Machines Are Replacing Wall Street’s Bonus Culture (P&L, Bloomberg Markets)

Summary (You can listen to the podcast by clicking here)

• Wall Street’s bonus culture is slowly disappearing with big market wins often now made by algorithms not humans. Equities and FX markets are hit the hardest but fixed income isn’t safe either. Industry might struggle to attract, motivate and reward top talent as it used to.

• Rick Helfenbein, former Chairman, President & CEO of the American Apparel & Footwear Association gives a pessimistic view on the Phase 1 trade pact between US and China. It remains negative for the retail sector – which accounts for two-thirds of the US economy – and it might take 3 to 5 years for any tangible Phase 2 talks to gain traction.

• Kristina Hooper, Chief Market Strategist at Invesco, predicts modest 2020 returns for US equities, given the strong 2019 run-up driven by highly accommodative monetary policy. She also sees a potential move away from the dollar as the save haven and reserve currency – with gold and the Japanese yen the beneficiaries.

Why does this matter? Don’t let the Phase 1 headlines fool you – the progress seems minuscule and in parts, keeps the status quo. The administration agreed not to impose tariffs on some $160bn in mostly consumer goods imports from China and reduced tariffs on another $112bn worth of goods from 15% to 7.5%. But the average tariff rate remains significantly higher than before the trade war and the impact on the US economy is widespread.