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Hi all, this week the hotly anticipated US Consumer Price Index for September was released, a critical figure in the UKs mini budget plans has been fired, some of the world’s biggest financial institutions have release their quarterly earnings reports for Q3, and there have been some interesting developments in big tech. Enjoy!

Patrick

Arm Wrestling Inflation

On Thursday the US consumer price index for September was released, with data showing that the Feds 300 bps of rate hikes so far in 2022 have still not proved effective, with inflation running rampant at 8.2%, higher than analyst expectations. Core inflation (minus food and energy) stood at 6.6% YoY, up from 6.3% in August. Markets tumbled and bonds yields rose on the release, as it is expected the Fed may need to become even more aggressive in order to get inflation in check, making a likely recession even more so. With elections coming up in November, Republicans have made price rises a big part of their campaign, blaming the Biden administration’s $1.9trn injection into the economy in 2021 as the main cause.

Kwasi Kicked Out

In a huge turn of events in UK politics, the chancellor of the exchequer Kwasi Kwarteng has been sacked by Prime Minister Liz truss after just 38 days in office. This comes as the PM has had a complete change of mind on the proposed mini budget that has caused mayhem in UK markets and pension funds since it was introduced.

On Friday Truss named former foreign secretary Jeremy Hunt as her new Chancellor as well as backtracking on her promise of avoiding an £18bn corporate tax rise, which was a prominent feature of her Prime Ministerial campaign. New chancellor Hunt is to present a medium-term plan for the UK to cut its debt by Halloween, with predictions that this will include more reversals on other tax cuts that were a part of the budget.

Brakes pressed on Big Banks

Some of the biggest US Investment banks reported their quarterly earnings on Friday, with JP Morgan reporting net income of $9.7bn for Q3, a 17% decrease year on year. Their slowdown in investment banking income was partially offset by higher-than-expected lending revenues via federal reserve interest rate hikes, though the company are holding a $1.5bn reserve provision for bad debts. In a statement to analysts, chief executive Jaime Dimon stated factors such as inflation, higher rates, war, and oil “will have a strain on future numbers”. The banks shares finished up 1.7% at the end of the day.

Further down the street, Morgan Stanley reported year on year decline in net income of 30%, its longest run of declines in three years, as it suffers from a dry up in investment banking fees. Other big names followed the same trend, with Wells Fargo reporting annual decline of 31% in net profit, and Citi Bank declining 25%.

Tech Takeaways

Twitter has stated that Elon Musk is under investigation by US authorities over failure to hand over legal disclosure documents of his 9.2% holding (over the 5% threshold) in Twitter on time back in April. The ongoing battle between Musk and twitter took a turn last week as he announced that he wishes to buy the company at the initially agreed price, after previously attempting to pull out of the deal. The two parties have a deadline of October 28th to come to an agreement or else the deal will go to trial.

Apple has announced a no fee, high yield savings account service in partnership with Goldman Sachs to its credit card customers. This adds to Apples portfolio of financial services that includes Apple pay, and its buy now pay later service ‘Apple pay later’. The company are keen to take advantage of their 1 billion + customer base in financial services. The interest on the new savings account was undisclosed.

Netflix has unveiled plans to bring a cheaper, advertising backed streaming option to its customers, which would reduce the monthly subscription cost to $6.99. The company have historically opposed advertising backed streaming, but that has changed this year as once red-hot subscriber growth has turned into decline. Netflix COO Greg Pieters said that the new service that launches next month will “build a significant incremental revenue and profit stream.”

Thanks for reading, have a good week!

Patrick

What is The Best Programming Language for Beginners?

Hello, the spark’s followers, it’s Giuseppe here, and today we’re gonna deep into quantitative finance Tools.

People always get confused by the bunch of software available on the market; for this reason, it’s good to list them and provide a brief explanation.

First, it’s helpful to talk about the utility of such a tool and why excel is not enough to provide significant results.

It’s widely known that excel is the king of the company process, with 70% of the share market, according to Bloomberg. Unfortunately, with the Big data era, Microsoft’s tool seems too old to accomplish certain types of analysis or tasks due to the increasing amount of data.

Hence the need for reliable, efficient and fast programming tools.

What are the best programming languages for Finance in 2022?

1) Python

According to Google Searches, python is the most common programming language in Finance world. HackerRank classifies Python as the third most-requested Language in Finance interviews and the first in Fintech.

Python’s functionality has made it useful in Machine Learning, Data Science, and AI, driving the critical process in Financial Services.

What makes Python so widespread?

1) The usability of python comes from its simple, flexible and easy coding languages to learn, especially for beginners.

2) The infinite amount of open-source packages downloadable

3) The possibility to build a project from scratch and save it as a Package/Library.

To conclude, it’s clear that Python is the best programming language for Quantitative Finance.

2) Java

According to HackerRank, Java is the top-ranked programming language in Finance.

Java’s popularity in banking and Finance derives from its widespread usability, which also mirrors its general cross-industry popularity; in fact, Java can be used to write programs and apps for various purposes, such as banking apps, trading algorithms and eCommerce.

What are java's strength points?

1) The coding language has a nice learning curve and has been widespread for many years in the industry.

2) The program can handle a significant amount of data.

3) “Write one, Run everywhere” platform where any line of code written on java can run on any machine. This feature reduces the bank’s portability problem, unifying the job under a unique code.

To summarise, it’s clear how Java is in the top 3 programming languages for resilience through years and innovation.

3) C++

The critical feature of this language is based on the execution speed, which is a high request inside the banking process and generally for all that concern Quantitative Applications.

C++ is one of the oldest codes on the world scene, and it was created in the 1970s with the willingness to add OOP (Object Oriented Programming) to C#.

The main challenges in this Program arise from the complicated code, which makes the learning curve difficult and steep.

What makes C++ reliable as a tool?

● C++ competitive edge derives from its execution speed throughout the whole process. This speed is possible because C++ is a compiled language, meaning that a compiler directly translates its code to machine language. Since the computer requires less translation to understand the code, there’s a boost in speed.

To summarise, C++ is a more elitist code for a more experienced and skilled user.

Thanks for reading this week’s Quant Trading article!

Giuseppe

Disclaimer

This communication is for informational and educational purposes only and should not be taken nor used as investment advice, as a personal recommendation, or solicitation to buy or sell any financial instrument. This material has been prepared without considering any particular recipient’s investment objectives or financial situation and has not been prepared in accordance with the legal and regulatory requirements to promote independent research. Any references to past or future performance of a financial instrument, index or structured product are not, and should not be taken as, a reliable indicator of future performance. I assume no liability as to the accuracy or completeness of the content of this publication.

Which Programming Language Should You Learn?