After suffering through more than a year of difficult market conditions, fixed income traders were finally having a good couple of months. Volatility spiked in September, leading to better-than-expected third quarter results, and then there was last week’s equities sell-off that saw more investments being pushed to fixed income vehicles. But then the New York Times had to go and ruin all the fun with an article that would depress any bond trader with a pulse, even if they already knew the truth.
The piece centers on the automating of fixed income desks – something that has been in the works for years but has become a real point of emphasis for big banks, like the automating of equities desks was years ago.
In a bit of a surprise, J.P. Morgan let its executives take part in the piece. They held little back, even lamenting the fact that they didn’t embrace automation – and, therefore, the move away from human traders – sooner.
"Industry and particularly banks are littered with those who held on to what was the existing structure for too long," Troy Rohrbaugh, J.P. Morgan’s co-head of rates, foreign exchange, commodities and emerging markets, told the Times. "We've done it ourselves, and we've definitely seen our peers do it. We are 150 percent committed to not letting that happen.”
Now this transition doesn’t necessarily mean fewer jobs. They’ll just be different jobs – ones that likely won’t jive with a bond trader’s resume. J.P. Morgan has built a 150-person team dedicated to pushing more trading toward electronic platforms, according to the report. Barclays, meanwhile, has a new “e-markets team” with similar responsibilities. Likely, you’ll need to be a better coder than relationship-builder to fit in with those crowds.
Oh, and for those who are left, earplugs may be in order. J.P. Morgan’s automated tool apparently spits out the jingling sound of a cash register every time a trade is made. So you’re basically working in an arcade or casino.
As if things weren’t tough enough for fixed income traders. Before the September spike, bond trading was down a massive 22% over the last five years with liquidity plunging 70%. Total headcount is down 30% since 2010.
In the latest hiring roundup, Credit Suisse is bringing on investment bankers in EMEA and Asia, BlackRock may need more help in fixed income and Deutsche Bank is loading up on U.S. wealth managers.
Based upon those third quarter results, this is where we’d suggest U.S. banks might be hiring in the final three months of this year – or, if not, where their hiring plans will be focused for early 2015.
Once a huge backer of the Democratic Party, Goldman Sachs is increasingly a right-leaning firm. It is now the biggest backer of the Republican Party on Wall Street.
Large pension funds that have funneled hundreds of billions of dollars to hedge funds are finally getting a bit perturbed with the lack of recent success. Several are in talks to invest their money elsewhere. The hedge fund industry just suffered its worst week since 2011.
Former Barclays CEO Bob Diamond’s daughter (a former Deutsche Bank analyst) got married over the weekend to a current Deutsche Bank MD. Their wedding photos have gone viral. You could land a 747 on her train.
Here’s a crazy story involving UBS, a foundation, stolen Nazi art and a whole swarm of lawsuits.
Yesterday was the 27th anniversary of Black Monday, when the New York Stock Exchange suffered its largest single day percentage loss in history. Wall Street veteran Art Cashin tells the tale of how everything went down.
Buzz Around the Office
A New Mexico man who was jailed for DWI had bribery charges added to his rap sheet after offering police his can of Mountain Dew if they let him go.
Quote of the Day: “One of the things you’ll hear from entrepreneurs is it’s better—not necessarily easier—to build companies when there’s a recession because there’s less froth, it’s easier to hire people, there are fewer competitors. Entrepreneurs say in an economic boom it’s actually hard to build a company because everybody’s too excited and there is too much money funding too many marginal companies.” – investor Marc Andreessen