Morning Coffee: Mysteriously rich Asian Masters student only wants to work in banking. JPMorgan developers must facilitate the possible elimination of their own jobs

If you don't get a junior banking job straight out of university, you can always study a Masters in Finance and try getting your junior banking job after that instead. However, Masters in Finance courses are expensive. At Warwick Business School, for example, UK students pay £37k and international students pay £45k in fees. Not everyone can afford this.

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The sort of person that can afford a Masters in Finance is a mysterious student with links to Singapore, who is known as 'GKC'. The Financial Times says GKC owns two UK apartments worth a combined £4m, and has £800k in bank accounts. When she finishes the course, she wants to work in banking.

As contemporary students in the UK will testify, there are many GKC-like students to be found on British Masters in Finance courses. They might not all have circa £5m ($6.7m) in net assets, but they often have plenty of cash. 

British nationals are discouraged from pursuing Masters courses because when they graduate they will have to pay an additional 6% in income tax on everything they earn above £21k as they repay their student loans. UK students already have to pay 9% in additional tax on loan repayments for their bachelors courses, so the combined additional tax payments are 1,500 basis points. The structure of the British tax system means that British Masters students who go on to earn over £100k pay a punitive marginal tax rate of 77% on their earnings between £100k and £120k. It's just not worth it. 

If you're the mysterious GKC, though, your wealthy benefactor has likely paid your fees and you probably don't have any student debt anyway. It's not easy to get a banking job in London following changes to student visa rules, but you can potentially get a job in Hong Kong, where things are currently booming. 

This is fortunate for GKC, who despite being worth nearly $6.7m, is having a spot of bother. The UK's National Crime Agency has imposed an "unexplained wealth order" upon her, demanding that she explain how she came by all that money given that doesn't seem to have worked for years. The suspicion is that it's related to a money laundering case in Singapore. 

It all sounds very stressful, particularly given that GKC has been at boarding school in this country since the age of 16 and likely needs money to stay. Banks interviewing a stressed Singaporean Masters student could take pity and at least offer a short internship.

Separately, corporate-speak is strong in banks and nowhere is it stronger than when it comes to AI. On one hand, the spiel goes, that AI will increase productivity and liberate humans to do interesting work appropriate to multicellular mammals. On the other, banks want to cut costs, and replacing developers with AI is a way of doing so.

JPMorgan's developers are therefore in a spot. Business Insider reports that the bank is commanding the 65,000 people in its technology division to "drive excellence" by using AI, or face the consequences.

JPMorgan's developers have reportedly been ordered by the HR team to: "Demonstrate measurable improvement in code quality, speed and productivity through regular use of approved AI coding assist tools, contributing to the team's overall efficiency targets". And to: "Engage in identifying, implementing and optimizing AI-driven automation opportunities within technology lifecycle management (TLM) processes to drive efficiency and support capacity unlock initiatives, ensuring all enhancements leverage current technology assets before considering new solutions."

Failure to assimilate these commands will be problematic. Developers at JPMorgan are anxious. Someone's seen a management dashboard categorising them as "light", "heavy" and "non" users of AI tools. JPMorgan CEO Jamie Dimon has spoken publicly about over-hiring during the pandemic and using AI to negate the need for new hires. Developers who don't leverage the optimization for efficiencies may be in trouble.

Meanwhile...

Oil traders are exhausted. Only high frequency strategies used by banks and electronic market makers seem to be trading. “It’s changing so fast that you can be long one minute, and then next thing you know, something comes out and you’re short.” (Bloomberg) 

Deutsche Bank created a "pressure index" showing when Trump is likely to make a conciliatory statement causing oil prices to fall. “If the index moves up, a probability of strategic adjustment by the US administration is more likely. If all four pain points hurt, the incentive to adjust is very high.” The pain points=weighted 20-day change in S&P 500, 10-year US Treasury yield, Trump approval rate and 1-year forward inflation. (Financial Times) 

Lloyd Blankfein says difficult times may be ahead. “The analogy I like to give is you accumulate tinder on the floor of the forest and eventually a spark will come. But the longer between intervals where there’s a spark that sets it on fire, the more that accumulates.” (Bloomberg) 

“The market isn’t being erratic, this is what an efficient market looks like in the face of radical uncertainty. People are shifting gears incredibly fast or they’ve backed away. The market’s confusion is entirely rational.” (Financial Times) 

Millennium gave cash to Engineer's Gate but now they've mutually agreed that the cash will be withdrawn. Engineer's Gate wanted to the cash in the account to be subject to quarterly withdrawals in normal markets with the possibility of investor-level gates in stress periods. It also calculated the allocation at $1.5bn, while Millennium saw it as $3.bn including leverage. (Bloomberg)

IMC's annual report says it made $3bn in trading revenue and $968m in profit. (Bloomberg)  

BNP Paribas is rolling out an AI companion for all its staff. (Bloomberg) 

It's going to be great to work in Hong Kong. Profits from a wide range of investments may soon be be eligible for tax treatment as carried interest, including earnings in hedge funds. (Financial Times) 

Dentists can earn $400k but they also have huge tuition fees and loan repayments after buying dental practices. (WSJ)

If you work for the PiF now you won't just be investing in Saudi Arabia. “The Saudi macroeconomic and physical position remains strong, stable and resilient. We measure our returns not in quarters but in decades, and PIF remains committed to its investments around the world.” (Bloomberg) 

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