The Inside Brief In Conversation with Dmitry Balyasny

Demetri, welcome to Abu Dhabi.

Thank you so much.

Uh, you're very familiar with the geography, a new hub. It is Abu Dhabi. You've applied for the permission. Why now? Why scale up now in Abu Dhabi?

I think it's a really opportune time. you could feel the energy, the commitment of the leadership to really building a world-class financial center. Um, for us, we've already had a successful office in Dubai. So, it's a natural regional expansion. Uh, and there's a lot of talent from Europe, from Asia, uh, looking to take advantage of the combination of the growth, the lifestyle, the infrastructure, uh, and the resources here.

So, we're excited to be part of it. Tell me, has your has your phone been sort of popping on WhatsApp with uh London London macro traders from Notting Hill that want to exit this and come to the UAE?

Yeah, actually uh of our existing regional office, the largest concentration of traders are macro traders. Uh it's a very good time zone for macro to where you can pick up a lot of the different time zones around the world without being up all night. Uh so that's the largest concentration we've seen but we also have uh long short and commodities and systematic and other strategies. Uh and we're looking to do the same and uh really grow it significantly in Abu Dhabi.

If we look at the ecosystem in New York, it's historic, it's deep likewise in London.

If you look at the building out of the talent pool here, how would you describe where we are

and the timeline to something which makes it very robust.

Well, I think it's it's obviously earlier stage than somewhere like New York or London, but I think the trajectory is is very positive. So to build a real financial center, you need to deliver on a number of different things. Uh and I think Abu Dhabi has those ingredients. So capital obviously uh that traction for talent to be in a place where there is the commitment to AI and technology there is infrastructure there's great lifestyle it's a wonderful place to live uh combined with the draw of the capital I think you have the raw ingredients to really build that significant presence over time but you know all these things take a little bit of time

how important this kind of my time in the DIC and here at ADGM it's very reminiscent of the early 90s in London. It's a community. It's accessible. You walk around. You can actually come up and talk to CEOs like you as you pass by.

That accessibility is something I think that is still very unique

and it's something I think that they want to try and build on. How important is that for the flow of information and let's say relationship?

I I think that's very helpful and for us uh we pride ourselves and our firm on being like a culturally collaborative place. Yep.

Um, so we certainly reward individual performance, but we work as a team. And so being in a place where you could leverage off of the tech infrastructure, the AI growth, the collaboration, being private and public markets, the access to different top management teams that come through like that's certainly uh very helpful.

How competitive is it to get a job at at your shop? I know it is very competitive, but for the young people in terms of going through college applying for an internship with you, what do the numbers look like?

I think we had 30,000 applications and we accepted 120 interns last year. So, it's about 0.5% or less and we hired half of those at the end of the internship.

You've worked at the cold face. You you've had sort of a rough and tumble of markets all your life. What do you look for in an intern first of all and then we'll talk about the experienced hires? I think the first thing is like a a real passion to be in this industry. Uh it's a very challenging and competitive place.

So if you're just kind of interviewing because you heard it's cool and you can make money like you're not going to have the the uh the grit and perseverance to get through all the ups and downs. So I think it starts with that. Uh and then you know there's a whole host of technical things that we try to differentiate on. So I [snorts] was with MBA at the weekend and they've got their AI agent on on the investment committee. It's called Maya.

You've got no bank with Claude from Anthropic. What are you doing at the investment committee in terms of integrating AI?

So we use it throughout the firm. Uh not just at the investment committee level, but over 90% of the firm uses it. So we have 2500 people globally and 90% usage. So it's it's quite a lot. Uh we've built over 2,000 uh automated agents that are running like 5,000 tasks uh daily across the business.

So you can automate it to look for like very specific things for and those differ by investment team or investment professional what they're looking for. But the way I like to think about it, it's like what would you do if you had a thousand analysts at your disposal? Like how would you direct them, right? And you can't really do that with people. Even if you could find a thousand analysts and employ them for your team, you can't manage it.

But with AI, you you can. And so you can give them very specific things to track, you know, 24/7 and you're constantly getting alerts and reports when something triggers and some of those things lead to really good trades.

So that's about intellectual productivity uplift. The thought that goes through my mind if we go back to how did you learn? How did I learn? And I learned through the most tragic mistakes trading the nick badly taking delivery of tankers of oil. I mean I was a nightmare as a trader, a much better broker.

But will AI rob the next generation of macro traders of those rough experiences? I think that form certainly me and I know from history formed you.

I don't think so. I I look at it as an adjunct of something that helps you be more productive from a research standpoint where you can integrate a lot more information. you can do uh deeper work much faster, right? Like as an example, we put a uh a a a deep like research agent that we have that takes like hours to analyze a more complicated question to work on something and it comes back with an answer in hours where if you gave that to a person like that would be weeks of of work and the answer probably be less complete when it comes back. So, I think it just makes you hopefully a better, more thoughtful decision maker.

Is that what it's done for you?

Yeah, I think so. Yeah.

Um, let's jog along to 2026. You're still at the cold face. You trade risk and that's why you have a packed audience in here today as well as as your your knowledge. If I said to you, where is the alpha for 2026? What would you say?

I don't know that there's any particular elephant. I think the the main thing to really watch is how the AI trade unfolds. Like that's certainly been the underpinning of a lot of the growth and a lot of the positive performance in in many markets. Uh we're still bullish on the overall environment, but that's definitely the thing to watch. I think from a macro standpoint, like the political tensions that we came into this year with, I think are better than where they were.

I think US and China are in a better place. I think US policy and trade is in a better place. And I think the markets have gotten more used to the volatility and are kind of tempering their response to each individual change. So it feels like a little bit uh you know more certain or at least the the range of outcomes is probably a little bit tighter than it was a year ago. Uh but you know AI is evolving fast and you know we'll see how that goes.

