Year 1981:
u Intel released its first 32-bit microprocessor- the Intel Iapx 432. Technology development accelerated the electronicization and integration of financial markets and enabled Wall Street to recapture its market shares.
u Salomon Brothers completed a merger with Phibro, once the world’s biggest commodity trader, and later went public.
Year 1982:
u The Federal Reserve cut the discount rate. Another bull market started under the Reagan administration. Over the previous 17 years, the DJIA had only increased by one point to 875.
Year 1984:
u Suffered from a power struggle inside the company, Lehman Brothers was sold to Shearson, a subsidiary of American Express.
Year 1985:
u Business Week called Salomon Brothers “King of Wall Street”, a name later given to the company CEO John Gutfreund.
u Bear Stearns went public.
u Blackstone Group was founded by Peter G. Peterson and Stephen A. Schwarzman this year.
Year 1986:
u Previous successful leveraged buyouts created a boom in LBO (leveraged buyout) transactions. Michael Milken was nicknamed Junk Bond King because of his engagement in selling high-yield bonds.
u Morgan Stanley went public.
Year 1987:
u The Carlyle Group, a US-based private equity firm, was founded.
u Drexel Burnham Lambert issued the first Collateralized debt obligations (CDOs).
u By 1987, roughly a quarter of stock transactions were conducted by the electronic trading system.
On October 19, the flourishing global stock market hit Black Monday, when stock markets around the world crashed. It began in Hong Kong and Singapore, later spreading to London and Wall Street. The Dow Jones Industrial Average (DJIA) dropped 22.6% to 1739. The newly appointed Fed Chairman Alan Greenspan managed to increase market liquidity by purchasing more government bonds.
u The market took two years to recover.
Year 1988:
u First Boston Corporation was acquired by Credit Suisse and became CS First Boston. It was the first true global investment bank.
Year 1989:
u After Merrill Lynch expanded its business scope from retail brokerage to the capital market, it became the largest underwriter of shares of bonds.