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Fixed income trading slows to a crawl

If you’re a fixed income trader, you’ve probably had a fairly slow last couple of months. Initial FICC revenue totals have so far been lousy, and it may be an industry-wide problem.

Jefferies just reported that its fixed-income sales and trading revenue plummeted an astounding 88% year-over-year. Net income for the three months ending in August fell to $11.7 million from $70.2 million a year earlier. The news is worrisome for all of Wall Street as Jefferies often acts as a barometer for the industry as a whole.

The drop in FICC revenue put a hurting on Jefferies’ employees. Compensation and benefits expenses dropped 33% during last quarter. Expect that trend to continue across the Street.

J.P. Morgan analyst Kian Abouhossein believes that quarterly fixed income trading will be down 26% year-over-year. Barclays has signaled that they’re in trouble, and Deutsche Bank could be as well. However, execs at Morgan Stanley and J.P. Morgan said they expect trading revenue to be flat or down just a few percentage points. We’ll have to wait for a month to check on the accuracy of those predictions.

Jefferies Chief Executive Officer Richard Handler blamed much of the decline on the current interest rate environment. Not much changed on that front this week. Fed Chairman Ben Bernanke on Wednesday decided against tapering stimulus, and it’s still unclear when the Fed will wind down its $85 billion-a-month bond-buying program. The uncertainty is killing the bond market.

Happiest Investment Bank on the Street is Hiring (eFinancialCareers)

Large bulge bracket banks facing strict regulations have been forced to pare back their investment banking staff. Quietly, smaller private investment banks have been picking up the pieces and adding bankers to their payroll. Count Houlihan Lokey among this group.

Pay Disclosures (WSJ)

The SEC on Wednesday proposed new rules that would force public companies to disclose the pay gap between its chief executive and other employees. Expect many a loophole to be utilized as firms abide by this silly rule.

J.P. Morgan to Create ‘More Jobs Internally’ (eFinancialCareers)

Looking to catch a wave back to profitability and shore up capital to stem last year’s London Whale losses, J.P.Morgan Chase CEO Jamie Dimon vowed to rely less on the outsourcing that he blames for some woes and create more jobs internally.

Rocking Out Like a Banker (Business Insider)

Hundreds of former Lehman Brothers employees got together on Tuesday for a concert to benefit the 9/11 Memorial Fund Foundation. Check out the photos. As you would imagine, they look a lot more like bankers than rock stars. Oh, and not surprisingly, former Chief Executive Dick Fuld didn’t show up.

Hedge Funds Disciplined (NY Post)

Nearly two dozen hedge funds have been charged with stock manipulation for illegally shorting shares right before secondary offerings and then turning around days later and buying shares in the offering. Hedge fund D.E. Shaw has already settled.

Not Off the Hook Yet (DealBook)

With the five-year anniversary of Bernard Madoff's arrest looming, prosecutors have only two months left to file charges related to the Ponzi scheme. Authorities are reportedly looking into the roles played by Shana Madoff Swanson, Madoff's niece and a longtime executive at the firm, and Paul Konigsberg, an accountant who worked with the company.

Good to Be On Top (Universum)

Ernst & Young, Goldman Sachs and PricewaterhouseCoopers are among the top five most attractive employers to prospective candidates, according to a new survey.

Buzz Around the Office

Belly Flop (YouTube)

Generally speaking, viral videos involving fraternities and stupid stunts go viral for a reason: they end with injury or embarrassment. This one went viral because the guy absolutely nailed it.

List of the Day: HR Secrets

Human resources surely doesn’t tell you everything. Here’s what they are hiding.

  1. They much prefer to hire referrals. It takes the pressure off them.
  2. Internal candidates are often already lined up for jobs that must be posted.
  3. They hate desperate people.

(Source: AOL Jobs)

AUTHORBeecher Tuttle US Editor

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