Morning Coffee: CFA Institute releases information on June exam horrors. Big bonuses at Morgan Stanley?
Are CFA exams really as hard as everyone expects them to be? Yes. In fact, they are harder. The CFA Institute has just released results to a survey of people who took its exams in June 2014 and their unanimous verdict is that the CFA's tests were not at all easy.
Only 7% of the CFA's test takers thought the exam questions were easier than they'd expected. 61% found them to be as they'd expected. 32% found them unexpectedly challengingly. Most interestingly for anyone preparing to take the exam on December 6th 2014, the CFA Institute released the following chart showing which parts of its syllabus were associated with easy exam questions and which weren't. Surprisingly, June's test takers thought the quantitative methods were a comparative doddle. However, the fixed income topics clearly merit a special proportion of the 300+ hours of revision people put in before the average CFA test.
Source: CFA Institute
Separately, Bloomberg thinks Morgan Stanley's investment bankers will be getting the biggest increases in their bonuses this year. It says that JPMorgan and Citi will be hurt by their dependence on weak rates and FX trading. Goldman Sachs is also heavily dependent on fixed income currencies and commodities trading, which was weak in the first two quarters. However, Bloomberg thinks that Morgan Stanley will benefit both from the strength of its investment banking business and from its improving performance in equity trading. Morgan Stanley is thought to be the only bank to have increased its equities revenues in the first nine months of the year.
If Morgan Stanley does indeed increase pay, it will almost certainly come as a surprise to staff. James Gorman, Morgan Stanley's CEO regularly says bankers are overpaid, and our estimates suggest that, on average, Morgan Stanley's London bankers earn half the amount of their rivals at Goldman Sachs.
European mortgage backed securitization is making a comeback. It's still got a way to go. - In 2007, MBS volumes were $154bn. In 2015 they could more than double from this year's level to between €10bn and €15bn. (Financial Times)
Crispin Odey's Odey European Fund made a 10% gain last month. Currency positions involving the Australian/US dollar and the US dollar/South African rand produced some of the biggest returns. (Financial News)
Banks are being asked to claim down on their risk models. Expect increased demand for risk modelling expertise. (Bloomberg)
Steve Cohen's new hedge fund awarding extra bonuses for conspicuous compliance. (Bloomberg)
Morgan Stanley has been making a big push into private equity. Thanks to the Volcker Rule, it's not investing its own money but is raising funds from investors and private clients. (Reuters)
Christian Bitter is leaving BlueCrest! It's not clear whether this is related to the $17m fine being raised against him by the Financial Conduct Authority for allegedly fixing LIBOR while he was at Duetsche Bank. (Bloomberg)
Starting from next year, UBS traders will only be able to open new trading positions and investments with company-approved brokers. (Bloomberg)
If you want to earn big money, you need the audacity to fart in the escalator and blame it on someone else. (Guardian)
Someone has left a Lamborghini Countach on London's Tower Bridge. (Evening Standard)
Words you must not say at work. (Daily Muse)