PROGRAMMING NOTE

As this hits your inbox, I should be at the end of a transatlantic flight from Milan to Boston with two kids under the age of four… so hopefully it works out — or the plane’s empty : )

I’ll be in the states for two weeks visiting friends and family in and around Rhode Island, where I grew up. I’ll be in transit quite a bit but I’ll be doing my best to stay on top of all things AI + Wall Street.

Happy 4th of July! 🇺🇸 

ADOPTION

BNY Now Employs Dozens of “Digital Workers”

Meet the new (AI) guy, from the WSJ:

The story notes that humans are still in the loop.

The AI agents have their own logins and have access to the same tools as human staff, so they can operate independently such as writing code, and submitting fixes for approval. BNY says it’s working on giving them even more capabilities, including access to email and Teams, so they can proactively flag problems they can’t solve. The bank says it’s still hiring top human talent, while building out their digital workers.

Takeaway: I'm not sure if having digital colleagues will be ubiquitous in six months as BNY’s CIO suggests, but I think this is directionally right. We already have automations for perfunctory tasks like filing expense reports. This seems like the next step in that trend.

• Side note: I'm particularly looking forward to New Yorker-type cartoons based on how we're all going to interact with our new digital friends. (And yes I made this with AI).

AI Engineers are in High Demand

If you’re an AI engineer, I imagine you’ve had to deactivate your LinkedIn account because it’s blown up. Meta is supposedly offering certain AI engineers $100 million pay packages. I would imagine there’s like a handful of folks in the world who can command that kind of salary.

From Financial News:

Top engineering roles at hedge funds are commanding massive salaries. Craig Whiting, a trading technology headhunter in London, has been posting on this trend on LinkedIn over the last few months. He said in May that these jobs are crossing into seven-figure territory without management duties. I asked him what specific AI skills funds are looking for but couldn’t say because of an NDA. He says there will be fewer jobs in trading tech but they will pay dramatically more.

Takeaway: AI is eroding entry-level work but is creating demand for the very best engineers.

• Related: AI Is Changing the Craft of Coding, for Better and Worse (Bloomberg)

AI is not leading to mass layoffs

You would think that the above stories and some of these headlines, “AI could wipe out entire Wall Street teams,” that we were in a full-blown automated recession, but no.

Takeaway: Maybe AI layoffs are coming but they’ve not shown up yet. I’m skeptical it will lead to massive job cuts. Adoption has been framed as: “AI is the new way. Get out with the old” when tech adoption is typically a bit of both.

• Related: A team of engineers saved Morgan Stanley more than 280,000 hours this year. The bank says its tool won't take jobs. (Business Insider)

REGULATION

Senate Strips Measure Blocking AI State Rules

The biggest regulatory story of the last few weeks and months has been how the pending federal tax bill would have barred states from regulating AI at the state level.

That storyline ended this week.

The Senate voted 99-1 to remove the provision, pushing back against tech companies like Microsoft and Meta that were seeking to prevent a patchwork of state-level AI regulations.

The vote preserves states' ability to pass their own AI laws, with over 1,000 AI bills already proposed at the state level while Congress has yet to pass comprehensive federal AI regulation.

Takeaway: We’re amid a massive technology change and regulation is where it typically is: behind. AI companies will likely now push the federal government to come up with their own framework rather than deal with a patchwork of regulations.

AI To Create Significant Changes for Workers: Powell

Fed chair Powell told lawmakers that AI is not producing meaningful changes to the economy right now, but it has the “potential to make really dramatic changes.” (FedScoop)

Here's a quick three-minute recap of Powell on AI’s impact on the economy. He shares some thoughtful comments on how AI is going to be transformative, but how and when it shows up in the economy is anyone's guess.

ICYMI PODCAST

Beyond Positive, Negative, Neutral in Sentiment Analysis

Sentiment analysis has been on Wall Street for decades, but I just learned that it generally categorizes news as positive, neutral, or negative, which, when you think about it, is kind of wild. All the headlines, all the news, all the chaos of the world, reduced to just three categories…?

But, like a lot of things we cover in this newsletter, AI is changing that.

In this episode of the Alpha Intelligence Podcast, I talk with my co-host, Francesco Fabozzi—just him, for the first time—about his research into more nuanced sentiment scoring. Instead of boiling everything down to three categories, we explore how AI can assign more granular sentiment values that better reflect market signals.

🎧️ Listen: YouTube, Spotify

CALENDAR

Upcoming AI + Finance Conferences

I’ve put together a calendar of upcoming AI and finance conferences. Click on the image below to access links and event descriptions. Let me know if I’ve missed any and I’ll add them. Thanks!

WHAT ELSE I’M READING

• We Are Still Underreacting on AI (Pete Buttigieg’s Substack)

• Hedge fund technology jobs are a nightmare: "You're better off at a mutual fund" (eFinancialCareers)

• Unlock Signals in Noisy Markets: Finance Meets Foundation Models (Gradient Flow Newsletter)

• How Amazon, Duolingo, Shopify, and Others Say AI Will Reshape Staffing (Adweek)

• A.I. Frenzy Escalates as OpenAI, Amazon and Meta Supersize Spending (NYTimes)

• Sherry Marcus Joins Tradeweb to Lead AI Strategy (Financial Tech Report)