Is PIMCO the First Domino to Fall?

Six years ago, Pimco was viewed as Wall Street’s savior. The company reportedly asked as many as 10 different banks to let their newly dismissed employees know about Pimco’s various job openings.

That strategy was unheard of, but it seemed like a good way to acquire new talent. If a company is growing, why not take advantage of those who are not?

Now the tables have turned and Pimco — which is struggling to maintain its position after losing Bill Gross — is the one that financial institutions are targeting. They have already taken $23 billion from a Pimco fund. Who knows — they might also lure away the company’s top talent.

If the financial losses keep up, massive layoffs are inevitable. But this may not be the only firm that’s headed for hard times.

Bloomberg data shows that while the buy side has grown over the past 20+ years, the sell side has experienced significant declines over the past 12 years. If the sell side performance continues to deteriorate, it could send Wall Street down a very negative path. Consequently, the dreaded “L” word — “layoffs” — could make a grand return.

There have been a couple of warning signs indicating that layoffs could be ahead, specifically a report from The Wall Street Journal. The report said that there is still a gap between trading revenue and employment. If the gap doesn’t improve, layoffs could strike by the year’s end.

That report was issued in June. Thus far, it doesn’t appear that any of the major layoffs have happened yet (not publicly, at least). And there are signs that the industry will persevere.

Nonetheless, you can’t blame job seekers (and those who are already employed) for worrying about the future. We’ve seen what happens when Wall Street hits hard times — no one wants to go through that again.

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