In today’s big story, we’re looking at when the big US banks are handing out bonuses.

What’s on deck

• Markets: The SEC says its X account was compromised, and that bitcoin ETFs have not been approved for trading.
• Tech: How Microsoft built one of its top generative AI products.
• Business: Boomers’ lack of retirement savings is going to become their kid’s problem.

But first, it’s the most wonderful time of the year. (For Wall Street.)

Here comes the money

The long, stressful days working on Wall Street lead many workers to question why they’re in the industry. For many, the answer comes today: bonuses.

The 100-hour anxiety-filled workweeks and unrelenting bosses and clients don’t seem so bad once bonus season hits. As an industry insider once told me, it’s much easier to forget about work problems once you see your bonus deposited in your account.

And for good reason. Bonus season is the culmination of a year’s worth of work, as bankers get most of their total comp via bonus. It’s a number that can be eye-poppingly big. We’re talking seven figures without breaking a sweat.

Business Insider’s Alex Morrell and Emmalyse Brownstein have a rundown on when all the top US banks plan to start communicating bonuses to employees.

After a record-breaking 2021 bonus season, Wall Street crashed down to Earth, and then some, in 2022. A non-existent M&A and IPO market meant bonuses dropped significantly.

But some firms took a very un-Wall Street approach to last year’s bonuses, subsidizing the lack of revenue in one division across the rest of the firm.

The move was meant to keep dealmakers happy but wasn’t welcomed by those who had a strong year — traders — and were forced to shoulder the losses of their peers.

This year also looks tough for investment bankers, thanks to the extension of the M&A drought. Emmalyse has a full breakdown of the bonus outlook for all Wall Street divisions.

Bonus season also signals the kick-off to hiring season on Wall Street. 

Even people who are miserable at their jobs won’t change gigs a few months before their bonus lands. But Wall Streeters can start considering their next move once that check clears.

Bonus season is also a good way to get a gut check on one’s standing within a firm. Wall Street’s love language has always been money, and there’s no better way for a boss to show their affection than a bonus that’ll help you buy a beach house.

Meanwhile, a weak bonus is the easiest way to show an employee the door without actually having to fire them.

Investment bankers’ bonuses will be the most interesting to watch. There’s one reason most people get into dealmaking, and it’s not for the love of the game. Bankers expect to be paid well, but another year of lackluster deals makes that harder for banks to do.

Banks want to retain those bankers so they can get to work once M&A picks up, but they also can’t keep handing out big bonuses when the fees they’re bringing in have dried up.

Of course, that’s not to say bankers don’t have options. The venture capital world is in the midst of a talent crisis, BI’s Melia Russell reports, which could lead more bankers to follow the well-worn path to VC land.

🔔 Before the opening bell: US stock futures rise early Wednesday. Meanwhile, bitcoin is down following an “unauthorized” SEC announcement. Read more below. 

2. War over Taiwan could be devastating for the United States. The country’s economy could take a 6.7% hit in the first year of conflict if Washington got involved, and a 3.3% hit if China were to blockade the island. Either way, Bloomberg predicts it would be worse than 2020, when the GDP contracted 2.2% due to the COVID-19 pandemic.

3. No, the SEC has not approved bitcoin ETFs for trading. The SEC says its X account was compromised when it announced the long-awaited approval of spot bitcoin ETFs, sparking immediate chaos.

2. Snap CEO proclaims “social media is dead.” Evan Spiegel sent staffers a post-holiday note with an upbeat tone. He predicted that Snap is about to “transcend” the smartphone, while lashing out at rivals for “connecting pedophiles, funding insurrection,” and more.

3. Carta’s “Nasdaq for private markets” came crashing down thanks to a single LinkedIn post. The company shut down its secondary markets product after it was called out on LinkedIn for misusing customer data. Carta’s CEO called the change “my greatest failure and disappointment.”

2. Billionaires are still having a hard time figuring out how to save newspapers. Top editor Kevin Merida’s departure from the Los Angeles Times highlights this. And you can catch the money-losing vibe by reading between the lines of billionaire owner Patrick Soon-Shiong’s staff memo.

3. Exclusive: Sequoia Capital distributed $10 billion to its investors in 2023. Sequoia did this even as it faced steep markdowns last year. The venture firm told its limited partners in a letter last week that it distributed over $42 billion to its investors over the past five years.

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• Ukrainian soldier describes his “1 in 1,000” escape from one of the most hellish battles of the war.
• Linda Yaccarino is (sort of) getting her way at X.
• Some people are getting $92 checks from Apple over the iPhone “batterygate” scandal.
• I left Texas and moved to Spain. Life is so good here I can’t ever imagine living in the US again.
• Almost a third of employees say their boss being in the office makes them avoid coming in, a survey found.
• Microsoft’s $10 billion partnership with OpenAI faces possible probe by EU watchdog.
• Why companies like Amazon, Walmart, and Target will let you keep some products you want to return — but issue you a refund anyway.

• CNN is hosting a Republican presidential primary debate. It’ll be moderated by anchors Jake Tapper and Dana Bash.
• Happy birthday, George Foreman. Pat Benatar, Frank Sinatra Jr., Rod Stewart, and Jared Kushner were also born on this day.
• Earnings today: Aritzia, Bang & Olufsen, and other companies.

For your bookmarks

Midwest vs. NYC Costco

The most surprising differences between a Costco in the Midwest and New York City. The prices and offerings were mostly identical, though the food courts had different sodas.

Dan DeFrancesco, deputy editor and anchor, in New York. Diamond Naga Siu, senior reporter, in San Diego. Hallam Bullock, editor, in London. Jordan Parker Erb, editor, in New York. Hayley Hudson, director, in Edinburgh. Lisa Ryan, executive editor, in New York.

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