The Big Unwind Hits Investment Banking

[marmar]

The Big Unwind Hits Investment Banking
by Wolf Richter • March 24, 2016


The meme has been that central-bank-imposed low interest rates and negative interest rates are killing bank earnings, and that oil-and-gas loan loss reserves maul what’s left of these earnings. But it’s tough for banking all around, as the global QE bonanza is bumping into real-world limits. And the Big Unwind has started.

For investment banking revenues, a key income source for “systemically important” banks, it has been one heck of a terrible first quarter, according to Dealogic’s preliminary Global IB Strategy Review. And the damage will show up in earnings reports soon.

If, in the list of fee mayhem below, you frequently stumble across phrases like “plunged,” “plummeted,” “lowest since Q1 2009” when the bond market imploded during the Financial Crisis, or “lowest since Q1 2001” when the dotcom and IPO bubble imploded, it’s because that’s the kind of quarter it has been for investment banks and their lifeblood: extracting big-fat fees coming and going.

.....(snip).....

Barring a financial crisis, it is hard to imagine a worse quarter for the big banks engaged in investment banking. And yet, it’s just the beginning. Banks have been at the epicenter of the great credit bubble. They’ve benefited from it. They’ve sucked it dry. They’ve become bigger and fatter and paid out record bonuses for years. But now the Great Unwind has arrived. .........(more)

http://wolfstreet.com/2016/03/24/the-big-unwind-of-investment-banking/

[Hydra]

1. I've been waiting for the unwinding to happen

The "recovery" has no engine behind it. It was destined to fail almost as soon as it was put in place.

[SCantiGOP]

2. ?? 8 years

That is definition of failing as soon as it was put in place?

[Hydra]

3. I know this might be a difficult concept for our short term memory culture

Last edited Tue Mar 29, 2016, 07:25 PM - Edit history (1)

But when a process or a policy is put in place, it can be kept in place for years before it reaches its logical conclusion. ISIS didn't start the moment we illegally invaded Iraq, global warming didn't start billion dollar fires the second we found coal to burn, and Fukishima didn't melt down the day after they flipped the switch.

We were supposed to have a green jobs revolution or something else to take the place of the housing/construction bubble and the previous tech bubble. It never happened.

What's the plan, now? Everything is peachy? Pray?

edit: typo

[ret5hd]

4. And Hydra drops the mic.

Good job.

[Hydra]

5. Thank you!

Embarrassed about the typo, but they plague me :p

[beardown]

6. We got QE and stock buyback bubbles

As with all bubbles and as you noted, they take time to grow and then pop.