NEW YORK (TheStreet) -- Pure-play investment banks
Goldman Sachs and
Morgan Stanley will be under pressure to cut compensation, people and bonuses to boost profits as the outlook for their core capital markets and trading businesses remaining weak heading into 2012.
Their flexibility to do so will be tested when the firms report earnings this week; Goldman is scheduled to report on Wednesday, while Morgan Stanley reports on Thursday.
Analysts have ratcheted down fourth-quarter estimates for both Goldman Sachs and Morgan Stanley in the last several months, as it became evident that the weakness in capital markets was likely to stay for some time. Yet, the disappointing trading and investment banking performances from JPMorgan Chase and Citigroup in the fourth quarter may have lowered the bar even further.
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