Wall Street’s most sophisticated, high-speed traders are growing hot on fintech investing

The ax that was hanging over Deutsche Bank finally fell. On Sunday, the bank said it was firing 18,000 people in a massive restructuring that would see it dump equities trading entirely. The next day we were on the ground to report what was going on outside the bank’s 60 Wall St. office.

Insiders around Wall Street struggled to understand Deutsche Bank’s move, and many said the businesses that survived the cuts, like research and equity capital markets, didn’t add up to a compelling future for the bank. Deutsche Bank didn’t say much about its plans publicly, but we learned it told a hedge-fund client details about who would be spared in research departments around the world.

As for those who were laid off, insiders told us prospects to land a new gig may not be great and that most of the top talent had already been poached out of the bank before Sunday.

Deutsche Bank’s week from hell didn’t end with job cuts. In fact, the bank’s list of regulatory headaches is growing. The Department of Justice, which had investigated Goldman Sachs’ dealings with the Malaysian fund 1MDB, is also now delving deeper into an ex-Goldman exec who later went on to Deutsche Bank, reports said. Also on Thursday, another report said senior managers had overruled compliance-staff concerns about the bank’s dealings with Jeffrey Epstein, who is facing charges of sex trafficking. 

It’s hard to imagine that we had time to write about anything other than Deutsche Bank, but as you can tell from the list below, the team also churned out excellent reads on CBD, chatbots, and more. 

And for those of you interested in the cannabis business, our star reporter Jeremy Berke has a new newsletter called Cultivated, which will give you an inside look at the deals, trends, and personalities driving the multibillion-dollar global cannabis boom.

‘Some of the conversations we had in 2006 we are having again’: Bain and Carlyle are teaming up in rare deal that private equity has been reluctant to do since the financial crisis

Bain Capital and The Carlyle Group have teamed up to buy the German light-bulb maker Osram Licht for $3.8 billion in a rare instance of private-equity giants coinvesting.

In the first half of 2019, there were 107 deals with more than one private-equity investor, down 57% from the same period last year.

The deal, which will give Osram a capital injection after it issued warnings to investors about a weak light market, comes at a time when private-equity firms have been reticent to team up with rivals for large transactions, instead looking to their own clients for capital, including pension funds and sovereign wealth funds.

Morgan Stanley is rolling out an AI chatbot to research clients early next year. Wall Street thinks the tech could save $8 billion annually.

Morgan Stanley has developed an artificial-intelligence-powered chatbot to help its workers sift through the bank’s research.

AskResearch was originally created for internal use by analysts and sales employees, but the bank plans to offer it to clients in early 2020 via a mobile app.

The chatbot is the latest effort by Wall Street to create AI-powered virtual assistants to cut down on menial work for employees and clients.

Wall Street’s most sophisticated, high-speed traders are growing hot on fintech investing. Execs from 5 firms explain how they find their best investments.

Electronic trading firms, known for their ability to quickly move between positions, have shown an increasing interest toward financial-technology investing.

Some firms have gone as far as setting up completely separate funds to make deals.

Business Insider spoke with executives from five electronic trading firms about their strategies toward fintech investing.

The hedge-fund industry has a problem with managers cherry-picking performance. One group wants to stop that.

Hedge-fund performance has been underwhelming. An influential professional organization has overhauled its reporting standards in order to bring more funds into the fold, but adoption would force portfolio managers to give up tactics to make returns look better.

The notoriously opaque hedge-fund industry has never widely adopted any broad guidelines for calculating performance figures. Managers can overstate returns by selective reporting, observers say, and many are supportive of centralized, transparent rules.

It’s another example of the transformation the once niche industry has made into a more institutional business.

Quote of the week:

“It was a s— show on Monday, it’s a s— show today” — a uBiome employee this week after the troubled startup laid off half its staff in the wake of an FBI raid as part of an investigation into the company’s billing practices. 

In markets:

  • Ray Dalio revealed to us the one key investing strategy he’s used to build his $18 billion fortune
  • BlackRock’s global research chief explains why the stock market’s principal driver just changed — and breaks down how investors should adjust to the big shift

In tech news:

  • The 100-hour weeks, intense culture, and divisive hires that made Deliveroo a $2 billion business with backing from Amazon
  • Trillion-dollar Microsoft is gearing up for another potentially ‘unprecedented’ growth spurt
  • As its CEO prepares to step down, $1.4 billion Cloudera says it will start giving away all its software for free in a big change to its business

Other good stories from around the newsroom:

  • CBD and hemp startups are using creative loopholes to skirt Facebook’s ad ban. Here’s how they’re doing it.
  • Airbnb’s former CMO left his high-profile job to help tech brands like Pinterest and Uber find their purpose — and his consultancy is on track to make $8 million in revenue in its first year

Aston Martin’s Largest Shareholder Considers To Increase Stake

Shares of Aston Martin Lagonda Global Holdings plc (AML.L) were gaining around 3 percent in the early morning trading in London after the British luxury carmaker’s largest shareholder said it is considering the possibility to increase its stake in the company.

Strategic European Investment Group S.a.r.l., affiliated to Italian private equity group Investindustrial Advisors Limited, said it is planning to make a cash offer for 6.84 million shares in Aston Martin. The partial offer for approximately 3 percent stake is at 10 pounds per share.

Investindustrial already holds 31 percent stake in Aston Martin.

In a statement, Strategic European Investment said it has received irrevocable undertakings from existing shareholders including Primewagon (Jersey) Limited, Adeem Automotive Manufacturing Company Limited and Asmar Limited.

It has also received an irrevocable undertaking from Daimler AG to provide its approval of the partial offer regarding all of its shares in Aston Martin, representing about 4.2% stake.

The possible offeror has time till July 29 to either to make an offer for Aston Martin or to announce that it does not intend to make an offer.

In London, Aston Martin shares were trading at 1,029.60 pence, up 2.45 percent.

UK Car Production Declines For 12th Month Straight Month: SMMT

UK car production declined for the twelfth straight month in May on sharp contractions in domestic demand and exports, data from the Society of Motor Manufacturers and Traders, or SMMT, showed Thursday.

Car production plunged 15.5 percent or 21,239 units on a yearly basis in May.

Demand both at home and abroad dropped by double-digits reflecting softening in the UK and key global markets, and the effects of model changes, caused the negative performance to continue, SMMT said.

Production for domestic buyers declined sharply by 25.9 percent, and overseas orders were down 12.6 percent.

The lobby noted that exports accounted for 80.9 percent of all cars made, re-emphasizing the importance of maintaining free and frictionless trade.

The sector is facing multiple seismic challenges simultaneously, namely technological, environmental and economic, Mike Hawes, SMMT chief executive, said.

“The ongoing political instability and uncertainty over our future overseas trade relationships, most notably with Europe, is not helping and, while the industry’s fundamentals remain strong, a brighter future is only possible if we secure a deal that can help us regain our reputation as an attractive location for automotive investment,” Hawes added. “No deal is not an option.”

Car production declined 21 percent with 557,295 units rolling off production lines – almost 150,000 fewer compared with the same period last year.

To a certain extent, the decline indicates the decision by some manufacturers to bring forward summer shutdowns to April in anticipation of the original Brexit date, the lobby observed.