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Wall Street is back! Then again, maybe not.

It's hard to make much of last week's split-personality market action, which saw the major market averages tumble then roar back and end the week pretty much where they started. The sell-everything, buy-everything mentality seems more a product of professional traders trying to make a quick buck off shifting war sentiments than a revival in the making.

This week, investors will get a reminder of just how grim things are for brokerages when

Bear Stearns

(BSC)

,

Goldman Sachs

(GS) - Get Goldman Sachs Group, Inc. (GS) Report

,

Morgan Stanley

(MWD)

and

Lehman Brothers

(LEH)

all report first-quarter earnings. Moreover, the outlook for Wall Street firms is likely to remain weak for the near future, even if a war with Iraq can be averted.

Nothing Doing

The trouble is that many of Wall Street's bread-and-butter revenue generators are barely churning, with trading activity, corporate deal-making and stock underwriting all in abeyance.

TheStreet Recommends

Notwithstanding last week's frenzied trading, daily share volume on the

New York Stock Exchange

is running 8% lower this year, while it's down 27% on the

Nasdaq

. That means fewer commission dollars for brokers such as

Charles Schwab

(SCH)

,

Merrill Lynch

(MER)

,

Ameritrade

(AMTD) - Get TD Ameritrade Holding Corporation Report

and

E*Trade

(ET) - Get Energy Transfer, L.P. Report

, and less in fees for trade-execution firms such as

LaBranche

(LAB)

,

Knight Trading

(NITE)

and

Instinet

(INET)

.

Things are particularly bad with retail investors, who continue to avoid Wall Street like a disease. Last week both Schwab and Ameritrade, two of the nation's biggest online brokerages, told analysts to lower their earnings estimates, because their customers are making fewer trades. Without the return of the retail investor, it's hard to see how the market can sustain any lasting rally -- war or no war.

It's not much better on the investing banking front either.

While the dollar value of worldwide corporate mergers is up slightly over last year, the number of deals is down considerably. Thomson Financial Securities Data reports that the dollar value of announced corporate mergers is up 10% to $204 billion, but there have been 1,165 fewer deals.

Nihil Novum

Meanwhile, the market for new stock offerings is starting out even colder than it did last year -- which was one of the worst for initial public offerings in almost a decade. The combined valued of all IPOs brought to market this year is down 60% from a year ago, to $2.6 billion.

Just about the only bright spot for Wall Street has been a mini-revival in bond underwriting. Securities Data reports that the dollar value of corporate bond underwriting is running 11% higher than a year ago, at $777 billion.

Yes, Wall Street firms have been making money throughout the bear market, but earnings have been largely fueled by cost cuts -- not growth in revenue. That's not a formula for revival.

Most Wall Street analysts, for instance, expect Goldman Sachs on Thursday to report net revenue of $3.5 billion for the first quarter -- pretty much unchanged from a year ago. The consensus is for Goldman to post earnings of 96 cents a share, 2 cents less than a year ago, according to Thomson Financial/First Call.

The consensus estimates for other firms that report this week are Bear Stearns at $1.35 a share, Lehman at 99 cents a share and Morgan Stanley at 62 cents a share. Of the four brokers reporting next week, only Bear's profits are expected to rise from a year earlier.

To get to those earnings, the securities industry has had to endure a lot of pain. Through a combination of layoffs, attrition and voluntary departure, it now employs roughly 20% fewer people than it did at the height of the bull market.

The one good thing about all the misery of the past three years is that many Wall Street stocks -- after falling anywhere from 25% to 50% -- now trade at relatively reasonable multiples. On the basis of 2003 earnings estimates, many brokerage stocks trade at price/earnings multiples in the low- to mid-teens, with Bear Stearns, E*Trade, Morgan Stanley and Merrill Lynch bringing up the rear.

Historically, the stocks of Wall Street firms have tended to trade around 17 or 18 times earnings.

The priciest brokerage stocks, on the basis of 2003 earnings estimates, are Schwab,

Raymond James

(RJF) - Get Raymond James Financial, Inc. Report

and

A.G. Edwards

(AGE) - Get AgeX Therapeutics, Inc. Report

, trading at multiples of 20, 17 and 17, respectively.

Of course, forward P/Es are based on what analysts project a firm to earn in a given year, and with Schwab and Ameritrade already paring back their numbers, these P/E ratios may not look so reasonable in the coming weeks. Also, some Wall Street firms may have to start adding more dollars to their litigation reserves, as the cost of paying damages to investors from last year's tainted research scandal and the

Enron

mess starts coming due.

Moreover, just because a stock trades at a reasonable P/E doesn't mean it's ready to take off, either.

And right now, there are still no revenue drivers about to ignite Wall Street and the brokerage business.