Wall Street can breathe easy – for now

BlackRock's big layoff

Things finally may be looking up on Wall Street.

Big banks may have begun the year slashing high-end head count, but a key JPMorgan Chase official had an optimistic tone speaking Wednesday at the Deutsche Bank Global Financial Services Conference in New York.

"We are getting toward the end of the cycle of contraction," corporate and investment bank CEO Daniel Pinto said, referring to the downsizing in fixed income, currencies and commodities businesses that are key for so many Wall Street banks.

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After seeing top banks slash head count and compensation to preserve profits, Pinto's comments are likely welcome all across Wall Street.

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Pinto also likes the looks of the investment banking business, which was hit hard by a standstill in deals activity that accompanied market turmoil that began 2016. Mergers and acquisitions have shown signs of picking up.

Additionally, initial public offerings that were planned for last year, like Valvoline, as well as IPOs expected in the back half of the year, like Jose Cuervo, have served as a sign of reassurance to investors and bankers alike.

"We feel very good about the banking business," Pinto said. "When you look at the [IPO] pipeline, there is a lot coming in."

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Next, it remains to be seen how much other Wall Street firms can — or will — do to reduce compensation expenses.

Goldman Sachs recently trimmed a few dozen investment bankers from its total staff of nearly 37,000, Bloomberg reported Wednesday. The bank is known for cutting underperformers on an annual basis.

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Virtually every Wall Street bank has downsized to begin 2016. It remains to be seen whether others even have room remaining to cut. At Morgan Stanley, which made cuts in the first quarter throughout the bank, after making a 25 percent head count reduction within its fixed income, currencies and commodities business at the end of last year, its lead director thinks the bank has cut to the appropriate size, for now.

"We worked hard to right-size the fixed income operation," Morgan Stanley lead director Erskine Bowles said at the bank's annual meeting in May. "Whether or not we're going to have to make other changes, we'll see."