What desks / products have a bright future ahead of them?
Automation aside, what desks / products actually have a bright future ahead of them?
yes this is a derivative thread to S&T being an awful place to be in but surely there are still pockets of growth today and will continue to grow.
Based on the most helpful WSO content, it seems that the future of the S&T job market and the best desk to start a career in can vary depending on several factors such as regulations, market forces, and technology.
Equities have been doing well recently, with a lot of M&A activity and a booming stock market since the crisis. However, roles like cash equities have been phased out by technology, and it's viewed as a purely relationship-driven role where a young analyst might develop limited fundamental knowledge/experience.
Fixed income has seen recent headcount cuts due to weaker bond trading, and banks are seeing bond-trading revenue decline by up to 40%. Despite this, you've expressed interest in credit sales, but are worried about the space shrinking.
In terms of long-term earnings potential and other career opportunities, it's important to consider that if you're faced with job cuts because of the market, other firms/banks might be interested in hiring you because of your experience as a salesperson/trader in your particular product. However, trading at BB is mostly a market-making role and should be avoided if you're looking for career longevity.
In conclusion, it's crucial to ask yourself what desk or product aligns with your career goals, interests, and the skills you want to develop. It's also important to stay informed about market trends and changes in the industry.
Sources: HELP: The Future of the S&T Job Market and Selecting the Right Desk
A couple of places I think will be interesting over the next 2-3 years beyond that who knows. Market dynamics just change so fast.
1. Anything in CMBS- There is going to be a major correction in CRE at some point which is going to make CMBS trading very interesting. When a market gets very dislocated you see people who have never bought a CUSIP start to step in b/c like the return on CUSIPs vs deals they are seeing in private markets. Those people tend to be accepting of a wider bid offer which is great for the sell side. There is still a lot of cash out there in the CRE space and it will start to flow to CUSIPs especially if the private market gets super dislocated.
2. Anything involving coverage of banks- The community and regional banking space is going through a major transformation and its become very clear that their funding profiles are much different than they thought. They are going to have to become much more dynamic in the capital markets than in the past. Interest rate derivatives volume with this client base will go up and banks are going to be much more active in securitization of loans as well as whole loan trading. There is a lot of $$ out their in private credit and being able to play middle man between the bank with the ability to originate loans/find customers and the private credit fund with capital to put to work in the space is going to be very lucrative for the sell-side. We should see a growth in whole loan desks to service this as a lot of the private credit space is going to use the street to help them source product and does not want to directly face the borrowers or the banks originating the loans themselves.
Would love to hear your thoughts on CDS (specifically EM) desks
I don't really know anything about EM at all.
Thank you for thought reply and insight. Safe to say as long as rates stay elevated and create imbalances within the markets these areas will only continue to further benefit? The reason I ask is products / desks can sometimes be in vogue as we are in a new regime vs the stability and margins present in trading pre GFC.
That is a very fair statement that elevated rates are the big driver, while I think that is bad for the economy as a whole and other areas of most of the big banks are going to get hurt by elevated rates it does create opportunity for dealers. There are a lot of factors at play that will prevent the dealers from ever getting back to GFC type trades and revenues but the elevated vol should keep big bank trading earnings elevated for a while.
Commodities
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Can’t tell if you’re serious lol. Agree with you on the physical front but don’t quite see it on the paper front. All ears thought if you are serious.
https://www.mckinsey.com/industries/electric-power-and-natural-gas/our-…
Big picture, the more 1) exotic and 2) OTC products are harder to automate and have room to add value. Fewer competitors as well. Rates/MBS/Corp Paper all attractive imho.
Avoid anything equity/futures/commods.
EQD expanding and doing well. Honestly recommend
Why do you think rates are attractive? Incoming SA in rates trading at a BB, so am interested to hear more about the long-term prospects.
Bump
why avoid cms?
where are the most desirable commodities desks going forward? Anywhere with a physicals presence?
Commodi repellendus illo itaque saepe ut aut fuga. Eum officia itaque nemo sed quia. Sed autem nemo tenetur repellendus qui recusandae.
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