Wall Street’s Profit Engines Slow Down

[Andy Nguyen]

After an unusually sharp slowdown in trading this summer, analysts are rethinking their profit forecasts for 2010.

The activities at the heart of what Wall Street does — selling and trading stocks and bonds, and advising on mergers — are running at levels well below where they were at this point last year, said Meredith Whitney, a bank analyst who was among the first to warn of the subprime mortgage disaster and its impact on big banks.

Wall Street’s Engines of Profit Are Slowing Down - NYTimes.com

 

[Joy Pathak]

Hedge Funds Are Running Out of Reasons to Exist: Matthew Lynn - Bloomberg

 

[Byron]

Nice read Joy, thanks. Thanks to the recession, the hedge fund industry is under a cloud now - there are naysayers for high frequency trading, even people calling for a ban on derivatives. Since there will always be people who want more money than they have - come another somewhat sustained period of growth, expectations on returns will again be higher, and there will be plenty of clever people coming up with alphas in clever ways (or atleast, that's the hope!). Hedge funds are here to stay, but they might go on vacation sometimes.

 

[latency]

there is no retail flow, retail pulled out of equities and funds en masse after the flash crash, so not much volume going through, there is not going to be any money to be made until there is more confidence in the economy and people put back money into equities. the volumes are so low even after accounting for the summer. looks like it is going to be bad for some time.