More Layoffs Coming in Financial Markets

EconMatters's picture

By EconMatters




Trading: State of the Union


I was visiting a large Oil trading floor last year, and they were having their big state of the union town hall on the floor and the CEO of the group that trading and marketing rolled up into talked about the dying volatility in general saying that they could hold on for a couple more years with this level of volatility, but if this continued for 5 or 6 years they were in trouble, and would have to find new ways of making money, i.e., new business models for trading and marketing. 


Industry Layoffs


Last week ING and SOCGEN both announced significant layoffs despite the rest of the economy seeing a slight improvement over the last 12 months. CITI has already restructured, and promised more layoffs in the future, and J.P. Morgan announced substantial job cuts in their equities division on Friday.


Dead Markets


Just watch markets lately and one realizes rather fast that more job cuts are on the way, and in a major way all across the spectrum from financial analysts, stock analysts, traders in most products, back office support staff, and management.


More Layoffs Inevitable


I would say that all firms probably need to cut staff by at least 1/3 over the next two years, with current and trending market dynamics in the industry over the last five years, these positions are just not needed today. Frankly, these jobs are dead weight on firms’ balance sheets, and it is amazing how long it has taken firms to reduce staff given the evolution in financial markets.


Changing Market Dynamics


First of all be sorry for what you wish for in fed induced liquidity taking all the volatility out of markets; and trading profits are sure to decline in trading shops all along the spectrum of products. 


Next, with the evolution of computer trading and computer driven Algos not only has this reduced volatility, but traders’ jobs in the process. 


Third, with highly correlated markets and more money flowing into ETFs, stock and commodity differentiation is less relevant than in the past requiring fewer analysts. 


Fourth, with major consolidation in the industry due to the collapse of Bear Stearns, Lehman Brothers and Merrill Lynch this has reduced the overall size of market competition, shrinking volatility further, and reducing overall trading volume. 


Fifthly, the overall sluggishness of the global economy where many countries have debt problems and are still in the deleveraging phase has severally shrunken GDP growth which hampers private capital infusion into businesses which hurt the IPO and investment banking markets for the financial industry. 


And finally as the chart of the 10-year note versus the S&P 500 futures contract illustrates asset class differentiation over the last five years has reduced significantly requiring less investment expertise than in the past. All of which is bad for jobs in an industry struggling to redefine itself after the financial crisis.


Revive Markets=More Industry Jobs


In watching financial markets there are many products which are simply deteriorating before my eyes from  a volume, volatility and profitability standpoint, and the more of these markets that pop up each year means that many more job cuts in the industry are on the horizon. 



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BlueCheeseBandit's picture


I think all layoffs should be required to watch this as part of their exit counseling:

Jump you fuckers! Death to eunuchs!

rtalcott's picture

GFN...Good Fucking News...more non-productive MFers not getting paid...




rlouis's picture

Expecting Wells Fargo to announce layoffs in their mortgage (refi) processing division any day.

Clowns on Acid's picture

The investment banks know that the gig is up. What Greenspan said essentially "the stock market is the economy" is well known to top management. They are moving slowly but with certainty.
El Erian says that this is "not a Lehman moment", I think it is....the only difference is that this time, the banks are prepared for it.
The Fed under Bernanke has liquified the markets just long enough for the banks to get their balance sheets "in order".
It's time for the Fed to let the air out oif the balloon slowly. It won't work....

geno-econ's picture

But Greenspan said on CNBC that as long as the stock market stays bouyant, despite the looming sequester, everything will be just fine.  If the stock market tanks, there will be pain and anguish for the entire world economy.  Difficult to imagine stock market growing any further with indicators trending lower----unless Greenspan's successor keeps printing and Wash. keeps spending forestalling the inevitable 

orangegeek's picture

Post the article that states Barry is laying off his bloated legion of unionized government workers.


That's news.


Finance hires and fires all day long all the time.

f16hoser's picture

Boo Hoo Hoo. Champaign anyone? They were toasting the March on Wall Street movement from the balconies as I recall. What goes around comes around......



P.s. FUCK 'em

joego1's picture

Maybe they can move to China and get jobs as net tenders at Foxcon.

chunga's picture


The more the better.

moneybots's picture

"CITI has already restructured, and promised more layoffs in the future, and J.P. Morgan announced substantial job cuts in their equities division on Friday."


Some just desserts for those who are ripping off the public.


"Revive Markets=More Industry Jobs"

If you go back to early 2010 and draw a curving line forward under the lows on the chart, you can see the developing parabolic arc.  Math says that all parabolics fail.

NoWayJose's picture

Algorithms don't need year end bonus checks

Atlantis Consigliore's picture

shut Fraud Street and the ANAL-ysts and fraudsters, and trader front runners, and pimp brokers, down, DOWN.

shut it all down. 

CheapBastard's picture

"Cry me a River...."


If these guys are smart they could grab a $722,000 trailer home in Culver City before all The Alien Hoard buys them up.

JamesBond's picture

parent's basement bitchez