Morning Coffee: Morgan Stanley bankers have 3-4 months before deals "deleted." When hedge fund managers survive massive drawdowns

If you're a senior banker, there's a well known method of retaining your job during difficult times. It's called the pipeline. The fatter your pipeline of imminent-yet not-quite-happening deals, the less likely you are to be let go. In the current yippy climate, the pipeline is what most banking jobs are resting upon.

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Speaking on Friday, JPMorgan CFO Jeremy Barnum said there's a "wait and see" attitude to deals in the pipeline. There is a lot of "dialogue", said Barnum, but unless you're Ian Hannam, talking doesn't generate fees.

How long before the pipeline of deals conceived before the tariffs is relegated to history? The Financial Times notes that Morgan Stanley CEO Ted Pick last Friday gave it "three to four months" before deals paused become deals "deleted" or shoved into a category of "someday". 

Senior bankers with pipelines are presumably following the utterances of Donald and Howard Lutnick as enthusiastically as the next person. Pick, an equities guy by trade, is convinced that Donald and Howard will make things right. He still thinks we're at the start of an "investment banking cycle." In the first quarter, financial sponsors were back, mid-sized deals were back, and the deal cycle was starting, said Pick. That, however, was before the tariffs.

For the moment at least, promising pipelines mean there are unlikely to be big banker job cuts. Morgan Stanley is already cutting 2,000 jobs, but they're housekeeping cuts across the organization rather than anything banking specific. 

All that's required for existing deals to go ahead is some "stability" said Pick. Pricing need not be an issue - even in plummeting markets, most deals are based on "comparative value" and the underlying impetus from concerns about "supply chains, energy, technology, and sizing against the sector," remain.

But what if the deal pipeline is still bunged come July or August? Pick didn't say so, but it seems likely that banking jobs will then go. - Unless, of course, bankers can assemble entirely new pipelines of deals suiting the new environment. If tariffs are settled, a huge reorganization of the US economy will be required. "We're talking about the rearchitecting of industrial policy in the context of America's place in the world and where it wants to be decades from now. That is weighty stuff," said Pick. 

This is what bankers can cling to. All that's needed is some stability. Good luck.

Separately, at least one of the top basis traders we identified last week has got into trouble. 

Bloomberg reports that Alexander Phillips at Tudor Capital lost $140m in April (so far) and that he's down $80m across 2025 to date. Despite this, Phillips is reportedly still at Tudor and "working to recoup his losses." 

It's a reminder that some hedge funds are more lenient than others when it comes to major drawdowns. As we noted in March, Citadel also helps portfolio managers manage big losses. Others (Millennium) have a reputation for stopping people out once they're down 5%. Eisler, meanwhile, has reportedly stopped a relative value pod run by New York-based Barry Piafsky, after it made a $30m loss during the recent chaos. 

Meanwhile...

Bloomberg journalists Joe Weisenthal and Tracy Alloway have been skipping sleep. "Tuesday night, I got, like, four hours of sleep. I was in my bed, and then I was like, I’m not gonna be able to fall asleep. So I went to the couch, and I just kept refreshing my Bloomberg app on my phone as the 10-year rate kept going higher and higher." (Vanity Fair) 

Hedge fund manager Vineer Bhansali at LongTail Alpha is sleep-deprived too. “Every 15 minutes and 20 minutes or so, I’ll wake up and check what’s going on...These days things move so fast.” (WSJ) 

The four main quant money pools run by Man Group the world’s biggest publicly listed hedge fund firm, lost as much as 7.8% this month through April 9. (Bloomberg) 

Alumni from major hedge funds have been breaking out and setting up funds of their own. New funds include: ArrowPoint Investement Partners, Century Investment Partners, Candlestick Capital, founded by Jack Woodruff; Woodline Partners, cofounded by Michael Rockefeller and Karl Kroeker; Cinctive Capital, cofounded by Richard Schimel and Larry Sapanski. (Business Insider) 

Once upon a time, no one wanted to work in electronic market making. "When I graduated, options trading was a relative backwater compared to banking. It wasn’t high status. SIG wasn’t even SIG. They were called Susquehanna and nobody knew what the heck a “Susquehanna” was. I made $37,500 for my starting pay.... Today, new hires make 10X that." (Moontower) 

Morgan Stanley generated $692m in "other" revenue. Most of that came from selling debt relating to Elon Musk's purchase of Twitter. (Bloomberg) 

JPMorgan's fixed-income traders took in $5.85 billion, up 8% from a year earlier but less than analysts expected. (Bloomberg) 

While treasuries trade like risk assets, German bonds are suddenly more popular. (Bloomberg) 

Europe should “quickly adapt to any regulatory rollback” to protect the competitiveness of its banking sector, said French Finance Minister Eric Lombard. (Bloomberg) 

Bessent’s “detox” doesn’t have much to do with trade. It’s about reducing government spending, and — despite all the noise around Elon Musk’s DOGE — that project hasn’t really started. (Politico)

The dollar’s movements recently are not a dollar crisis in the sense of a collapse of the dollar. Instead they are a “dollar fx swap crisis.” (Crises notes)

SMBC hired Michael Duff from BNP Paribas as head of UK and EMEA financial syndicate. (Global Capital) 

State Street is buying a new $433m 195,000 square feet (18,116 square meters) London headquarters. (Bloomberg)  

Photo by Ujesh Krishnan on Unsplash

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