Morning Coffee: "As good as it gets" for bankers may not be that good. Citi says that it won’t monitor you, much.

During triumphal parades in the Roman Empire, someone had the job of standing behind the victorious general, occasionally whispering “remember that you are mortal”, to stop him from getting carried away.  The modern equivalent for investment bankers during the record-breaking H1 2026 results season might be the SpaceX share price.

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After a quarter in which equity capital markets and equities trading led the way, the fact that the biggest and hottest deal of the year so far is now trading only a little bit above its IPO price serves as a reminder that profits so far this year have been very concentrated in a few big deals and in the tech sector, and that the market’s appetite is not necessarily unlimited. That’s a slightly sobering thought, given that investors are going to have to digest the IPOs of Anthropic and OpenAI, plus potentially quite a lot more SpaceX shares once the lockups expire.

As Jamie Dimon put it yesterday, “It’s getting close to as good as it gets. We just don’t know how long it’s going to last”.  But the nature of banking is that you don’t often get long flat prosperous plateaus; things either keep getting better or suddenly get worse. It’s noticeable that despite putting in one of its best quarters in living memory, Citi saw its share price fall yesterday.  When expectations have got so high, it’s difficult not to disappoint.

Some commentators have noted that a lot of the bull case now relies on continued investment in AI infrastructure – David Solomon of Goldman Sachs said that this was only in the “early stages” of driving new business for the bank.  But this too depends on being able to get a lot of equity issuance away; as well as the share price, SpaceX bonds have performed in such a way as to suggest reluctance on the part of investors.

It all comes back to the state of the stock market, then.  Even the wealth management divisions of the bulge bracket banks seem to be relying on newly created IPO millionaires for their growth. And the stock market is very dependent on retail investors, who don’t seem to be quite as predictable as they used to be. As JPMorgan’s Jeremy Barnum, put it,“the market is clearly extremely risk-on, and we’re kind of takers of that”, but everything could turn around in a surprisingly short period of time. Particularly if the Straits of Hormuz problem turns on not to be quite as completely solved as we thought it was.

The first law of investment banking is, as a former Citigroup CEO once said, that “while the music is playing, you’ve got to get up and dance”.  The second law is, of course, to never allow yourself to be quoted saying anything resembling the first law.  Although the parade is truly triumphant, the whispers of “memento mori” are pretty audible too.

Elsewhere, there are few things which investment banking executives love more than their dashboards. Being able to monitor your employees’ activity is a great stress reliever and gives you the illusion of being able to control things down to the last detail.  It is, however, very annoying for the people being monitored.

One of the few top bankers who gets this is Tim Ryan of Citi.  He has made it clear that although he wants to monitor the use of AI and ensure that every token is spent wisely, he realises that he has to take a step back.  As he puts it, “You have to measure the big things, but don't try to measure every last-mile use case, because, frankly, you'll uninspire people if they feel like they're being watched too much”.

He calls it the balance between “metrics and pride”.  Talented professionals expect to be treated like professionals, which means trusting them to act that way. (With only the occasional broad-brush measurement to make sure that they’re not taking advantage of that trust).  We don’t know where Tim Ryan learned how to strike this balance, but as a father of six, he’s probably better placed than many of us to understand that helicopter parenting isn’t a viable strategy.

Meanwhile…

Sometimes it’s seen as a bit of a top-of-the-market sign when equity analysts start to get a public profile.  Dan Ives of Wedbush has always been a recognisable figure, partly for his extraordinarily loud patterned jackets and partly for his bullishness on tech stocks. Now he’s co-founding a boutique firm, to be called Yorkville Ives. (CNBC)

Banks used to compete for financial sponsors business by demonstrating their willingness to put up their balance sheet for leveraged loans.  But now players like Apollo are big enough in their own private credit arms to do it all themselves.  (Bloomberg)

Junior lawyers at Morrison Foerster have been told that as well as putting in the billable hours, they need to be preparing business plans to show how they would bring in more clients. This sort of thing is usually only something lawyers think about when they’re trying to get promoted to partner. (Financial News)

“Tokenisation” sounds like something rude that someone might say about the latest DEI initiative, but in fact it’s potentially a game-changer for trading and settlement, as well as being possibly the only genuine use case for distributed ledger technology.  Goldman Sachs, BlackRock, JPM and several other big institutions have got together to make it happen. (WSJ)

Peter Luck has moved from Bank of America to be chair of UK Investment Banking at Barclays. (Global Capital)

Kathy Ruemmler of Goldman Sachs has spent what must have been one of the most stressful days of her career, testifying to Congress about her email traffic with Jeffrey Epstein. (FT)

“I’m not against mocktails, but I make a living selling food and beverage. That’s how I pay my mortgage”. Apparently, according to the Hamptons hospitality industry, Generation Z bankers have more abstemious tastes than previous generations. (NY Post)

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