Stayin’ Alive: A Guide for the Summer Analyst or Associate

Let’s say you actually care about whether you do well at your summer program. Then…

• Don’t complain about your projects. Get staffed on a shit job? Everyone has worked on a shitty project, including the people you are working for. The worst thing you can do is echo someone who is negative around you.
• Think of your internship as a 2-month long interview process. You wouldn’t tell the interviewer that you don’t like a certain part of the interview.
• Befriend the staffer.
• Show up earlier than the people you work for. If you’re a summer associate, show up earlier than the VPs or MDs.
• Face time does count. Don’t leave earlier than 8pm, and for weekends, do as others do.
• Don’t eat meat? Vegetarians don’t belong in finance. And if you want to say that you don’t drink, you might as well say that you don’t have sex.
• Socialize with your colleagues. As for going beyond formally planned activities and reaching out to other (non interns) — let them reach out to you. If someone asked me to go out for a drink — I wouldn’t think negatively of that person, I’d just think of a reason not to go.
• Expenses — just follow policy.
• People find out if you’re hooking up with another intern. It’s considered puerile, but happens all the time. It’s not like dating another ibanker is considered prestigious. If you’re hooking up with a model, on the other hand… And if you’re a girl, you’re writing yourself into the ’slut’ category.
• When it comes to dress, you definitely want to fit in, but on the upper end of fitting in. You should dress well for interviews, however.
• Lastly, you want to create bonds with people who are going to pull for you when it comes to hiring time. Think about that.

Thermador Groupe est spécialisé dans la distribution de produits plombiers en France. Son Chiffre d’Affaires se reparti aujourd’hui dans plusieurs domaines précises : les pompes (27,5%), les produits de robinetterie (23,3%), les accessoires de chauffage (17,6%), les tubes en matériaux de synthèse (12,6%) et les matériels de motorisation (4,6%). Le groupe connaît une évolution stable depuis des années, ce qui s’exprime par une croissance du bénéfice par action constante depuis 2003. Cherchant à se diversifier, le groupe a commencé à élargir son activité en entrant dans les marchés d’Europe de l’Est.

Malgré une bonne performance au premier semestre, l’entreprise semble être touchée par les mouvements des marchés financiers et la crise de l’économie française. Le Chiffre d’Affaires est toujours en hausse de 9% par rapport à l’année précédente, mais reste loin derrière l’excellent Chiffre d’Affaires du premier trimestre (+30%). Ceci est la conséquence d’une économie française en difficultés. Le secteur de la construction voit sa croissance ralentir, la demande des matériaux de constructions baisse et avec cela les ventes de Thermador Groupe. De plus, une hausse des matières premières, surtout du cuivre, met l’entreprise dans une situation ambiguë, entre les fournisseurs cherchant à répercuter cette hausse des prix sur les prix de vente de leurs produits, et les clients qui cherchent à diminuer leurs coûts.

Une hausse de 15% du Chiffres d’Affaires sur l’ensemble de l’année 2007 est réalisable, mais l’année risque de se terminer moins bien que prévu, si l’économie française reste en difficultés. La tendance du titre est donc neutre.

The Chinese bubble

Nowadays China plays an important role in our world economy. Its imports and exports heavily influence the world economy and every sign of a weakness has influences on stockmarkets everywhere. This year the Chinese stockmarkets already slumped twice and each time it took the other stockmarkets temporarily down. A study of stock-market history conducted a few years ago (by economists at Yale University) confirmed that global markets are far more correlated now than they used to be, which means that emerging markets like China can have a profound effect on asset prices world wide.

The Chinese economy is booming but the question is how stable is its financial system?

The population does not know so much about stockmarkets. They see that investors make enormous profits and decide that they want to be part of this rally to fortune. They consider the markets more than a gamble, not considering the risks related to their investment. This is due to the lack of education and the lack of experience. Stockmarkets are something quite new for the Chinese population, before these markets have not been easy to access. Today, it is in many ways easier to invest money on the stockmarket and China is not alone with the dilemma of a not-informed population. Vietnam faces the same challenge and so do other neighbouring countries.

This is not surprising. China currently faces it’s biggest-ever stockmarket boom. Everyone, from students to retirees, enters the race supported by the easiness of borrowing money. With inflation at 3.3% the real interest rates are around zero this year which encouraged the withdrawal of savings from banks. People also have wider access to money through mortgages or pawnable assets.

Nothing seems to stop this run, and governmental measures are until present without a great impact due to the poor financial infrastructure which makes it difficult to influence the markets.

What happens now if the market would plummet? The impact on the social stability would be inestimable if the bubble would pop. Low income groups as students and retirees are involved in the current stockmarket boom and if those people would loose their money, they would probably turn their anger on the party.

Today there are 91 million accounts held by individuals at brokers or in mutual funds and in average 200,000 new accounts are opened each day. All this in an environment which has obvious signs of becoming overheated.

Share prices are moving far ahead of companies’ earnings, to a degree scarily reminiscent of Japan in the late 1980s just before its crash. Shanghai’s stocks rose 130% in 2006 and continue to climb.

It is said that there are too few institutional investors because the government continues to impose restrictions on how far for instance insurance companies can invest their money. This leaves the market mainly to individual investors facing listed companies with poor corporate governance and consequently increasing risks of market-jarring scandals.

Is it time to be worried? Since 2004 there are economists claiming that China’s bubble will burst one day. Overinvestment will lead to over production and to an economic crisis. Even though this might be unlikely to happen for the moment, it is possible that the financial market will readjust itself. This means that there will be a certain number of losses and a certain number of losers. It should be interesting to watch the evolution closely and to see how the Chinese government will react face to this situation.

I asked a friend from Russia to comment my article because I wanted to have an insider view on this story. Here is her comment, I very much appreciate it:

Hi, Michael!Well, that's an interesting view on international geopolitics concerning Russia. But I have few comments. Nobody needs the second Cold War,including Russia.But like any country, Ryssia would like to be heard by the other countries at least after such a long period of ignoring of its interests. And that doesn't mean that it climbs to world power. But taking into account such factors as world globalisation, economic recession in the american economy, huge prices for oil, gas and energy carriers, like any country having any influence instruments (oil resources in this case),Russia aims at improving its position in the world geopolitics, but not at dominating in the world. And that's normal for any country. Especially for the biggest one in the world. Russia just shows its independence from american influence and that's all. For sure Russia still have some internal problems, but it has to build normal market economy for 20 years the time when other countries had 200 years for that. For sure it makes mistakes like any country made through all its history. Nobody talks about second cold war. Russia just would like to play in the world geopolitics without anyone's orders. That's the deal.

The source of my last article is mostly The Economist, the printed version. However, there are also articles available online.

Not a cold war, but a cold tiff

Feb 15th 2007 | MOSCOW
From The Economist print edition

Here are some sentences from this article:

• Concerning what Mr. Putin said:

"The world, Mr Putin added, was witnessing “an almost uncontained hyper use of force”, which was plunging it into “an abyss of permanent conflicts”. Lest anyone mistake him, he specified that “the United States has overstepped its national borders in every way,” exhibiting “a greater and greater disdain” for international law."

• Concerning the efforts to enlarge its influence on neighbours:

"The Russians saw their defeat in Ukraine as evidence of perfidious American meddling in Russia's sphere of influence. For the Americans, the debacle showed that a truth plain in Mr Putin's domestic policies—that he was not a real democrat—would affect his country's foreign behaviour too."

• Concerning the economic power:

"It [Russia] has the biggest hydrocarbon reserves in the world, which can be used as “tools of intimidation and blackmail”, as Dick Cheney alleged in an aggressive speech in Vilnius in May 2006, to which Mr Putin's Munich address was in part a riposte. It has lots of nuclear arms to underpin its self-esteem. But it does not have the conventional forces, nor the economic and ideological resources to compete with America globally as it did in the cold war."

• Concerning the american influence in Russia:

"He [Putin] again insisted that non-governmental organisations active in Russia but funded from abroad were the tools of foreign governments."

