We Learned A Lot These Past Three Months…Bring On The Next Six!

While these past three months feel like years unto themselves, when we look at the calendar today, it is “only” June 1st – the exact mid-point of Jefferies 2020 fiscal year.   We started this year with a very specific and ambitious goal, to deliver by far our best year ever at Jefferies.  Putting aside our goal for the moment and focusing on the Coronavirus, the world economy, the capital markets and society, we thought we would share with you our mid-year observations and thoughts.

1. Business Liquidity. Everything begins with liquidity and ends when you don’t have it.  For humans, animals and plants, this means water.  Businesses are like living organisms and their first order throughout these past three months has been to make sure they too have enough liquidity with a long enough runway to maintain solvency. At Jefferies, every one of us has directly or indirectly been working intensely and consistently to raise capital and extend lifelines for as many of our clients as humanly possible.  It is a difficult job, but a worthy one, as our collective actions have been responsible for helping many wonderful companies survive the crisis and, in doing so, we are helping to ensure countless good jobs remain viable.
2. Market Liquidity. Further to the importance of liquidity, our Jefferies team has been visible and present from day one of this crisis to advise and execute the decisions of all the professional investors who are responsible for managing the pensions, life savings and cumulative wealth of everyday real humans around the world.  This represents people’s funds to live on, retire with, pay for education and afford homes.  Our clients needed us most when the world was at its darkest to help them be the best fiduciaries they could be for their clients.  Each of you rose to the challenge, and our technology and support teams were heroes for making everything seamless.
3. Government Action. And when we look at the wonder that is the stock market, there is little question that liquidity reigns supreme.  We published thought pieces immediately as the crisis hit, arguing that there was no choice but to have broad, massive and immediate fiscal policy implemented, as there was no alternative to avoid a much more horrible economic outcome.  While nothing is perfect and things can always be improved, both sides of the aisle, and with a highly focused Fed as the tip of the spear, quickly restored order to the capital markets, with liquidity defining much of what is driving the current reality.  No doubt there will be long-term repercussions and we are clearly not out of the woods by any stretch, but the right people are paying attention and an immediate calamity has been averted.  A functioning capital markets is now allowing people like us in the private sector to carry on our important work of helping companies and investors not only recover, but eventually flourish.
4. Flexibility. As part of our resilience, we at Jefferies have shown massive and rapid adaptability in the way we work together.  Our work lives have become ever more flexible, leveraging our culture and technological capabilities to meet all challenges and take advantage of all opportunities.  Ultimately, we will all be more flexible in how and where we balance our work life and the rest of our life.  This is a very positive development and one we at Jefferies intend to better understand and embrace.  We also want to make sure that a needed barrier does remain between the two sides of life.  We intend to ask all of you for help in designing the future of how we will collectively work best together.
5. Directness. In our interactions with clients, one meaningful improvement we have observed is that the imperative of these times has brought about even greater clarity of thought and straightforwardness of dealing.  We are rapidly driving directly to what the issues are and focusing substantively on the solutions and the execution.  Never has experience and insight been more valuable.  We have never been a subtle or nuanced firm.  It’s not our style nor that of the people we attract at Jefferies.  The time for direct, honest, pro-active and productive advice and action has come, and we are the perfect ones to do it.
6. Urgency. Further to this last point, we have been pleased with the speed at which Jefferies is acting and reacting, and we are impressed with the rapidity of decision-making among our clients.  For two guys known for our sense of urgency and willingness to commit in real time, we are thrilled Jefferies is being recognized and rewarded for our commitment to clients and exceptional level of service.  It’s business as usual at Jefferies, but don’t confuse that with how business is usually conducted at our competitors.  We have a real advantage here and we should all press it.
7. Wartime. There is little doubt this is the mother of all crises we have endured in our business careers and lives.  The threats and risks are as close to war as we have ever seen, and the breadth of the effects is as wide as one could imagine. One of the scariest and most real side effects of this tragedy is that it has disproportionally struck those who can least afford the pain.  The wealth gap and divisiveness in the U.S. (and perhaps the world) has never been more extreme, and the very nature of this virus has added fuel to the already too large flame. This is one of the reasons we went so broadly with our outreach last week to immediately help charities with our amazing fundraising day led by all of you and our clients.  While every positive action is a step forward, the need to fix society’s key problems is even greater today than ever.  As an important but not completely unrelated aside, our hearts go out for the pain suffered in Minneapolis – a horror of horrors beyond any conceivable rationalization and a call to each American that every life matters and we must stand together for equality and justice for each human being.
8. Health.  This crisis is about health.  The manner in which we ultimately come out of this will depend on the range of outcomes resulting from ultimate medical solutions.  All other hard work and effort will impact the ultimate conclusions on the margin, but hygiene choices, the right safety precautions, testing, contact tracing, therapeutics, prophylaxis and hopefully an eventual vaccine are fundamental to how our future plays out.  Our ability to pivot, adapt and recalibrate is incredibly impressive and each of you at Jefferies has proved what you are capable of achieving.  We remain optimistic that the massive amount of energy, money, smarts, big data and collaboration by the medical community will ultimately prevail.   

Today is June 1st and the official beginning of our second half of 2020.  We are all slightly upended and a little tired and weary, but we are thrilled to know that our goal of having a very special 2020 is intact — thanks to all of your efforts these past three months.  It will not be easy and none of us know what tomorrow will bring.  That said, Jefferies’ mantra for the remainder of fiscal 2020 will be:

• Protect each other, our clients and the firm.
• Work smart, hard and with zero arrogance.
• Embrace complete teamwork led by honesty, transparency, integrity and a passion for each other and the clients we serve.

Let the second half begin!

Rich and Brian