After a tedious 2017, the thrill of working in trading is back. This week’s big swings on global stock markets have generally raised traders’ hopes of higher volatility (and higher fees) in 2018. But which firms are already benefiting from the turmoil of the past two days? Some winners (and losers) are emerging.
Virtu Financial, the high-frequency trading firm, is one of the success stories – its own stocks have received a volatility-induced bump, reports Business Insider. HFTs suffered last year as placid conditions reduced their ability to find market opportunities in which buyers and sellers weren’t matched up. “Greater volatility means a greater demand for liquidity and higher liquidity premiums (spreads) and that is what market makers sell,” said Larry Tabb, the founder of research company TABB Group.
Then there’s Odey Asset Management, whose funds were up 6% on Monday. Hedge fund founder Crispin Odey has been predicting another global recession since 2015 and has been selling stock markets short as a result. While his firm has often performed poorly during the nine-year bull market, the equity rout of the past few days has given him hope that his bearish forecasts will become reality. The return of volatility could also be good news for Goldman Sachs, which has suffered in calm markets. Goldman's markets business is skewed towards hedge fund clients and Bank of America said yesterday that hedge fund clients were extremely active as markets fell.
Not all hedge fund managers are happy, however, especially those who have bet on markets staying calm. Shares in Man Group dropped as much as 7.9% on Tuesday as one of its funds fell on rising volatility, reports Bloomberg. Option Solutions, a hedge fund firm that trades equity options, also fared badly during the market correction and was forced to sell holdings. “Traders who were short volatility just had to puke,” Tobias Hekster, co-chief investment officer at True Partner Advisor, told Bloomberg, referring to the practice of selling regardless of losses incurred. “And our expectation is we’re not done yet.”
It’s not only hedge funds who have lost out during the stormy markets. Jobs focused on exchange-traded notes (ETN), products that bet against upswings in the stock volatility index, are suddenly looking dicey. Credit Suisse and Nomura have both liquidated VIX ETN products and as Matt Levine at BloombergView points out, these products have effectively been "wiped out" for good.
Separately, freshly minted MBAs are receiving $25k for merely landing a job at a top-tier consultancy. Careers firm ManagementConsulted says that's now the average sign-on bonus is the U.S, while year-one performance bonuses can rise as high as $44k. With average starting pay of $150k, MBA-grad consultants should easily take home more than $200k after just 12 months on the job.
Standard Chartered may cut jobs in investment banking. (Reuters)
Citi has pledged post-Brexit loyalty to Britain. (Express)
Senior trader Jezri Mohideen, who left RBS amid a Libor probe, has resurfaced at Nomura. (Bloomberg)
The new problem for compliance pros: colleagues with bitcoin investments. (Reuters)
Meet the firm involved in more than half the top-10 biggest investments in VC-backed start-ups. (Recode)
Jamie Dimon has called J.P. Morgan healthcare clients to ease concerns about the bank’s initiative with Amazon and Berkshire Hathaway. (Market Watch)
Goldman Sachs has a new CEO in Brazil. (Reuters)
Barclays has lost its country head in Spain. (Financial News)
Video interviews are impersonal and off-putting. (BBC)
Your Valentine’s date at McDonalds. (Daily Mail)
McDonalds' fries are a cure for baldness. (ABCChicago)
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