Morning Coffee: Strange geniuses given easy access to top jobs in finance. Cohn takes aim at J.P. Morgan
Are you a mathematical genius with potentially limited social skills? You're in huge demand in the finance industry today. Old-school fundamental analysts are out of fashion and the race is on to find developers able to write algorithms that can analyze billions of pieces of data in real time. Quantitative hedge funds are ascending as many traditional hedge funds struggle.
One such genius is Igor Tulchinksy, a computer scientist and founder of WorldQuant, an Old Greenwich, Connecticut-based firm which manages more than $5bn. Tulchinsky employs hundreds of scientists, including 125 PhDs, plus hundreds of part-time workers to look for hidden patterns in the markets. A former colleague says Tulchinsky is a "convincing example that people who are extremely talented in certain areas of life can be uniquely strange in others." WorldQuant's model means brilliant engineers, computer scientists and mathematicians with day jobs in academia or other fields can contribute to its alpha factory on the side. It's a strategy that seems to work: the WSJ says WorldQuant has never had a down year. If you want to work there, Tulchinsky says the prerequisite is being able to "take a problem and think all the time.”
Steve Cohen is after similar geniuses. Last year he gave $250m to Quantopian, a website that lets members build and run computerized trading programs. Bloomberg now reports that one equities strategy developed on Quantopian has been given $3m of Cohen's money.
Ok, it's not 'easy' to get spotted on Quantopian. The equities strategy Cohen sponsored was chosen out of 100,000+, which suggests you'll have a greater success rate applying to a graduate training program in an investment bank. At Quantopian, though, you won't need to go through a long recruitment process and will be judged entirely on the success of your strategy irrespective of your social skills or academic record.
Separately, Gary Cohn, President Trump’s chief economic advisor and Director of the National Economic Council, says it's time to separate consumer and investment banking, offering support for reinstating the Glass-Steagall Act in some form. The U.S.'s two main political parties actually agree on that issue – but most bulge-bracket bankers hate the idea.
Why would a former Goldman Sachs investment banker support a break-up of the biggest financial institutions? Like Morgan Stanley, Goldman only became an actual lending bank in 2008, which brought in extra regulatory scrutiny along with lucrative retail deposits, although its consumer banking business is relatively small.
A new version of the Glass-Steagall Act, combined with a Dodd-Frank rollback, might let Goldman avoid stress testing and U.S. Federal Reserve oversight, even if it would have to strengthen its balance sheet and absorb higher costs as a broker-dealer, according to Bloomberg.
That would negatively impact Gary Cohn's former employer much less than rival banks on Wall Street, including J.P. Morgan Chase. That said, Jamie Dimon sits on a Trump advisory panel and said that breaking up big banks would be bad for America, so it's no guarantee that the president will go along with Cohn's recommendation.
Dimon and BlackRock’s Larry Fink are concerned about the U.S. economy. (Bloomberg)
Goldman, J.P. Morgan and Citigroup are among the firms concerned about the New York Stock Exchange’s move to assert greater control over market data – today, it’s all about Big Data for trading desks. (WSJ)
A retrial has let two former Barclays traders off the hook after having been charged with manipulating Libor. (New York Times)
Jamil Nazarali is stepping down as the head of execution services at Citadel Securities to become a senior adviser to the electronic market-making firm’s CEO Peng Zhao. (WSJ)
Deutsche Bank executed a $8.5bn share sale, a capital-raising necessary to put the German lender on firm financial footing. (WSJ)
Of the UK financial services firms responding to a PwC survey, 61% say that they believe they could lose as much as 40% of their revenue to standalone fintech firms. (Finextra)
Standard Life may move a lot of jobs from London to Dublin. (Citywire)
In a generational reversal, Americans are now more likely to work for a large employer than a small one. (WSJ)
About three dozen jobs in the last decade now pay at least $100k a year on average, nearly doubling the number of occupations where average salaries are so high. (WSJ)
There’s a growing gap between the top third of companies that pay the most in employee compensation and the rest. (Harvard Business Review)
About 44% of recent college graduates were employed in jobs not requiring degrees in the fourth quarter of 2016. (Bloomberg)
Photo credit: Alex Pigeon/Amherst Wire