Trader death, except in commodities (preferably agricultural)
A new study says 20,000 trading jobs will go by 2012, most of them in the next 12 months. But commodities traders, particularly those who specialise in foodstuffs, should be fat and happy no matter what.
The scary figures come from a research firm which claims to have spoken to hundreds of traders, many of whom expect to lose their jobs some time soon.
"Volatility is good right now, but there's just not the volume," says report author Stephen Kimsey. "Past experience suggests we're in for a lot of redundancies - look back to what happened in 2001."
Banks like UBS and Merrill have promised to put less capital at risk, and this appears to have fed through to jobs. "Banks are cutting back on traders and trading where risk is high and where the balance sheet is used," says Shaun Springer, CEO of search firm Napier Scott. "But it's more about reducing risk than pulling out of trading altogether."
From credit to commodities
Commodities traders appear relatively immune, however. Last week Credit Suisse announced another 500 job cuts in its investment banking unit, most of which are expected to fall in fixed income and equities trading - at the same time as unveiling 13 hires for its global commodities division, on top of the eight it made last month.
The FT's Gillian Tett says the commodities boom is a bubble that will end horribly, but some beg to disagree.
"There was a lot of speculative froth in the commodity market in the first three months of the year," says Shaun Port, CIO of BDO Stoy Hayward Investment Management. "But we've seen a reverse of that. And the rise in the price of oil appears to have been driven by real money rather than speculation."
Recruiters say CS is now one of the only banks hiring in commodities, but hedge funds and trading houses are taking up the slack.
Port estimates that the number of commodities hedge funds globally has risen from 300 to 500 in the past 12 months. Agricultural products are at the sharp end. "We've had a 40-year down-trend in agricultural prices," he says. "That's now over."
