Year-end bonuses look good for Wall St.

A healthy stock market and the frenzy in deal making driven by private equity should result in Wall…

A healthy stock market and the frenzy in deal making driven by private equity should result in Wall Street bonuses for 2007 that rise 10% to 15% above last year’s record high of $24 billion, according to Johnson Associates Inc., a New York-based executive recruiting firm.
Those lucky enough to work for private-equity firms are on track to receive bonus increases of 20% or more, according to the Johnson, forecast, released last week. At Wall Street investment banks, the report noted, up to half of revenue is set aside for compensation.
Senior commercial bankers, however, aren’t expected to fare as well this year. They are unlikely to see bonus increases top 10%, the Johnson forecast predicted, while year-end compensation for retail bankers is expected to remain flat or rise only 5%.
One small dark cloud did emerge on the Wall Street horizon last week: New York-based Goldman Sachs & Co. appears to have initiated a hiring freeze, according to the New York-based financial news and commentary site breakingviews.com.

Chinese hedge bets
The Chinese and American governments may not have worked out all their differences at last week’s economic summit meeting in Washington, but leave to it to the hedge fund guys to strike a deal.
While Treasury Secretary Henry Paulson and Chinese Vice Premier Wu Yi wrangled over trade and currency issues in Washington, Chinese government officials in Hong Kong signed off on a $3 billion purchase of a non-voting stake in The Blackstone Groupof New York.
Not coincidentally, Blackstone, a
private-equity and fund-of-hedge-funds firm, plans to have an initial public offering in the next few months.
The Chinese government is expected to take control of less than 10% of Blackstone’s equity.
The purchase is being made by a new Chinese state investment company being set up to diversify the country’s overseas investments beyond Treasury notes and bonds, and other government securities. Jesse Wang, chairman of the new Chinese agency, said that it is more interested in buying shares in a broad range of stocks than taking control of individual companies.

Up and down
Upward mobility isn’t what it used to be.
In 2004, the median income for a man in his 30s, considered an accurate predictor of that person’s lifetime earnings, was $35,000, or 12% less, adjusted for inflation, than what men in their 30s earned in 1974. Those figures were part of a study released last week as part of the Economic Mobility Project, a series underwritten by several prominent think tanks.
“The up escalator that has historically ensured that each generation would do better than the last may not be working very well,” the study observed. Principal authors of the study were John Morton of the Philadelphia-based Pew Charitable Trusts and Isabel Sawhill of the Washington-based Brookings Institution.

Are there alternatives?
Alternative investments remain as hot an investment option as ever, as evidenced by New York-based JPMorgan Asset Management’s scheduled morning-long panel session on the topic this Tuesday.
Summing up a common refrain among wealth managers, JPMorgan notes that “investors are increasingly seeking alternative-investment options that can add alpha potential while seeking to reduce risk.”
The panel will address questions about alternatives, such as whether excess returns from the investments are sustainable and where the next frontier in alternatives can be found. Jes Staley, chief executive of JPMorgan Asset Management, a unit of JPMorgan Chase & Co. in New York, will head the panel, and speakers include Glenn Dubin, co-founder and managing partner of New York-based hedge fund Highbridge Capital Management LLC.