Hope You Enjoyed Your Summer Fun—It’s Game Time for Team Jefferies

Team Jefferies,

It is hard to believe, but today marks the first business day of the last quarter of Jefferies’ 2024 fiscal year, with 2025 poking its head right around the corner.  There is a lot going on in the world today, and we expect volatility.  There are 62 calendar days left before what already is a highly contentious U.S. presidential election that could be very close in its outcome.  Unfortunately, wars are still being fought in the Middle East, Ukraine/Russia and elsewhere in the world.  Global monetary leaders are navigating their individual country mandates to balance soft landings, striving to minimize inflation, working to maintain health in the job markets, and assuring global liquidity can absorb whatever volatility may come.

So, what does this mean for all of us at Jefferies?

1. Fortunate Jefferies.  We are in a very advantageous position as a Firm.  Our financial foundation has never been stronger.  Equally important, the significant investment we made during the recent downturn is clearly bearing fruit as our capabilities and market share continue to grow.  Our long-term team members are meshing incredibly well with our newer partners, and the benefits are accruing directly to our clients, to whom we remain incredibly thankful for continuing to reward us with their loyalty and trust.  Our Alliance with SMBC is proving its worth more and more every single day, and we are excited to have their well-regarded CEO, Toru Nakashima, join us at the end of the month for his first Jefferies Board meeting as we announce our third quarter results.  It goes without saying – but we cannot help but say it anyway – we should be confident of our position and capabilities at Jefferies, but never arrogant or satisfied.  Humility is Jefferies’ secret sauce, and we can never have enough helpings.  
2. All Hands on Deck.  This has the makings of a very busy fourth quarter for Jefferies, and we need every single one of you to join us in being “all in,” fully engaged, in the office, and rested and ready for action.  Our clients will need help navigating the volatility.  There could be a significant rush for year-end deal activity and a strong demand for liquidity to reposition portfolios and effectuate hedges.  The good news is that the capital markets are functioning incredibly well (see our most recent note on the IPO market).  M&A, block equity, leveraged finance, direct lending, convertibles, continuation funds, LP secondaries and capital driven restructurings are all readily actionable.  Politically driven tax posturing, anticipated regulatory complications, commodity volatility due to geopolitical strife, and a general desire by LPs to get capital returned should all contribute to healthy year-end activity.  Abundant dry powder with private equity, increasingly active and well-capitalized strategics, and a global trend towards lower rates are also all predictors of increased activity.  We could be wrong, but this has the makings of a very active and important period in the capital markets, and the stock valuations for financial services companies (including ours) are basically saying the same thing.  The two of us plan to be fully in the office as well as continue to travel the world seeing all of you and our clients.  We want to help each of you every way we can, to assist you in what we at Jefferies do best: Expertly execute solutions for our clients to help them achieve their goals for their stakeholders.
3. Emotional Times.  The remainder of 2024 has the potential to be an incredibly volatile time for many of us.  Even for those of us living and working outside the United States, everyone feels the implications, complications and duress caused by the American political process.  Europe, Asia, North and South America, and the Middle East will all be affected.  Jefferies now significantly touches all these critical geographies and thus we have become a microcosm of the financial globe.  We would like to remind everyone of a few undeniable beliefs that we both hold:
   • Vote.  We will never tell any of you how to vote, but we will implore all who are able to take full advantage of the privilege, honor and responsibility that comes with living in our amazing country.  
   • The Sun Always Rises.  It is often preached that one political side or the other holds the only key to the world’s future and the abyss awaits if the wrong side wins.  We disagree.  We are staunch believers in the genius of our forefathers’ establishment of three branches of government and the resulting checks and balances that keeps us on course moving forward.  Yes, elections have consequences, but we are confident the multi-century American experiment in democracy will always prevail.  We are extremely optimistic about the future of America for our children, their children, and generations to come.  
   • Support Each Other.  We understand that, in times of stress, volatility and duress, it is easy to be discouraged.  Expressing that discouragement is not a sign of weakness.  Indeed, we view it as a sign of honesty and strength.  If you feel it, ask for help.  And, on the other side of the coin, when you see one of your partners at Jefferies having a hard time processing the volatility, dealing with the emotionality, or not being able to muster the wherewithal to best navigate uncertainty, be there for them.  Part of being so fortunate at Jefferies is that we are a family.  Embrace that responsibility and privilege.

Welcome back and, together, let’s finish this year strong.  We cannot wait for 2025, but we have a lot of heavy lifting to do together before we get there.

Proud to be 100% back with all of you,

Rich and Brian