He huffed and he puffed -- but he stopped short of blowing the house down.

The "he" in this case is Sean Egan of Egan-Jones Ratings, the bête noire of embattled investment bank Jefferies Group (JEF) and its CEO, Richard Handler. Egan on Tuesday held back from making further demands on Jefferies to bolster its balance sheet by raising new equity -- at least for the time being.

Egan isn't being quixotic or altruistic, of course. His comments came hard on the heels of the release by Jefferies of its fiscal fourth-quarter results. The numbers were as dismal as had been anticipated: The company reported its profits nosedived to 21 cents a share from 31 cents a share in the year-earlier period. But Jefferies also reported it had trimmed its balance sheet significantly and reduced leverage. Both these moves were calculated to appeal to Egan and anybody else worried that the investment bank might be irreparably damaged by exposure to European sovereign debt, or by the poor trading and deal-making environment that has hammered investment banks this year.

The news temporarily bolstered investors' enthusiasm for Jefferies, which saw its stock price soar nearly 23% to end the day at $14.50 a share. While after-hours trading trimmed a nickel from that price, it was still an astonishing performance by a stock that has been languishing recently.

Egan says he'll take a closer look at Jefferies once the firm releases its annual 10-K filing, providing more detailed insight into its financial position, in a few weeks' time. The risk, of course, is that Jefferies may only have acquired some breathing room, and that the pressure will be back on in the New Year. Certainly few of the fundamentals that led to this state of affairs show any signs of improving. The European sovereign debt crisis is far from resolved, despite recent initiatives that pulled Greece, Portugal and Italy back from the brink of default and economic meltdown.

Even if the crisis can remain contained, the wider question of whether 2012 will see economic growth strong enough to buoy the global economy remains alive and well. Investors could wake up any day to headlines that will wreak havoc on financial markets and on the core businesses of firms like Jefferies.

The results of such a challenging environment are painfully evident. In its preliminary report for the year, released Tuesday, market data firm Dealogic announced that global investment banking revenues were 47% below year-ago levels, and that revenues from underwriting initial public offerings plunged an astonishing 71%.

While Jefferies may control its balance sheet, its leverage and its headcount, it has no power over the broader environment in which it must do battle with Wall Street rivals. Nor can it influence market sentiment. As long as Egan -- the most vocal of the firm's critics -- holds his fire, the stock may well perform in line with other financial stocks heavily exposed to the investment banking cycle. But that may not be enough for Tuesday's relief rally to be more than a flash in the pan.

Related Links:
Why Battered Jefferies Could Survive
The War in Europe Escalates -- No Guns, Just Butter
Britain is Odd Man Out in Europe’s ‘New Deal’