NYT Dealbook: Bankers set for a boom, Commodities set for a bust

The New York Times DealBook recently saw fit to post, without noting any irony whatsoever, the following two posts within six minutes of each other. If you like data points on sentiment for commodities vs. other opportunities, this is a great example:

Here's the first, at 8:04am:

London’s Bankers, in Short Supply, Get Fat Pay Packages (May 12, 8:04 am)

Financial workers in the City of London are “holding most of the aces” in the recruitment market as banks desperately search to fill vacancies created by the surge in corporate activity, a new report claims.

Recruitment firm Morgan McKinley said pay packages are becoming more attractive and staff are moving jobs more frequently to meet demand. According to the report, the number of new positions on offer in April was 20.4% higher than last year. (Link)

Here's the second, at 8:10am:

Commodity Traders Should Plan for the Bust of Their Hiring Boom (May 12, 8:10 am)

Being a commodity trader is the hottest job in town. After years in the doghouse, these experts in the arcane arts of contango and backwardation are suddenly worth millions.

In this booming market, anyone who can say “crack spread” without laughing is getting hired, says Breakingviews. But while banks want to pay up now while prices are still high, they’ll be just as fast to fire. Wise traders should ask for multi-year contracts. (Link)

Interesting how one article pretends to understand the future - clearly, commodities are set for a fall - and one is simply telling what we already knew - that bankers are valuable.

I realize that the NYT DealBook'ers simply report what is being written around the web, but they also made the editorial decision to post these right on top of each other without comment.

Ed's wild guess: there are 10x more investment bankers reading newspapers than there are commodity professionals. As such, interpretating hot demand for bankers as "normal" and hot demand for commodities traders as a "bubble" is a journalistic strategy for success: flatter your target audience.

Usually, the things people talk about as a great place to be are peaking, and the things people are fearful (or ignorant of) are still in a bull market. Commodities are getting a lot of play as a phenomenon that is close to "done," and the argument typically given for why commodities are ready to fall is that "this rise can't go on much longer."

On the flip side - in line with the demand for investment banker-types and investment banking services - is how private equity funds continue to raise record levels of capital, and are doing ever larger deals that are dependent on a low cost of funds...in an environment of rising rates.

Simply borrow money to buy a company with almost "no money down," borrow some more money to pay yourself a hefty "dividend," and then sell the equity of the company to the lumpeninvestoriat of mutual funds, "hot" deal chasers, and retail.

From the worldview of Dealbook (and others), private equity is an activity that can (and should) continue indefinitely. But 3 years of high gas prices...can only be the work of anti-American communists. - Ed