Merrill Commodities
Any thoughts on Merrill Commodities based in Houston? It seems investment bank's commodity desks are either in Houston or NY. Could someone break down where the big commodities desks are located? ie. Merrill - Houston, Goldman... and so on. A general rank as far as all the commodity groups goes would also be good.
I know that Goldman Sachs has a strong commodities desk. Bear energy guys as well have a strong reputation (JP Morgan)
Goldman Sachs, Morgan Stanley, and Barclays Capital are the top 3 in commodities
I agree - GS and MS are by far the biggest, but BarCap snapped up both LEH and UBS trading desks and are now in a very strong 3rd position!
You most definitely want to work for Merrill/BofA 1 reason being is they have absolute idiots running that merger now and they also pay huge bonuses for people who lose large amounts of money. They like to "RETAIN VALUE" which translates into $5 bills in bonuses for $15 bills of losses. The more the merrier!
Goldman and Morgan Stanley are the biggest and have been for quite sometime. The majority of their trading desks are in NYC. Barclays has a comfortable seat in third also with most the their trading in NYC. However, the landscape seems to be changing. Merrill had built up a pretty sizeable commodities business based in Houston after the aquisition of Koch's group. Who knows what's going to happen with that now. Citi also had a good size shop in Houston though I wouldn't be surprised if that gets scaled back too. Then you have JPMorgan which started their group in NYC a few years ago and has been on a buying frenzy ever since starting with Bear Energy (Houston) in March and most recently UBS's Canadian power business and their European based ag business. Also, being one of the best capitalized banks in the industry puts them in a significant advantage at so many levels. I wouldn't be surprised if we see some reshuffling of the order, with Barclays and JPMorgan on the rise. The big benefit to Houston when it comes to energy trading is that there are dozens of shops across the city as long as you don't limit yourself to banks.
Barclays is actually not that far behind GS and MS right now. Adding Lehman and UBS will help, but not by much. While Lehman had employed a large group of people they were pretty much still in start up phase and didn't make much in the way of revenue. And while Barclays did get UBS, they didn't get the Ags business or the Canadian power and gas operations.
From what I've seen about last year's global commodities revenue, it breaks down like this:
Goldman approx. $3.0B Morgan Stanley approx. $3.0B Barclays Capital between $2.5B and $3.0B
JP Morgan somewhere around $1.0B, maybe higher Merrill Lynch somewhere around $1.0B, maybe higher
Citi still under $500.0M Credit Suisse not sure, but probably about Citi's size Deutsche not sure, but probably under $1.0B
Skins1, or anyone else:
2 questions:
Are the company values listed here estimates, based on financial statements? Or...can you, or anyone else recommend good sources to estimate sizes of Banks' commodities activities, and the breakdown of what asset, or operation those revenues/losses/assets commitments come from?
How has the landscape (especially hiring and asset commitments) of Banks role in the commodity space changed over the last 18 months, and how do you all expect it to change with the Volcker Rule and other Financial Regulation?
Pretty sure Citi Commodities is over 500 Mill. The energy group made 500 million itself.
Does Citi actually have anything other than energy though?
Unless I'm mistaken, Phibro (in Westport) is not the same as Citi Energy in Houston. I believe Phibro primarily punts around in the oil markets while Houston is more client focused in gas and power.
Merrill Commodities used to be Entergy-Koch, which was a pretty good shop back in the day. Every company and bank has its own culture including risk tolerance. For example, MS has a very strong physical presence in most energy markets which depending on your view is either a good thing or a bad thing (I think the physical side is boring and quite frankly a bit frustrating but it does offer a unique perspective on supply and demand fundamentals)
IMO, if you're interested in energy you should start in physical in order to understand how the product flows... if you can get experience scheduling you can benefit from the connections you make at other shops. On the physical side.. don't just think of next-day/intraday trading... depending on the shop you work at you may also enter term trades... this type of experience is fundamental for someone looking to move into the financial aspect of trading energy... without it you will simply lack the knowledge of the underlying
Could someone clarify if Citi's (excl Phil Bro) commodities business in Houston are mainly paper trading? Also, which groups within Citi's commodities business are they particularly strong at?
Separately, are most of the houses (mainly BB's, energy firms) in Houston dabbling in both paper and physical trading?
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