposed, the manufacturing company doesn't necessarily have to make up the difference on their end. They can always pass that additional cost along to the purchaser.
And then there's the matter of markets. With US stocks getting pummeled this past week, it's clear investors are allergic to Trump's trade uncertainty. Meanwhile, in the bond market the scared rush into Treasurys, considered to be among the safest assets, has pushed yields into dangerous territory.
Near-term yields are higher than their long-term counterparts, something that's historically signaled an imminent recession as it implies nervousness. This is commonly referred to as a yield-curve inversion, and the current situation is more stretched than at any point since 2007.
Joe also points out that any Mexico tariffs would be in addition to the China tariffs already enacted. The trade war has already had a meaningful effect. Companies have started warning investors about the downside they might face if the trade war doesn't end soon.
That includes Stanley Black & Decker CEO James Loree, who said recently that his firm may go as far as to move production back to the US from China in response - a costly, complex endeavor.
Don't expect Trump to let up anytime soon. Between China and Mexico, tariffs appear to be his favorite policy weapon.
On another note we've just started collecting nominations for our annual Rising Stars of Wall Street list that will run in the fall. We're looking for people under age 35 who are killing it in their industry, making notable contributions or accomplishments ahead of their class within investment banking/dealmaking, investing, and sales and trading.
To nominate someone, fill out our form here. Please let me know if you have any questions!
And don't forget ... Business Insider is hosting a (free!) finance event tied to our "100 people transforming the world of business" list. The event is called IGNITION: Transforming Finance, and it will be held on June 10, 8-9:30 a.m., at the New York Stock Exchange. It'll feature a number of speakers from our list, including Omar Ismail, the head of consumer digital finance in the Americas for Goldman's Marcus business, and Huy Richards, the head of digital investment banking at JPMorgan.
Please e-mail me if you'd like an invite at ooran@businessinsider.com.
Have a great weekend, and enjoy the sunshine.
Olivia
JPMorgan's new equity-trading "bot" is part of a set of developments that could cut the firm's trading costs by hundreds of millions of dollars a year.
The project was spearheaded by Neil Joseph, the European head of equity trading at JPMorgan asset management. He said it's part of a broader overhaul of automation of processes at the bank.
"We're increasingly recruiting technologists from firms like Google and Microsoft," he said.
Inside the growth plans of Aperture Investors, a new asset manager set up by a former Goldman Sachs exec that's out to change the industry
Active investors are getting squeezed.
A combination of poor performance and fee pressure resulting from the rise of passive funds has the industry questioning the value of these highly paid asset managers.
Aperture Investors, the brainchild of former AllianceBernstein CEO and Goldman Sachs executive Peter Kraus, has responded by offering a different model to investors.
Square has started working with a select group of CBD startups while other payments rivals shy away from the trendy substance
Square has started working with a small group of CBD startups to handle customers' credit-card transactions.
A spokesperson for the payment-processing company said it is conducting a limited invite-only beta test for certain CBD products.
Square is stepping into an industry that most large domestic payment processors don't serve because of regulatory uncertainty.
BlackRock, Vanguard, and other big asset managers are placing big bets on tech. But some advisers have major concerns about the new platforms.
Big asset managers like BlackRock, Vanguard, and WisdomTree are increasingly offering or investing in technology for financial advisers to use with their clients.
Some advisers said that the move from offering investment products to technology solutions could raise conflicts of interest and privacy concerns.
An inside look at landing a tech job at one of Wall Street's largest trading firms, which is harder to get into than Harvard and requires final sign-off by the CEO - even for interns
Citadel Securities, one of the largest market makers in the world, has taken a data-driven and analytical approach to its hiring process.
Candidates go through a phone screener, followed by five in-person interviews, and sometimes a behavioral assessment, all to analyze a wide variety of skills and traits.
Peng Zhao, the firm's CEO, signs off on the hiring of all employees, including interns.
It's a highly selective process as fewer than 2% of applicants are hired - a lower acceptance rate than at Harvard.
In markets:
- The Fed warned that companies are stockpiling debt and using it for all the wrong reasons, and that could be disastrous if the economy sinks
- An under-the-radar signal is providing crucial hints about the next stock-market crash, and trade-war turmoil could soon have it flashing red
- MORGAN STANLEY: Why it's too late to prevent the next recession, even if a final trade-war resolution is reached
In tech news:
- This pitch deck helped a New York City startup raise millions to build a direct-to-consumer marketplace that fills the gap between Amazon and Walmart
- Citigroup spends $8 billion a year on tech, and it's finally starting to see a hefty pile of savings from the massive investments
- Mark Zuckerberg's personal security chief accused of sexual harassment and making racist remarks about Priscilla Chan by 2 former staffers
Other good stories from around the newsroom: