While You Were Working - June 27

Janet Yellen played the age card

Speaking at an event in London, Federal Reserve Chairwoman Janet Yellen, who is a distinguished 70 years old, was asked about when the next financial crisis might hit. Her response:

“Would I say there will never, ever be another financial crisis? …You know probably that would be going too far but I do think we're much safer and I hope that it will not be in our lifetimes and I don't believe it will be.”

Jeez Janet … that is certainly easy for you to say! But you know, some of us are a wee bit younger than others.

A case of whodunit popped up at the Fed

In this case, the “it” is turning down the job of president of the Reserve Bank of Philadelphia. According to documents obtained via a Freedom of Information Act request, the Philly Fed was all set to name a new president back in 2015 right up to the moment when the candidate backed out. Mum is the word from everyone involved, but that is not going to stop a wee bit of a guessing game from taking place.

My completely unfounded and totally speculative guess is Neel Kashkari. Perhaps he was ready to go to Philly, but then he heard the Minneapolis job was going to open up and decided he preferred the balmy winters in the Twin Cities.

A more “efficient” SEC is on the way

SEC Chairman Jay Clayton says he expects the regulator, which he claims is on track to conduct 20% more adviser examinations this fiscal year than last year, will increase that number by an additional 5% next fiscal year. In an era of tight budgets and light-touch regulation, you can call me skeptical. Unless, of course, those examinations are reformed to the point where they don’t really include a whole lot of examining. If that happens, then I am sure the tally will rise and “increased efficiency” will get all the credit.

Some hedge fund peeps said machines aren’t taking ALL the jobs in finance

It turns out hedge funds are going to have to keep at least a few humans around as they steer their dollars into investments largely identified by computers.

Winton founder David Harding and DoubleLine Capital Chief Executive Officer Jeffrey Gundlach are among a few of the big names that have recently admitted that humans will always play some role in dictating investment strategies – such as selecting which algorithms to implement.

Michael Hintze from CQS says the best option is a merger of minds and machines.

“Models are a great place to begin, but not necessarily a good place to finish. … It is a team effort and you need the analysts, traders and portfolio managers with the skills, experience and judgment to use and understand sophisticated financial models.”

That is music to the ears of many investment pros. But then again, no one is saying those 2 & 20 asset management fees will survive forever.

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