- cab’s outside.” That was the darkish Friday morning humour at the bank in the mid-90’s. It stemmed from a painful round of layoffs in 1992 (when we wrote off some ugly real estate loans in New York and London). The first on scale since the Great Depression, the cuts targeted middle managers in their 50’s. Our senior regional managers pulled the consultant’s trigger, throwing out these truly blue-blooded men like shoeboxes of torn-off Band-Aids. On a Friday afternoon, with just minutes’ notice, the discard was handed a severance package, asked to pack up his desk (under supervision) and escorted out to a waiting taxi. It was disgusting, and not our style.
Speaking of brutal, a cocky CIBC competitor sauntered in to our office on a Friday in ‘92, and gleefully announced Royal’s impending layoffs two hours before our internal memo dropped. His bank was #2 at the time, just barely, so he taunted, “They say we’ll take over Royal to lead the big six banks by Monday morning.”
Somebody snarled: “Get lost, you sweaty, stinking slab of last year’s lard.” But it hurt. A couple of weeks later I decided to sing: “You’re a mean one Mr.Grinch” at the branch Christmas party. Got serious stink-eye from the area VP, and returned it unapologetically. Not a lie.
Humble enough -- downsizing is by Braille: It was later that next year that Canada’s big blue won me over. The economy had picked up, and we’d actually hired back few of these guys who’d already cashed their severance cheques, (corporate comedy). By then, CIBC was headlong into its own nasty round of layoffs, which made ours look cute by comparison. And then, right in the flurry of one of Canada’s worst banking years in a generation, a certain Royal higher-up, not sure who, said something I’ll never forget: “We can’t shrink to greatness.” We fired the consultants, flipped our strategy on a dime, and went on a nation-wide hiring spree. Scooping talent from the other banks, we left that (former) #2 behind like a wilted dollar in the crack of the staffroom couch -- today, we nearly triple them in size. Oh, and in case you’re wondering, that annoying town crier got his cab ride home later that year.
He’s living in a van down by the river.
Charts:
Despite its monstrous size and influence, big tech is regulated less than other industries as measured by bulk pages of U.S. federal regulation (chart below).
- Begging questions:
- Is tech big because it’s unregulated?
- Is your oven listening to you talk about the government? (See also “Surveillance Capitalism” by Shoshanna Zuboff).
They rarely make mainstream headlines, but US T-bills matter greatly: This chart signals that interest rates are pressing upward, as the US Fed signals moderating the money supply expansion, and bond traders shift holdings to greener pastures.
So how do stocks behave in a rate-rising year? As noted in the RBC chart below, historically, the hot stove of financial expansion usually keeps the trading room warm for several more months.
Weekly Wrap-up:
- Time for a tune-up? U.S. equities have been on a long winning streak, piling on gains year after year. While we see positive returns continuing in 2022, investors shouldn’t fall prey to a “U.S. bias” as we think international stocks have favorable characteristics that argue for their inclusion in portfolios.
- Treasury yields are spiking – As the 10-year Treasury yield has pushed above 1.70%, the growth vs. value trade is once again coming into focus. We highlight what this could mean for investors.
- Regional highlights: Canadian rates climb as market expects BoC to stick to its hiking plan; European government bond yields leap higher; Signs China’s growth slowdown is stabilizing.
Full article here: Global Insight Weekly
Enjoy your weekend! They say warmer weather is coming!
Mark