Morning Coffee: The psychics wanted for $100m jobs in hedge funds. Humble M&A bankers thrive

A meme has been doing the rounds concerning trading jobs. In days past, it has cartoon traders staring at price action charts. Today, it has them staring at Donald Trump's tweets on Truth Social.

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Simply ingesting the tweets may not be enough, though. In these times, the most competent traders are apparently able to enter a form of spiritual communion with Trump's tweets such that they know what's coming next. It's not clear who has this power, or indeed how it's developed, but has become the number one skill that portfolio managers everywhere need to thrive in this markets. Multistrategy hedge funds are expected to form these kinds of "psychic pods" in the months to come.

The psychics appeared to be in action yesterday. The Financial Times reported that 15 minutes before Donald Trump posted in capital letters about his "very good and productive conversations" with Iran, traders made bets worth half a billion dollars in the oil markets. Six million barrels of oil were sold into a market that Bloomberg says had been bumping along at 700,000 barrels. 

Similarly, shortly before the "good and productive" tweet occurred, a burst of futures contracts for the S&P 500 were purchased with a notional value of $1.46bn.

When Trump tweeted, oil prices fell and futures contracts rose. "Somebody just got a lot richer,” one hedge fund trader observed to the FT. 

The riches may be entirely serendipitous, but it seems that having an ability to commune with Trump's tweets has become the new path to profitability. “My gut from watching markets for the last 25 years is this is really abnormal,” the trader told the FT. “It’s Monday morning, there’s no important data today, there aren’t any Fed speakers you’d want to front run. It’s an unusually large trade for a day with no event risk." Portfolio managers told the FT there is a "level of frustration" with the new method of playing the old game.

Masters in Finance courses may soon, therefore, be replaced by Masters in Psychic Engineering. Alternatively, there are observations that it might simply help to be in the right WhatsApp groups. A spokesperson for the White House told the FT: "The White House does not tolerate any administration official illegally profiteering off of insider knowledge, and any implication that officials are engaged in such activity without evidence is baseless and irresponsible reporting.”

Separately, European banks like Deutsche Bank, UBS and Barclays have been publicly hiring bankers in the hope of scaling league tables. But a different and less vocal European bank has unexpectedly appeared in third position in the UK. 

It's BNP Paribas. George Holst, the French bank's head of corporate coverage, seems a bit surprised by the state of affairs. “We are not expecting to be tomorrow comfortably a top three UK M&A house,” he explains to the FT.  BNP's current league table position appears to the result of working on two large UK deals (Nuveen's £9.9bn acquisition of Schroders, Engie’s £10.5bn takeover of UK Power Networks.)

Holst says the glory may not last. “We have always been ambitious for our UK franchise, but we are also humble in the sense that we know the year is long and that we still need to continue investing,” he reflects. 

Meanwhile...

Jefferies' shares have fallen 40% since September and now Sumitomo Mitsui Financial Group wants to take if over. (Financial Times) 

Hundreds of private bankers are being hired in Hong Kong and are receiving 25% pay rises in the process. (Bloomberg) 

Apollo has capped withdrawals from one of its large private funds open to retail investors. It is saying: “Periods of complexity and uncertainty can create some of the most attractive investment opportunities, but only for those with the flexibility to act decisively.” (Bloomberg)  

JPMorgan launched a basket of credit default swaps in Alphabet Inc., Amazon.com Inc., Meta Platforms Inc., Microsoft Corp. and Oracle Corp. (Bloomberg) 

HSBC appointed a chief AI officer, David Rice. He is a self described "deep introvert" who was previously the chief operating officer of the CIB. Rice declares himself "thrilled to take on this new role to help us drive forward our transformation agenda.” (HSBC) 

The video of the Iranian drone striking a Citi office in Dubai is not real. (Reuters) 

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