And there's a great debate in the AI world. It depends whether you whether you speak to Jack Selby. I was with him in Singapore a couple of weeks ago. And he warned about the incineration of cash.

Yeah.

Through to I I've got other economists saying to me, get ready for a paradigm shift um back of the '9s in terms of inflation and in terms of productivity. Have you have you come down on one side or another? Is there a risk of incineration? I think most of these like very uh far out forecasts as they get like a lot of headlines, but if you look at where inflation is versus the long run uh average or you look at where 10ear rates are in the US versus the average, there hasn't really been much change, right? And so I think there's a lot of counterbalancing forces on these things.

Um, and usually when someone looks just at one side, you can make an outlandish prediction, but I don't really see like huge change in the near term from those.

I caught up with the chief economist from Pym yesterday

and he said what we lack, not me, your world, what what what traders, macro traders, and the market lacks. We lack imagination. We don't lack memory, but we lack imagination on the scale of the tale risks that are out there. If you had to come down on the most significant tail risk for 2026, what would that be?

Well, I I I think like a AI surprise would probably be the the largest one that that's realistic uh in my mind where either uh there's like a fall off in a demand and the hyperscalers change their spending plans uh because they're not getting the monetization that they want and so far we haven't seen that. They've actually, you know, accelerated. uh or on the flip side where it really takes off, you know, faster than expected and you start to get job losses before people are uh kind of retrained for other opportunities and it sort of happens where there's not much change and then there's a lot of change all at once. So I think either of those scenarios could create some instability, but I think the more likely outcome is it kind of continues to grow that the way it has. It's interesting when when we look at volatility, pure volatility measures, let's say in quoted equities or in the bond markets, you're looking at the lows for this year, you're looking at the lowest in a couple of years in the bond market.

Um, a lot of people have said to me, they're actively hedging their dollar, their US dollar exposure. It's expensive, but they're doing it. Um, if there was a hedge, a king hedge of hedges

for you at a macro level, what would that be?

Well, we we don't do that so much. So, we have a macro business that runs about a quarter of our AUM and part of that business, they make bets on uh FX and there's a lot of different relative value trades within FX and uh they rotate quite a bit. So again, if you look at the dollar value, um coming into this year, it was kind of uh expected to be a very strong currency. Then three months later, you know, nobody wanted it. But if you kind of look at where it is today, it's kind of back to where it was 18 months ago.

So again, like when you extrapolate the short-term changes, you can make large forecasts, but in reality, I think it continues to be the world's reserve currency. the US continues to be, you know, the dominant uh business uh country. Uh so I don't think it's going anywhere.

And look, obviously you've pivoted, shifted, I'd like your superlative in terms of from equity slightly more to fixed income is is my understanding. Bonds have had a hell of a year, up 6%. Uh one of the best returning uh years for bonds in a while. When you look at the bond markets, what is the most significant tail risk there? Is it an agitated set of Fed cuts next year, let's say, or or what is it that could unse the bond markets are always concerned with levels of debt?

And I think that's the right thing to be concerned about. Whether you look at Europe or you look at the US or you look at Japan or you look at China, there's a lot of debt in different forms all over the world. And so you need enough economic growth uh and innovation to be able to grow your way out of that. Uh because you certainly can't tax your way out of it as as countries are finding out. and and again the risk of some sort of some kind of debt exogenous shock is that something that that that you spend time thinking about?

For sure. I mean I I mean the it starts with having really good uh risk takers on your team, right? So uh as a hedge fund like our goal is to have the world's best risk takers in every strategy uh you know under our roof, right? And so when you get these events like you want to be able to navigate them and sometimes you profit from them initially, sometimes you lose initially, but hopefully you manage the risk well and you could take advantage of the resulting dislocations. And that's what we saw this year.

If you have like good diversification earlier in the year, you had a draw down in equities, but macro was doing well, then you had a draw down in macro, but equities was doing well. And over the course of time, hopefully all your strategies work, but they don't correlate in any given month. And that gives you the ability to withstand the volatility and take advantage of the opportunities.

You've faced off a number of cycles over your time. You've dealt with a huge number of exogenous shocks.

Tell this room how to cope with and to manage the best.

Yeah.

In the in this world, draw on your experience.

Again, again, the first thing is you have to have like the best risk takers possible managing your capital, right? So, it starts with that. The second thing is you want to have like really good solid risk parameters around each of those uh teams, right? Or allocations where you know worst case scenario how much do you lose in every particular uh area.

Yeah.

And if you do a good job playing defense during those periods, then you're in a position to play offense as the markets stabilize and you could take advantage of the dislocations. But if you don't play good defense to begin with, you won't be around to play offense. I saved you the best question to last, which is other people come here and they sell portions of their business. They shall remain nameless. I think you know who I'm talking about.

Have you any interest in selling any portion of that company? I've just met your daughter backstage. She's now part of the company. I've met the error. Have you any interest in selling a portion of the company?

No, we're we're not we're not really looking to do that today. Like we're growing rapidly and developing our business globally. Uh and we're all partner uh owned. So we have 20 partners today which is a combination of portfolio managers and management uh folks on the team uh which is a real distinguishing you know part of our firm where the lead investors can also help shape the business strategies that they're in. And we're really looking to add more partners and grow the business over time and continue to perform for our clients.

Dmitri, we're a bit like the US budget. We're flashing red. We're overtime. He's saved from the next question. Dmitri Balani in conversation.

Thank you very much, ladies and gentlemen. Demetri,

thank you. Appreciate it.