So how bad will the second quarter be for the top Wall Street banks? We'll know next month. For a glimpse, Breakingviews turned to the second quarter report from mid-market powerhouse Jefferies Group and concluded that the view of a dismal second quarter may be well founded.

Jefferies saw fixed-income revenues tumble 30 percent sequentially. That in and of itself is cause for worry. At Jefferies, a decent performance on the mergers and acquisitions side of the house was enough to almost completely offset the losses. But for the top banks, offsetting a downturn in fixed-income revenues will not be so easily accomplished.

"Take Goldman Sachs, for example, which reports earnings next month. Its fixed-income traders regularly take in three to five times as much revenue as their investment banking brethren. Applying the shifting fortunes at Jefferies to Goldman's operations would leave a revenue shortfall of as much as $2.3 billion in the second quarter compared with the first. JPMorgan Chase, meanwhile, would come up almost $1.5 billion short. That wouldn't just dent earnings. After several quarters of lackluster results, it would also lend weight to the argument that the heady trading profits banks enjoyed in 2009 isn't coming back any time soon. That would in turn increase the pressure on banks to shed staff."

We are indeed seeing more people predict that big staff reductions are on the way, to complement the stealth reductions that may be underway now.

For more:
- here's the article

Related articles:
Stealth layoffs might hit Wall Street firms   
Morgan Stanley, "worth more dead than alive"