Morning Coffee: Deutsche Bank chief economist's paternity leave interrupted by UK chaos. Ken Griffin's new AI warning

As has been helpfully pointed out to us, traders work less hard than bankers. That is, unless there are market events, in which case people interfacing with trading floors work as hard as they must. This applies irrespective of major life events.

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Accordingly, the Times reports that people interfacing with UK gilt markets have had their plans and routines upended in the past week. It's not clear whether anyone has had to cancel their exercise regimes, but at least one person has had to follow the markets despite becoming a new father only two weeks ago.

That person is Sanjay Raja, a Deutsche Bank managing director (MD) and the German bank's chief UK economist. Two months ago, Raja noted that markets were pricing in the probability of a March rate cut. Since then, things have changed. Raja's paternity leave has unfortunately coincided with a leadership challenge to the UK prime minister, amidst an ongoing oil shock and repricing of government debt globally. It's not clear how long he was planning to take off and Raja has a fine director in the form Shreyas Gopal, but last week he was pulled back to his screens. "It feels like the bond markets have decided that there’s a strong probability we’ll have a new prime minister at some point this year so the uncertainty is when,” he informed the Times. 

Raja is not the only UK market participant whose life has been permeated by the bond market volatility. April LaRusse at Insight Investments has not had a recent child, but she has been in the habit of sometimes working from home. Last week, the Times said LaRusse and her colleagues were in the office instead. They were thinking about the bad stuff. “We always think about what could go wrong. You’re never thinking about the good stuff,” La Russe said.

Although senior traders say that volumes are lower than they might otherwise be in the gilt market after hedge funds were burned earlier in the year, Bloomberg notes that put options on sterling (weakening) against the dollar were at their highest level in two years last Thursday. 

This week could be consequential. "If you’d started to see the pound get a beating, that’s a whole other level of concern," said Raja, lamenting the old days when the gilt market used to be "wonderfully predictable and quite calm." 

That traditional calmness might be why one senior trader told us last week that gilt traders are not the most talented people. This week could prove him right, or wrong. It may also require LaRusse and others to be in the office. And Raja to devote part of his paternity leave to the terminal instead. 

Separately, Ken Griffin at Citadel has had a conversion that doesn't bode well for top jobs in financial services. 

Speaking at the Stanford Leadership Forum, Griffin said there has been a "step change in the productivity of the AI toolkit" which is now "profoundly more powerful than it was just nine months ago."

Griffin said Citadel has consequently unleashed "a much broader array of use cases for AI," and that  it "has been really interesting watch, to be blunt, work that we would usually do with people with masters and PhDs in finance over the course of weeks or months being done by AI agents over the course of hours or days."

Griffin confessed to feeling a bit depressed by this. "These are like extraordinarily high skilled jobs being, I'm going to pick a word, automated by agentic AI," he reflected. "You could just see how this was going to have such a dramatic impact on society." 

The implication is that Citadel will need fewer PhDs and Masters students in the future, and that those it has will be supercharged. Brett Caughran, a former Citadel portfolio manager who now runs an analyst training firm, says he's starting to hear senior investment professionals "think seriously about the incremental utility of junior talent." 

"I may not need to hire a junior at all," is becoming a more common refrain, says Caughran. This is a mistake, he adds. Juniors need to be trained to become a "true AI-augmented investor, and at year three will drive dramatically positive ROI to the firm." Hopefully Griffin agrees.

Meanwhile...

"Just after 8am on Friday, 8 May 2015 the Credit Suisse Fixed Income trading floor in London cheered as Ed Balls lost his seat. The Conservatives had won a surprise majority in the general election. The ‘risk’ of a Labour led-coalition was eliminated. Sterling rallied. Gilt yields fell. A bond salesman came up to me waving a Union Jack..." The celebrations turned out to be very misconstrued. (HybridEconomics) 

Jane Street is doubling its capacity in Singapore. (Bloomberg)

Nik Storonsky at Revolut: “Nik was not the brightest in our group. He didn’t say too much either. But the one thing that stood out about him was that he had a tunnel view about what he wanted.” (The Times) 

Crispin Odey invited former staff to participate in a “single question poll”. The poll asked whether respondents felt “the depiction of the company and the person of Crispin Odey in the FT article did not reflect your experience of working at Odey”. Respondents were offered only one answer: “Agree.” (Financial Times)  

Jassem Bu Ataba Al Zaabi is the man to know in Abu Dhabi but know one knows who he is. He is chairman of Abu Dhabi’s Department of Finance and coordinates the emirate's $2 trillion of sovereign wealth fund investments. He appears to have a dry sense of humour. (Bloomberg) 

BP is dismantling its pipeline gas trading team now that LNG is the focus. (Reuters) 

A technologist whose wife had twins stopped coming into the office because his commute took two hours each way on the train. A tribunal found that this was not permissible. (The Times) 

Jonathan Alpert will join Citi in September as global head of insurance from Bank of America. Ryan Willingham is joining as an MD covering specialty finance. He's from BofA too. (AsianBankingandFinance)

Inside the mind of Chris Hohn, the hedge fund manager who gives his money away.“I’m not doing this for publicity, but to see if I can encourage others to give. Our life is a gift and that means our money is a gift and we’re meant to share it.” (The Times) 

SpaceX wants an investor relations manager. This person needs to be a social media expert. (Net Interest) 

It's not easy being a nepo baby. “They’re constantly being called ‘nepo baby’. They’re never able to own their own achievements. Every one of them has been told, ‘You only got into that university because your parents made a donation.'" (The Times)   

Nurse practitioner, is a good-paying job that is also the fastest-growing field in healthcare. (WSJ)

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