Morning Coffee: JPMorgan has a coronavirus case on the fifth floor. Reddit is the new Twitter for bankers

Coronavirus has broken out at JPMorgan in Manhattan. Given that there’s no vaccine, no herd immunity and continuing transmission in the population, this is unsurprising. It would be really unlikely that there would be exactly zero cases on Wall Street during the “back to the school” period.  It’s unfortunate for JP though, given that they made such a public push on requiring senior bankers to come back in from September 21st.

Even before the bulk of JPM’s managing directors and executive directors return on Monday, the outbreak means that the bank has had to send some of its people home again, after someone apparently tested positive in equities trading in the Madison Avenue building. It’s hardly the sort of kick-off to the return program that anyone would have wanted. 

In principle, of course, it could be argued that this is proof that the testing system works, and that JPM has been acting quickly to quarantine potentially infected employees and prevent spread within the office.  The bank says that they’ve been “managing individual cases across the firm over the course of the last few months and following appropriate protocols when they occur”. But it might be difficult to make this sort of case to a frightened banker, let alone one in a high-risk category who’s been shielding themselves at home.  We’ll see next week whether this news will have affected the willingness of the JPM managing directors to lead from the front and come back in. 

Of course, though, it’s not really “willingness” to return to the office that the banks need from their employees – it’s “enthusiasm”.  Jamie Dimon was worried that people were missing out on learning experiences, spontaneous interaction and morale-boosting comradeship. None of these are likely to be in great supply if the building is full of scared people who don’t want to be there, all sneaking round trying to avoid being breathed on and jumping out of their skins every time anyone coughs.  Normality is something that will eventually return as a result of events, not something that you can demand by a deadline.

All banks are likely to have to deal with this sort of problem over the coming months.  A single positive test on one floor, for an employee with a small number of direct contacts to be traced is close to the best case scenario.  It’s quite likely that at least one major bank will have to deal with an actual outbreak, and temporarily throw all of its return-to-office plans into reverse.  The banks that handle this period successfully will be the ones that are able to be most flexible; reacting to changing conditions and accepting that there will be setbacks to deal with.  This would imply that in many ways, the most important part of JPMorgan’s plan for getting its people back into the office might be its other plan for making working from home a permanent part of its strategy.  If anyone ought to understand the value of preserving optionality in risk management, it’s surely a Wall Street bank.

Elsewhere, it was only a few years ago that membership of “FinTwit” – Financial Twitter – was something of a secret weapon on the trading floor.  People used to use the site to swap information and analysis between professionals, academics and central bankers, expanding their networks beyond even the reach of Bloomberg Chat.  It also gave access to a messaging system that could be kept on a personal mobile phone and which wasn’t necessarily accessible to compliance departments, not that anyone would have considering misusing that.

However, in the modern market, the ability to have valuable conversations with the sharpest intellects isn’t necessarily as valuable as it used to be.  As the number of Robinhood brokerage accounts has ballooned during the pandemic, retail trading now accounts for as much as 20% of the cash equities market and 12% in options. Because they move the market, it’s now more important to know the thoughts of bored single men, without much market experience, stuck at home and looking for a substitute for gambling.  And that means that the meme-heavy “r/wallstreetbets” forum is now the newest source of edge.  It’s even attracting alt-data quants who are trying to text-mine the posts to extract some sort of signals about market sentiment.  The biggest obstacle to Wallstreetbets becoming widely used, though, is the fact that the amount of obscene language used probably means it’s blocked by company firewalls.

Meanwhile …

Of course, day-trading options on margin is practically harmless compared to some other ways of passing the time.  “For some, who were just managing to control their cocaine use pre-lockdown, with the constraints of having to turn up for work alert and sober, drive the children to school and attend meetings face-to-face, the loss of those constraints as a result of lockdown tipped the balance into harmful use or dependence”, according to a consultant psychiatrist at the Priory Wellbeing Centre. (Financial News)

Redundancies, investment underperformance and a few high-profile employee lawsuits – it hasn’t been the greatest of years for Bridgewater.  And according to some sources, as many as a quarter of them have trade-secrets contracts so onerous that they would find it hard to ever work in finance again if they left. (Bloomberg)

A slightly wild story of a “ghost investor” – a “family office” which seems to only exist in order to charge due diligence fees to small hedge funds looking for inflows. (Security Boulevard)

The French and German governments don’t want EU rules on bonus payments to apply to smaller boutiques. (Reuters)

Pritpal Gil, Barclays’ head of APAC forex trading, is leaving the bank as part of a cost-cutting program; more cuts appear to be on the way. (Bloomberg)

The hostile bid by Veolia for Suez seems to be vindicating the decision by a number of boutiques to staff up in Paris earlier in the year. (Reuters Breakingviews)

Headlines like “Why I Broke Wall Street’s Code of Silence” have been overdone, but this isn’t a #MeToo story for once – it’s about the surprisingly well paid business of getting whistleblower payments from the SEC. (Institutional Investor)

It could be really bad news to find signs of life on Venus. (Institute for the Future of Humanity)

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