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Morning Coffee: What gets Goldman Sachs' top quant excited, and how to make extra money as a 29 year-old VP

Michael Steliaros, Goldman Sachs’ Global Head of Quantitative Execution Services, has given a short but opinion-filled interview with Quantminds in which he was asked what’s hot and what’s not in the quant world.  

Steliaros’s top pick for a game-changing development is the availability of massive computing power via the cloud; he suggests that Goldman’s growing and high-flying algo team are now able to carry out calculations that were simply impossible “even two or three years ago”.  He also, interestingly, suggests that the increasing market share of indexed and passive investors has begun to affect how liquidity evolves over the course of a day, and that dealing with these changes is the key challenge for him and his employees.

More controversially, perhaps, Steliaros seems to be pouring cold water over the hottest quant field of all – machine learning.  Apparently the greatest impact of machine learning at GS has been “on our marketing material.” Other than that, and even granted the unlimited computing power of the cloud, machine learning is yet to deliver any really usable advances.  Steliaros doesn’t rule out the possibility of something useful being generated, but the wry tone of his reaction to the question doesn’t really suggest a boss who’s in the mood to join the chase to hire machine learning PhDs.  - Unless he’s just playing it smart in public, and trying to talk down expectations for anyone in this area who applies to Goldman Sachs.

This may all hold the makings of an intellectual battle in quant land; over at UBS, the traders seem to be considerably more bought in to the machine learning revolution.  Chris Purves of the Strategic Development Lab reportedly has a team of 80 employees working on machine learning, artificial intelligence and related areas to drive trading revenues and protect UBS’ business from upstart competitors.  They’ve already rolled out ORCA, a machine-learning based system which aims to spot liquidity air pockets and choose the best routing for FX orders.

Mr Purves claims that with sufficient data and computing power, the “robots” at UBS will be able to make “Netflix-style” recommendations for client trades based on data mining and on ideas that clients have acted on in the past.  The choice of analogy suggests that he may have been too busy to actually look at any Netflix recommendations, but the message is clear; it’s not just in the back office that UBS is trying to replace expensive and unpredictable human beings with technology.  The “robots” are even being given staff ID numbers and assigned to individual line managers.

Back in the real world, it’s not wholly unknown for investment bankers to moonlight doing less well-paid jobs.  David Solomon has his DJing, after all, while Michael Grimes of Morgan Stanley drove an Uber when he was trying to find out about the company.  But if you want to feel truly exhausted, have a look at Madeleine O’Connell and her spare time passion project.

Ms O’Connell is a former competitive ballet, tap and jazz dancer who went into banking at Citi and is now a VP at Goldman Sachs.  She gets up in the morning at 0445, is in a cab by 6am to the offices of gym class start up Obé, then teaches a dance class for an hour before a quick shower and off to Goldman for and 8am start. She then spends the day doing debt private placements, possibly hosts an event for her other side-hustle, fitness-based networking group Sweats and Balances and gets home around 11pm.  Although you have to admire her energy, it has to be noted that this schedule does not allow for enough sleep to be consistent with long term health; she must be doing it for the love because the money just isn’t worth it.

Meanwhile …

Uber stock closed up yesterday, but there’s still likely to be quite a few people feeling more than a bit disgruntled by the IPO performance.  James Gorman isn’t hiding, though; he’s scheduled to speak on June 11 to the US Financials Conference, where the world’s investors will get a chance to ask about current industry trends and corporate strategy … and anything else that’s on their mind. (BloombergBusinesswire)

An uncommon promotion at Citi – usually Investor Relations is a quite a specialised job where people tend to make a long career, or go into markets and front office roles.  But Susan Kendall has gone from head of IR to CFO of Citi’s retail banking business.  She might be one to watch – although less common today, it used to be that a few years in IR was a way of giving high-flyers an overview of the whole business so that they could be groomed for top jobs. (IR Magazine)

Always the bridesmaid … Benoit Coure was nearly made the Governor of the Banque de France, then he was nearly given the top job at the Bank for International Settlements.  Now he might be made President of the ECB, but he might not.  Article also includes a schedule of elite public sector appointments and the date of the current term ending, if you’re interested and qualified (Bloomberg)

Nick Wrightson has been hired as a managing director as Deutsche Bank starts to build back its FIG team, which all but imploded last year with numerous resignations. (Financial News)

And Mizuho seem to be ramping up in US equities, and hiring some expensive-looking people to do so; Robin Wright has joined from Bank of America, where he was head of high-touch trading, and he’ll be reporting to Darlene Pasquill, former Credit Suisse Americas head of equities. (Business Insider)

John Overdeck of TwoSIgma, Paul Tudor Jones and Bill Ackman were at the Robin Hood charity ball, the hedge fund industry’s big party.  Only some of them dressed up as characters from Game Of Thrones. (Institutional Investor)

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AUTHORSarah Butcher Global Editor

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