Wall Street banking revenue is in freefall, and here's why

Wall Street banks reported ugly quarters for FICC trading desks,which took a beating in a volatile market.

[url=http://www.cnbc.com/jon-marino/]Jon Marino[/url]| [url=http://twitter.com/JonMarino]@JonMarino[/url]

CNBC.com

Fixedincome, currencies and commodities trading declines hit [url=http://www.cnbc.com/wall-street/]Wall Street[/url] hard in a volatilefirst quarter.

[url=http://data.cnbc.com/quotes/GS]Goldman Sachs[/url] reportedfirst-quarter earnings Tuesday morning that while crossing a low bar also saw a47 percent year-over-year drop in fixed income, currencies and commodities, orFICC, to $1.66 billion. It was part of a report that showed revenue growthtumbling 40 percent, from $10.62 billion from the year-ago period to $6.34billion in the first three months of 2016.

Withgrowing uncertainty on the horizon in the second quarter, the FICC strugglecould continue. In part thanks to more central banks embracing negativeinterest rates, S&P Global Markets Intelligence equity analyst Kenneth Leonsaid more FICC pain could continue on Wall Street in 2016.

"If there were an area to come back, it would be equities trading first," he said.

[url=http://data.cnbc.com/quotes/MS]Morgan Stanley[/url] said Monday itstrading revenue from debt, currencies and commodities saw revenue plunge morethan 50 percent to $873 million.

Equitiestrading also slid year-over-year at each bank, but not nearly as much.

MorganStanley said in its earnings report that the drop reflects "lower levelsof client activity in rates and foreign exchange and a challenging creditenvironment," as well as the divestiture of commodity businesses.

Otherbanks that reported earnings last week saw their FICC desks plagued by similarproblems. FICC desks' challenges stem from a number of issues to start 2016:their relative strong performance in the first quarter a year ago, centralbanks' maintenance of low interest rates and international instability.

[url=http://data.cnbc.com/quotes/JPM]JPMorgan Chase[/url] reported a declineof 13 percent in fixed income markets and [url=http://data.cnbc.com/quotes/BAC]Bank of America[/url] said last week itsaw FICC fall 17 percent. Each saw equities trading businesses post a strongerquarter than their FICC businesses.

Bank ofAmerica CFO Paul Donofrio said he thinks the second quarter is starting off farbetter than the first, but that volatility still could remain ahead. The June23 vote in the U.K. on whether to exit the European Union could again vexmarkets.

"March felt, I think, a lot better than certainly January and February,"Donofrio saidlast week on the bank's earnings call, adding, on the Brexit, "there'sgoing to be volatility potentially around the vote and around any changes afterthe vote."

[url=http://data.cnbc.com/quotes/C]Citigroup[/url] also saw an 11percent drop in fixed income markets trading from the previous year, the bankannounced in its earnings. While Citi's FICC losses were lower than otherbanks', it saw greater losses in equities trading, an anomaly for the quarter.

2016 Q1 Summary

The only question regarding the current market is whether we call it bad, awful, or grim? In many respects it’s pretty grim:

Here is the boots on the ground picture of the job market: