Latest news with #JohnsonAssociates
Yahoo
09-05-2025
- Business
- Yahoo
Trump tariffs could cost Wall Street its bonuses
Bonuses across almost all of Wall Street are on pace to be lower this year, a wild reversal compared to six months ago, when firms were more optimistic about bigger payouts in 2025. Most Wall Street workers are expected to see some decline in compensation, but IPO bankers are estimated to see their bonuses fall the most — as much as 20% from last year — according to compensation consulting firm Johnson Associates. That compares to a jump of as much as 25% in bonuses for these same IPO specialists that Johnson Associates initially forecast at the end of last year. "Hopefully, we're going to look back in three months or six months and say that we were wildly wrong and that things are a lot better," Alan Johnson, managing director of Johnson Associates, told Yahoo Finance in an interview. "That's what we always hope, but I wouldn't bet on it," he added. Dealmaking of all varieties, especially for IPOs, hit the brakes last month when President Trump unveiled sweeping "reciprocal" tariff announcements for the rest of the world as the stock market faced a volatile rout. That's also anticipated to "clog up" the private equity industry as it seeks to deliver returns to investors, according to Johnson. Even though markets have since recovered from that rout, many companies are still holding off on new public offerings until they have more clarity about the full slate of tariffs from the administration, which is still negotiating new trade deals with many countries. Read more: The latest news and updates on Trump's tariffs Stocks of traditional financial firms across the sector have dropped since the beginning of the year, with private asset managers, including Apollo (APO), Blackstone (BX), and KKR (KKR), seeing the biggest declines, followed by regional banks. (Disclosure: Yahoo Finance is owned by Apollo Global Management.) It's not just IPO bankers who are expected to see a pullback in compensation. Those working at hedge funds, private equity and asset management firms, as well as M&A, commercial, and retail bankers, and even corporate staff are expected to see as much as a 10% decline in pay. One of the few groups expected to rake in more is the part of Wall Street that typically benefits from any volatility: traders. Stock traders and their teams who sell trading strategies are likely to see their bonuses potentially jump as much as 25%. Debt underwriters and those in the niche alternatives business known as secondaries are also expected to catch some benefit from the turmoil, according to Johnson. The report is a turn from what Wall Street anticipated six months ago. Last November, Johnson Associates expected bonuses in 2025 would be better nearly across the board, with 2025 setting out to be the second-best year out of the previous five for take-home pay for those working in US finance. But the assessment of how things will play out over the rest of the year is far from set in stone as it's "heavily impacted by the outcome of trade war and geopolitical uncertainties," according to the report. The Trump administration announced Thursday that it secured a trade deal with the UK, marking its first agreement since the president's April announcement on "reciprocal" tariffs. The day before, the Federal Reserve said it would hold interest rates steady to "wait and see how things evolve" given the uncertainties surrounding trade, despite the Fed's concerns about rising inflation and unemployment in the months ahead. Read more: How to protect your money during turmoil, stock market volatility After a record 2021, bonuses across the financial services industry fell sharply in 2022, with underwriters seeing the biggest declines, according to Johnson Associates. Last year, payouts either declined further or remained flat. But performance swelled with a recovery of investment banking and a rebound in fees earned from equity trading. Collectively, the incentive changes over 2025 would be the biggest downshift in compensation to hit Wall Street since 2022, according to Johnson Associates' assessment. And that's expected to impact jobs. "Our base case would be, yes, there's going to be much less hiring and there's going to be layoffs," Johnson added. David Hollerith is a senior reporter for Yahoo Finance covering banking, crypto, and other areas in finance. Click here for in-depth analysis of the latest stock market news and events moving stock prices Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
New York Post
08-05-2025
- Business
- New York Post
Wall Street bonuses could drop as much as 20% because of Trump tariff turmoil
