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Morning Coffee: What it’s really like to be an economist in London. Why Goldman and JPM traders did so well

Working as an economist in London

The economist's life

So you’re thinking of becoming an economist in the City of London? Are you ready to board the merry-go-round that will take you from banking to the public sector and back again? Because this is how it is.

Bloomberg reports upon the most recent moves on London’s economist jobs carousel. Bank of America Merrill Lynch just poached Rob Wood from Berenberg to cover UK economics. Wood was hired to replace Nick Bate, BAML’s former UK economist, who left BAML for the Bank of England in January. Bloomberg points out that the Bank of England is revamping its research division and has been hiring various senior economists from the banking sector (especially Barclays). It adds that most economists in the City oscillate between the Bank, the banking sector, and the Treasury. Bate, for example started his career at the Treasury and spent nine years at Bank of America Merrill Lynch before quitting for the Bank of England. Wood himself spent nine years at the Bank of England before joining Berenberg in September 2012. – How long before the call of Carney drags him back again?

Separately, there’s a reason traders at Goldman Sachs and J.P. Morgan did well in the first quarter, and it’s not just their innate skill. The Wall Street Journal points out that banks focused on macro products (FX and rates)  benefited from the volatility of the recent months, whereas those focused on ‘spread products’ (mortgage backed securities and corporate bonds) didn’t. So, guess where Goldman Sachs’ and JPMorgan’s trading strengths lie?

At the same time, Financial News reported that Citigroup’s fixed income trading unit posted an 11% year-on-year decline in revenues on the back of ‘weakness in spread products’.  Spread products historically represent about 40% of fixed income revenues at Citi, but accounted for a far lower proportion in the first three months of this year. Were it not its losses on the Swiss franc, Citi said revenues in its FX and macro business would have risen by 20% in the first quarter.

Meanwhile:

Goldman Sachs achieved a return on equity of 14.7 per cent — the best in 18 quarters. (Financial Times) 

Goldman Sachs is a lot smaller than it used to be. First-quarter revenue of nearly $10.6bn is down almost a fifth from 2007. (Financial Times) 

Activist investor Knight Vinke is expanding in London and already has six employees in the City. (WSJ)

If you lose $1bn, you must resign from Citadel. (Bloomberg) 

After six months of ‘talks’, Ben Bernanke is joining Citadel. (Bloomberg) 

Ben Bernanke has been giving speeches which pay $200k each, equivalent to his salary at the Fed. Alan Greenspan attended a Lehman hosted dinner within a week of leaving office. (BreakingViews)

A complete beginner’s guide to the FRM qualification. (300 Hours)

How to stop people wasting your time. (HBR)  

“I have a steady, corporate job at a bank, which I feel absolutely nothing for. What’s worse, my manager retired and I hate my new boss, so my easy, secure job is now the seventh circle of hell.” (NYMag) 

Sniff people to find out how happy they are. (Independent)  

 

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