Another article states the following:

Russia and the Middle East

The bear is happy to be back

Feb 8th 2007 | CAIRO
From The Economist print edition

• Cold War:

"[...] Last summer's fight between Israel and the Lebanese guerrilla group Hizbullah echoed the cold war: a clash between proxy forces that tested armaments and tactics. While Israel's American-supplied gadgetry was far more lethal, Hizbullah's Russian weapons were effective too. Its anti-tank missiles knocked out scores of Israel's armoured vehicles."

• Influence on other countries:

"After Russia secured a $7.5 billion deal to supply Algeria with fighter aircraft, tanks and anti-aircraft missiles, its army chief of staff, Yuri Baluyevsky, recently echoed Mr Putin, saying that the American effort to create “a unipolar world” was fomenting crisis."

• Iran:

"Russia would like to think that the recent slight softening of Iran's public tone and the rising domestic criticism of its president, Mahmoud Ahmadinejad, may owe something to fears of losing its only legitimate outside source of nuclear technology [Russia]."

These citations aim only to underline what I said in my previous article. It doesn't mean that everything is right or wrong. It is interesting to follow the last evolutions.
Recently Russia has shown its interest to buy parts of EADS, Europe's pride. It is not very likely, in my opinion, that France and Germany will agree to those plans, but it clearly shows that Russia wants to enlarge its global influence. It seems to be obvious that Mr. Putin wants to make out of Russia a new superpower, opposing or challenging the United States of America.

But Russia is not the only important new player on a geopolitical basis. China is also eager to play the role of the new political superstar.

A new Cold War! We lived the end of the first cold war, are we going to live the beginning of the next episode?

Russia lost a lot of its power at the end of the first Cold War. They went from one crisis to another, their empire busted into pieces. Russia wasn't able to really prove its strength until recently. The last years the new Russia came back on the international platform, playing with its muscles. The hands in its neighbouring countries like Belarus, Georgia and Ukraine shows that they are starting to stop sleeping.

Iran. Powerless until the moment where an international power backs their plans, and confirms that they believe in Iran's honesty. Who is this international power? Of course, Russia is. They supported Iran, not only because they have economic interest in the region (everyone actually has this) but because Russia turns the wheel now. However, by letting the last UN resolution and as a consequence the sanctions against Iran pass Russia showed that Iran has to be careful in handling with them. It is Russia which dictates the rules and not Iran.

Russia also plays with Europe. Europe, as one of the leading economies, needs energy. And a huge part of this energy comes from Russia. Until present the lobbies have discouraged the politicians from changing anything of their energy policy because they feared losing money. The consequence could be now that every one of Europe's habitants will lose money. We have now higher energy prices due to the pressure of Russia, which also pressures Iran, which itsself has a lot of influence in Iraq and other countries in the Middle East.
China on the other side is the laughing third, accepting Russia's energy with open arms and willing to pay the right price for it...But can China really go this way? Can they mess up with Europe by accepting Russia's gamble for power? Europe represents an enormous market and the consequences of an "angry" Europe, installing import tariffs and other barriers could delete the economic advantage of cheap production in China...companies would rather go to Vietnam or other South-East Asian countries.

However, Iran and Russia, two players, some years before not in our minds, now present in every single newspaper. The last meeting of the Middle East quartet (EU, USA, UN, Russia) in Berlin this week Russia and USA came pretty close to a conflict, disagreeing on the new government to be formed in Palestine.

But can Russia afford such a conflict? Are they economical stable enough to really support a new Cold War? To answer this question we should ask ourselves if they ever have been strong enough to be a global player. Economically they have never been such a big superpower. Sure, their industry and their military-industry has been enormous but by the end their system collapsed because they simply forgot about the people living in their state. Those people wanted more freedom and where freedom is there can be no Cold War because it would need propaganda to create support in their own population. Being shut from the outside like North Korea, Russia would never do this or could never afford such a situation. Aren't they also depended on our knowledge, our machinery and technology?

There could be an endlessly discussion on this subject. But what is clear from now on is that Russia is back on the international scene. It is the comeback of the former Popstar. Russia is seeking to become a superpower again and aren't they on a good way?