Bonuses on Wall Street could plunge by as much as 20% as dealmaking dries up and the stock market whipsaws because of economic turmoil caused by President Donald Trump's trade war, according to a top consultancy. Johnson Associates, a compensation specialist, said deals have all but ground to a halt over Trump's threats to slap stiff tariffs on imported goods. In its latest outlook report released Thursday, the firm predicted a 10% cut to bonuses for investment bankers as 'expected M&A 'mania' disappoints with economic uncertainty' over the looming heavy levies. 3 Johnson Associates, a banking compensation expert, regularly publishes its analysis of Wall Street bonuses. REUTERS 'Bankers are concerned and afraid of paralysis where client activity freezes up and companies don't invest, buy or sell, and the firms don't generate the fees that they depend on. That is the biggest fear right now,' Alan Johnson, the firm's founder, told The Post. 'The longer the uncertainty lasts, the more significant the impact.' Johnson Associates warned that financiers working in equity underwriting, bankers who help companies sell stock to investors, could see a 20% decline in bonuses. Hedge fund and asset management executives are likely to see their incentives slide by up to 10%, the report added. Trump's so-called Liberation Day announcement on April 2 roiled markets worldwide after the commander-in-chief laid out a string of 'reciprocal tariffs' on nations that he felt treated the US unfairly. He has paused the reciprocal tariffs, which were set to kick in April 9, on all countries except China for 90 days as the administration tries to hammer out deals with global trade partners. 3 President Trump made the announcement on what he dubbed Liberation Day in the White House Rose Garden on April 2. REUTERS But the uncertainty has forced corporations to pull back on M&A activity, the bread and butter that seals megabucks payouts and advisory fees. It is a swift reversal from last year, when dealmaking had roared back to life as the world emerged from the economic fallout of the Covid-19 pandemic. The number of mergers and acquisitions announced across the world — an indicator of global economic health — fell in April to the lowest level in more than 20 years, according to Dealogic data. In the US, the world's largest M&A market, there were just 555 deals signed last month, the lowest number for any month since May 2009 during the global financial crisis, the data showed. The Johnson report did predict that there would be some on Wall Street who could benefit from the roiled markets. The volatility has boosted the profits of trading desks at major US banks as investors reorder their portfolios to weather the potential forthcoming economic storms. 3 The forecast for the bonuses outlook could change if trade deals are signed to stave off the threat of the heavy tariffs. REUTERS Johnson said that could drive bonuses for equity traders up between 15% and 25%, while their fixed-income counterparts could see a bump of 10% to 20%. Last year, Wall Street bonuses swelled, with the total pool for payouts hitting a record $47.5 billion as industry profits soared, according to a report by New York State Comptroller Thomas DiNapoli. That report said the average annual bonus rose by almost a third, with payouts climbing to a whopping $244,700.
Reuters
08-05-2025
- Business
- Reuters
Wall Street bonuses to drop as uncertainty prevails, consultancy says
NEW YORK, May 8 (Reuters) - Wall Street bonuses are expected to slide this year as economic and geopolitical uncertainty stall deal-making, according to a report by compensation consultancy Johnson Associates. Investment banking activities have dried up this year as corporations hold off on initial public offerings and mergers and acquisitions. Companies have been reticent to make moves after U.S. President Donald Trump's tariff announcements last month roiled markets. The consultancy expects a decline in incentives of up to 10% this year. "Bankers are concerned and afraid of paralysis where client activity freezes up and companies don't invest, buy or sell, and the firms don't generate the fees that they depend on. That is the biggest fear right now," said Alan Johnson, founder of Johnson Associates. "The longer the uncertainty lasts, the more significant the impact." In a worst-case scenario, bankers' incentive payouts could sink as much as 20% if economic activity slows, halting transactions, he said. More clarity on tariffs and the easing of geopolitical tensions could keep bonuses flat or boost them slightly. Employees in equity underwriting are likely to see an up to 20% decline in bonuses while advisory, hedge funds and asset management executives are likely to see incentives decline by up to 10%. Not all are expected to see smaller bonuses. Market volatility has led to an increase in trading volumes that could result in higher bonuses for traders and bankers, with equity sales and trading seeing an uptick of up to 25%, followed by fixed income sales and trading at 20% and debt underwriting incentives rising by up to 10%. The number of merger and acquisition contracts announced across the world - an indicator of global economic health - fell in April to the lowest level in more than 20 years, according to data compiled by Dealogic for Reuters. In the U.S., the world's largest M&A market, just 555 deals were signed last month, the fewest for any month since May 2009, during the financial crisis.
Bloomberg
08-05-2025
- Business
- Bloomberg
Banker Bonuses Set to Drop as Tariffs Cause Economic Uncertainty
The outlook for some Wall Street bonuses looks grim, with an expected pullback in payouts after a strong 2024 amid economic turmoil caused by the US trade war and geopolitical tensions. Investment bankers, hedge fund employees and asset- and wealth-management professionals are all poised to see lower year-end incentive pay in 2025, according to a report Thursday from compensation consultant Johnson Associates Inc. It's a sharp reversal from last year, when payouts swelled and industry profits soared.
