| NEW YORK
NEW YORK The past few weeks may have meant
Christmas shopping for some, but the next few could be all
about where and how Wall Street bonuses will be spent.
This year, payouts from financial companies are being
scrutinized more than ever, as several banks cut jobs and reel
from losses tied to mortgages and the global credit crunch.
Overall bonuses announced so far are down from last year,
headhunters have said, while individual payouts varied widely.
Payouts for some of the most successful fixed income
traders this year were flat to down 5 percent, while those for
other top performers were down 10 percent to 20 percent,
according to recruiters, quoting early feedback from clients.
So as the idea of a lower bonus turns to reality for some
Wall Street professionals, experts expect them to splurge less.
While they won't be hurt by the credit squeeze in the same way
middle-class America has been, what could force them to close
their wallets is the fear of losing their jobs.
"Job security is more an issue right now than how to spend
one's bonus," said James Grubman, a clinical psychologist who
has worked with several wealth management advisory firms,
including Wachovia Corp WB.N.
"If you are not sure whether you are going to have a job in
the financial services industry shortly, you may be more
conservative with your spending this holiday."
Jobs at the very top of Wall Street have already been lost.
Merrill Lynch & Co Inc MER.N Chief Executive Stan O'Neal and
Morgan Stanley (MS.N) Co-President Zoe Cruz were ousted after
their companies posted huge mortgage-related losses.
Citigroup Inc's (C.N) Charles Prince quit as its CEO, and
there has been talk that Citigroup could slash more jobs than
the 17,000 it announced in April.
Those who escaped the cut often did so at a cost. Both
Morgan Stanley CEO John Mack and Bear Stearns Co Inc BSC.N
CEO Jimmy Cayne kept their jobs, but had to forgo bonuses.
While Citigroup's shares had lost more than 47 percent in
2007, Morgan Stanley, Merrill and Bear Stearns were down 21
percent, 42 percent and 46 percent, respectively.
Goldman Sachs Group Inc (GS.N) remains the sector's bright
spot, with its shares up 6 percent this year.
"Much more important than (the) bonus is the investment
performance of Bear Stearns, Citi ... and that is going to
impact spending," said Emanuel Weintraub, managing director of
money management firm Integre Advisors.
FIFTH AVENUE AND TOURISM
During a good year, Wall Street bonuses are typically spent
on exotic trips, cars, jewelry and homes.
A popular New York shopping destination is Fifth Avenue,
though most luxury stores there cater to wealthy consumers who
don't rely on year-end payouts, said David Arnold, senior vice
president at luxury magazine Robb Report.
CEO Michael Kowalski of Tiffany & Co (TIF.N), which has its
flagship store on the fabled stretch of luxury shops, has said
Wall Street bonuses have never been an issue for the jeweler.
Also this year, tourists have flocked to the United States
to make the most of a weak dollar. For retailers in Manhattan,
that has translated into a nice revenue boost.
"There is the reality of a huge influx of Europeans in the
market ... for many of them the prices in the United States are
20 to 40 percent lower than comparable products in Europe,"
In November, Tiffany reported a 25 percent rise in
third-quarter sales at its flagship store, attributing more
than half the increase to tourists. A few days earlier, Saks
Inc SKS.N, whose sales rose 14 percent in the third quarter,
said its Fifth Avenue store outperformed the company average.
This year, higher-end cars from Mercedes-Benz (DAIGn.DE)
and Aston Martin and expensive accessories like watches for men
and jewelry for women will be popular, Arnold said.
One area that could see less demand is the already troubled
real estate market.
"Upgrading apartments or purchasing a better place to live
... I think people are more cautious on that," Grubman said.
Some could even spend their money on items that seem more a
luxury investment than a one-time expenditure.
"I'd say we're thinking that we could spend 'X' dollars to
rent in the Hamptons for August or spend the same amount and
get a wonderful piece of art for our apartment," said
Still, exceptions will always remain.
For instance, Halstead Property associate broker Jill
Sloane sold to bankers recently a $2.3 million three-bedroom
condominium and another $700,000 apartment on Manhattan's Upper
"It depends on which broker you talk to," she said. "I
happen to be really, really busy."
(Additional reporting by Joseph Giannone and Kristina
Cooke; Editing by Braden Reddall)