John Herrmann, a top-ranked economic forecaster, had his job eliminated yesterday at State Street Global Markets LLC as the company exited its fixed-income business as part of a cost-cutting effort.
Herrmann began working in February 2010 as a senior fixed-income strategist in the research and trading arm of State Street Corp., the third-largest custody bank. He holds the No. 2 spot among forecasters of the U.S. economy for the two years through November, according to Bloomberg Rankings.
“Our entire fixed-income group wound down,” Herrmann said today in a telephone interview. “What we saw at the end of 2009 was that a bunch of companies tried to launch fixed-income departments and it was met with mixed results.”
Custody banks, hurt by record-low interest rates that reduce the return on investments and lending and by a decline in equity markets in 2011, have worked to bolster profits by cutting expenses. State Street has eliminated 2,250 jobs in the past 13 months as part of a plan to reduce costs by at least $575 million annually by 2015.
Joseph Hooley, chief executive officer of the Boston-based firm, explained some of the cuts on a conference call yesterday.
“As part of our annual review of all of our businesses, we also recently announced our withdrawal from the fixed-income trading initiative,” he said. “This decision reflects a number of factors, including continuing market turmoil and regulatory changes, both in the U.S. and Europe, that likely would’ve required us to increase capital and expenses associated with this initiative.”
Carolyn Cichon, a spokeswoman for State Street, confirmed by e-mail today that Herrmann is no longer employed by the company.
“I’m definitely looking to join another firm,” said Herrmann, now president of Summit, New Jersey-based Herrmann Forecasting LLC. “You basically have to find positions where an employer is committed to a fixed-income universe for a long time and not just on a lark.”