There’s a little street in Midtown Manhattan where you can learn more about the world of finance in an hour than you can on the corner of Broad and Wall in a whole day. There’s nothing all that unusual about 54th Street between Madison and Fifth. There’s a deli on the corner where people buy their lunch by the pound. There’s a shoe store and a very expensive — and very good — men’s clothing store. But two restaurants make this stretch of road invaluable, at least for financial types like me.
San Pietro, an upscale Italian bistro, is situated on the south side of the street. Rothmann’s, a steakhouse, sits directly across on the north side of 54th. The prices they charge aren’t all that different; they’re suitably high for this part of town. And you’re guaranteed good food and drink in either place. But the 75 feet of asphalt separating the two might as well be the distance between Athens and Marathon.
San Pietro caters to the market’s chess masters; Rothmann’s to its well-polished pawns. I’ve spent considerable time in both establishments, but I am a visitor in one and a family member in the other.
Once a month I make my pilgrimage to San Pietro, home of the Masters of the Universe. My friend Charlie is good at picking them out: “You see Mack and Fink over there?” “That’s Greenhill.” “There’s Langone . . . and Perella!” “Over there . . . the guy who runs FM Global . . . what’s his name?”
I tried in vain to become a San Pietro regular on two occasions. The first time I attempted to use my dining companion — a strategist of considerable fame — as a springboard to acceptance. The second time I tried out my Neapolitan roots on the restaurant’s host. Both overtures were greeted with a wan smile, one that said, “Nice try, uaglio. But you’re about 20 years and nine figures short.”
I feel a lot more comfortable in the steakhouse across the street. At Rothmann’s, brokers and traders drink and talk about the things that most men in their thirties and forties talk about: golf, the markets, office politics, women. I feel so at home here I count the maitre d’, Pat, as a friend. He’s the type of guy who would let you sleep in the storeroom in a pinch, say if your wife threw you out. A martini is still going to cost you $14 at Rothmann’s, but it tastes that much better on this side of the street.
My friends in the business agree. For years a few of us have been assembling at the bar at Rothmann’s on Thursday nights. You might call us a dog’s breakfast of Wall Street personalities.
There’s Jimmy, who uses “the box” and “dark pools” and “IM” the way guys of a different era used picks and shovels. He likes the business well enough, but he prefers to talk about sports and “broads.” If he beats the VWAP and takes clients out a few times a week his manager is happy and he can sleep the sleep of the just. Jimmy can be sarcastic. “Our cents-per-share has gone up to 4.6,” he says. “I’m half expecting the sun to set in the East and birds to fly north for the winter.”
Or there’s Billy, an irrepressible, likeable, fun guy with a head as big as a stop sign. He couldn’t tell you where the S&P is trading if you held him at gunpoint. But he hit the jackpot as an institutional salesman. At 43, Billy counts two wives, three vacation properties, and two bartenders among his dependents.
And then there’s Brian, who’s straight out of central casting: He looks like an Ivy League fraternity pledge from the ’50s. Brian works at a hedge fund and he senses the great ironies in this business. He’s also one of the funniest guys you’d ever meet.
One Thursday night Billy invites along Omar, a new quant for a big long–short guy. Omar is very young, or at least he appears so. He graduated first in his class with a degree in chemical engineering from a college in India where they accept only one in 10,000. They say he can make an Excel spreadsheet sing.
Omar doesn’t know a lot about baseball or the Masters, so he’s quiet. But when the conversation lurches inevitably toward the collapse of Bear, Omar — in a perfect East Asian accent, no less — spits out: “What the f*** is VAR anyway when you’re leveraged 33:1?”
We all laugh at the random bitterness. When it comes to securities pricing Omar is betrayed by youth and an over-confidence in math. He’s never heard of Penn Central or Continental Illinois or Drexel. And he doesn’t care to know about these disasters. He came to New York to make money and the market’s fat tails are screwing that up.
Our laughter is followed by silence. Once again we’re forced to face the fact that guys just like us have lost their fortunes and are about to lose their jobs. I look around the room and I wonder whether a lot of us have traded our lives for free rounds of golf, unlimited use of the company car service, and the shellfish tower at Smith & Wollensky. When I turn to look out the window at San Pietro, I realize the guys across the street are the virtuosos, the Mozarts. We here at Rothmann’s are merely players, the Salieris.
We’re not as sure of ourselves as we were a year ago. If you’re under 50 it’s strangely unsettling to hear a guy who went to Duke talk about his chosen profession the way guys on the line talked about autos and steel a generation ago. The financial media miss this nuance.
I can’t help but think about my first stop in this crazy business. I was in the purchase and sales department at Morgan Stanley in Brooklyn, and I sat next to an old guy who used his lunch hour to collect aluminum cans for the deposit money. The media aren’t thinking about that guy when they rip into Wall Street. They’re too intent on making sure power and wealth is brought low. For many in the fourth estate, Wall Street consists of overpaid, soulless overachievers — people who make things too expensive for newspaper editors and other “average” folks.
There’s a little truth in that sentiment. But the greater truth is being lost: The suffering financial-services industry is to New York what autos once were to Detroit. The business has its fair share of billionaires, but it counts far more who take the subway to work and worry about paying their mortgages. The guy who collected the cans may have “worked on Wall Street.” But he was part of the industry’s machinery.
Many in the city are now in a foot race between reaching their numbers and discovering their own fair value. What’s the price of mediocrity when it has been overpriced for so long? When budgets and staffs need to get cut, does it matter that you were a decent student and a great lacrosse player at Georgetown? Will your bosses care? Will your clients on the buy side care?
Co-ops will get cheaper before the financial turmoil is over. So will Pilates classes and 450cc drivers. The Mozarts over at San Pietro will get paid through it all. The rest of us at Rothmann’s? The Salieris? We’re going to have to scrap.
– Jason Trennert is co-founder of Strategas Research Partners, LLC.