Wall Street Journal

Financial firms are using words such as “grim” to describe the trading environment during the first quarter, typically a very active period on Wall Street trading desks. Some analysts predict Wall Street’s five biggest banks will report trading revenue of $19.1 billion for Q1, down 16% from a year ago. They see the quarter mirroring the discouraging final months of 2015, when worries over economic growth and commodities prices caused trading activity and revenue to slump.

Morgan Stanley, whose shares on Tuesday fell 1.9%, reports first-quarter revenue this year has tracked close to last year’s fourth quarter. Jefferies Group swung to a net loss of $166.8 million during its first quarter, which ended Feb. 29, as trading revenue tumbled and the firm took two unusual hits to its otherwise solid equities-trading business. For the same period last year, the firm reported a profit of $12.9 million. Citigroup last week reported revenue from equities and fixed-income trading likely fell 15% in the first quarter. Among the culprits of the slump are corporate clients who delayed stock offerings due to volatile markets.

Financial Times

James Chessen, chief economist of the American Bankers Association, has urged the Federal Reserve to raise rates. Most economists, though, expect the Federal Open Market Committee will keep rates on hold when it concludes its meeting Wednesday, after raising them for the first time in nearly a decade in December. Chessen said increases need not be "aggressive or instant. But it needs to be a firm path.” Chessen assured the FT the ABA won’t lobby to raise rates, but will describe the consequences and impact of keeping rates “too low for too long.” Among those consequences: low rates have hit banks’ profits, pushing net interest margins to record lows. Chessen believes it is “highly unlikely” the Fed would go sub-zero, at least in the near future, which he said “would signal the economy was in very bad shape.”

New York Times

The Securities and Exchange Commission approved a return to investment banking for Steven Rattner, a high-profile financier who led the Obama administration’s overhaul of the auto industry. Acting on a request Rattner filed in 2013, the SEC this week approved Rattner associating with the investment banking division of Guggenheim Partners, after he was barred from some Wall Street jobs for two years in 2010. Rattner, the paper says, "did not appear inclined to take up the offer to affiliate himself with Guggenheim." Rattner was banned after settling civil charges, which were based on an investigation into kickbacks that involved the New York State Common Retirement Fund, while he was an executive at the Quadrangle Group. Rattner neither admitted nor denied wrongdoing. The order comes with several conditions, including: he would be required to meet every two weeks with Guggenheim’s compliance department to discuss his work, and he would not maintain customer accounts nor solicit or manage funds from public pensions. Rattner is currently chairman of Willett Advisors, a position he has held the past few years, where he manages the personal fortune of billionaire Michael Bloomberg.

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