2025 Q2 Market Report
Last quarter we certainly didn’t anticipate the stock market hitting new highs before Q2, but that’s what happened last week! Never minding the longer-term economic implications of the rapidly shifting political landscape, the immediate threat of evaporating wealth appears to be off the table – for now.
Where does that leave us? The job market remains very challenging, and it’s been that way for a long time. Clearly structural issues are at play. What are they? 1) Remote work during Covid fed into the continued push offshore 2) Banks simply aren’t expanding front-office staff due to reduced risk taking 3) We are in a prolonged ebb preceding the AI tsunami that will crash down on us in the coming years.
I don’t pretend to be able to enumerate how #3 is unfolding and what the tsunami will look like. There’s more disagreement than agreement over what the impact will be, and we are at the cusp of a transformation that will dwarf the Industrial Revolution IMO. In the more immediate term, it feels like we’re in a lull preceding the storm, as organizations figure out major strategy initiatives and feel their way through major changes. A Morgan Stanley MD last week noted, “We approach new technology cautiously,” which isn’t surprising from a big bank. The profile of the firm’s head of AI, appointed last year, emphasizes the point that these firms are more reactive than proactive. And while Goldman Sachs introduced Devin last week, their new “AI employee,” my sources tell me the tool is very crude and not nearly what it could be due to highly restricted training data. Baby steps.
Dario Amodei, CEO of Anthropic, said AI could eliminate half of all entry-level white-collar jobs within the next five years, Sam Altman of OpenAI emphatically takes the other side. “The world wants way more code than can get written right now.” He predicts companies will ultimately be making decisions to hire more coders with the idea of “producing 100x as much product with 10x as many employees.” Whatever the case, it won’t happen overnight, but the specter of this paradigm shift is already affecting all of us as it touches so many big decisions.
Fundamentals Still Matter
My network consistently raves about how much more they get done now with the help of AI tools. That’s no surprise, but I find it pretty amazing just how dramatic the reported productivity gains are. Looking for figures, I found productivity gains from -20 – 100% (yes, -20) - an indication of how hard it is to measure productivity gains more than anything else. But the stories are compelling. These gains are very real.
How will AI change the interview process? Goodbye Leetcode hello Vibe Coding! Not so fast – I have to believe that hiring managers will now stress software engineers’ knowledge of fundamentals even more rigorously now that AI’s are spitting out much of the code.
Challenging Market – Another Data Point
A Harvard mathematics PhD (please submit your limerick) with impeccable credentials wrote last week:
“My [job search] experience this year was extremely difficult compared to the last few years.”
It’s one data point, but this is a candidate who we’d never expect to have a challenging time finding his next role, and he found it to be very stressful this year.
4 Year Non-competes
Because 2 years wasn’t enough, Florida now allows up to 4 year non-competes. Be careful what you sign. Our experience is that a non-compete greater than 1-year significantly restricts our clients’ interest, even for the most compelling candidates. This reluctance exists even if the full duration may not be enforced, as companies simply don’t want to deal with the unknown.
Multimillion Payday
While the market has been unfavorable for quite some time, it’s always the case that the very best talent continues to be in high demand. The big AI players OpenAI, Anthropic, Perplexity AI, et al along with the AI arms of Big Tech firms Google, Meta, etc. are driving the price competition for top quants and engineers. $40 billion covers a lot of million-dollar salaries! Business Insider published a great article on the topic today, OpenAI and other AI players are targeting Wall Street's quant stars with multimillion-dollar paydays (apologies, pay wall). But it’s not like Wall Street can’t compete. Gregoire Deletang joined Squarepoint from Google DeepMind last year, and Goldman hired Daniel Marcu from Amazon. That said, a quick search on LinkedIn indicates that the big AI players are currently winning this battle, so it's likely that Wall Street will have to up the ante.
Tough Market for New Grads
The job market for new grads is particularly challenging currently. Fortune reports:
New grad unemployment 5.8% vs 4.2% for the general population
Three main factors:
Quit rates have fallen
Tariff uncertainty
AI reality (not the pause highlighted above, but actual displacement)
Many of the tasks that used to serve as a training ground for junior employees, like data entry, research, and handling basic customer or employee requests, are already being delegated to AI. Technical fields like computer science and finance are getting hit especially hard. While employment for people older than 27 in computer science and mathematical occupations has grown a modest 0.8% since 2022, employment for those aged 22-27, or recent graduates, has declined by 8%, according to a May report from labor market research firm Oxford Economics. That’s compared to college graduates in all other occupations, who saw 2% employment gains.
“We concluded that a high adoption rate by information companies along with the sheer employment declines in these roles since 2022 suggested some displacement effect from AI,” the report reads.
Current Priorities
SE: Software Engineer
QD: Quantitative Developer
QR: Quantitative Researcher
HF: Hedge Fund
FinTech
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Blockchain Architect – In-depth knowledge of electronic exchanges
Cloud Engineer – Cloud networking/Software engineering
Data/ML Engineer – Data engineering/Software engineering/ML engineering
Senior SE – Data & AI – Python and C++/Java
Buy Side
Senior C++ SE – Electronic trading
Senior Java SE – Post Trade
Data Scientist – Market Intelligence/Alt Data
Data Engineer – Alt Data
Senior Data Engineer – Alt Data
UI Engineer – Typescript/React – Market Intelligence
C++/Python SE – Systematic Macro
DevOps Engineer – CI/CD
QR Equity StatArb – Futures
QD Equity Derivatives – Python
Data Engineer – C# - Macro Data
ML Engineer – GenAI Technology
Full-stack Engineer – GenAI Technology
Lead UI Engineer – Typescript/React
GenAI Adoption/Integration Engineer
QD - PM in training – San Francisco
QR – Factor and Behavioral Modeling
SE/QD – Refining QR Code
Data Engineer – Dallas
Configuration Management Architect – Systems Engineering
HPC Compute/ML/Cloud Infra – Systems Engineering
Platform Specialist HPC – Systems Engineering
Platform Specialist ULL – Systems Engineering
Data Scientist – QR
AI/ML – QR
QR – low-latency trading
QR – medium frequency – Futures
Sell Side
Nothing – nothing!