[ by Melanie Gretchen ] Wall Street, look out.  For a third consecutive year, revenue from investment banking and trading at U.S. firms may fall at least 30% from the first quarter, according to Goldman Sachs analyst Richard Ramsden in a note last week. Summer Forecast: 'Tis the Season to Be Folly. Greece will hit home again, to hurt the year's second quarter, despite hope by a market rebound in the first quarter.  Thus far, deal volume has dropped and equity and credit markets have fall on concern that Greece may abandon the euro and the European sovereign-debt crisis will spread to nations including Spain.  Where those causes produced effects last year: in cut profit, bonuses, and jobs at Wall Street firms – to repeat this year. "It’s going to be a tough summer at least, and it does feel like the last couple years all over again.  The bank valuations seem unfairly discounted, but investors are looking at this year and saying, ‘I’m not going to fall for this again.’" -- David Konrad, an analyst at KBW Inc. in New York. Status Report. Unfortunately, Mr. Konrad is in good company.  Already, combined trading and investment-banking revenue at the 5 biggest Wall Street firms – JPMorgan, Goldman Sachs, Bank of America, Citigroup, and Morgan Stanley – is expected to drop from a year earlier for the 7th time in 8 quarters, according to analysts surveyed by Bloomberg.  The banks generated some $33 billion from those businesses in the first 3 months (excluding accounting charges), led by $20 billion from fixed-income trading. Eleven analysts reduced earnings estimates for Goldman in the past 4 weeks, and 6 have cut Citigroup's, according to a survey by Bloomberg, amid lower trading volume, wider credit spreads, and heightened volatility affecting the largest 5.  They will likely report trading revenue that fell a median of 33% from the first quarter, according to Matthew O'Connor, an anlayst at Deutsche Bank AG, in 5/25/12 note. Trending Down. Revenue from trading usually peaks in the first quarter, as corporations raise more debt at the beginning of the year, feeding fixed-income operations, said Roger Freeman, an analyst at Barclays Plc.  Up until recently, 15% has been a normal season decline for fixed-income trading revenue in the second quarter.  This year will probably be 30-40%, while last year the second-quarter drop for U.S. firms was circled 31% and 2010's drop was more than 40%. It Only Gets Worse. If the last 2 years are any indication, we're in big trouble.  Their second quarters bled into third and fourth quarters featuring investment-banking and trading revenues more than 40% off the first-quarter pace.  The chances of that trend recurring look "increasingly likely," Kian Abouhossein, a JPMorgan analyst said last month. Who Will Get Hit. Ironically, Greece gave English the word 'cycle.'  Arguing for the economy's recovery, JPMorgan CEO Jamie Dimon, 56, and Goldman CEO Lloyd Blankfein, 57, argued that the the current slowdown is a cyclical decline that will bounce back. Amid their optimism, 20-30% of the industry's managers can expect to get cut, amid new regulations and slower global growth, Boston Consulting Group Inc. said in an April 26 report.  If Moody's Investors Service downgrades the five firms, banks will likely be forced to make additional cost cuts through lower pay and firing, analysts said.  Specifically, trading units at large banks may need to 10% of their staff, David Trone, an analyst at JMP Securities LLC said. Recent cuts include:

• 14% of investment-bank employees got no bonus for 2011, up from 6% the year before, according to a report by executive-search firm Options Group, released last week
• 200,000 job cuts throughout the industry, including BofA and HSBC, which each plan to cut 30,000
• Goldman cut less than 50 jobs about 2 weeks ago to cut expenses as the bank's revenue prospects worsen, a person familiar with the matter said
• Morgan Stanley has plans in the works to cut employees in the trading business, according to two people with knowledge of the plans

For further details, go to [Bloomberg, 6/11/12].