- With Q1 results for the global banks just in the books, JPMorgan (JPM) becomes the first to warn on trading revenues in Q2, expecting markets revenue to slip 20% after declining 17% in Q1.
- SEC Form 10-Q
- As in the past, the biggest driver of the slide is weakness in fixed income, currencies and commodities (FICC) as investors continue to shy from exotic fixed-income vehicles contrived by bankers, and instead favor less profitable (for the bond desks) government and high-grade corporate bonds. There's also new regulations which have forced banks away from lucrative businesses like energy trading.
- "I don't look at the $5 billion in markets revenue and cry in my soup," said CEO Jamie Dimon on Q1's earnings call (the bank did $5.37B in trading business in Q1), stressing his belief that the current tough time for trading is cyclical not secular.
- JPMorgan fell 1.5% in after hours trading following the news last night. Morgan Stanley (MS) -0.5%, Goldman Sachs (GS) -0.1%, Bank of America (BAC) -0.7%, Citigroup (C) -0.4%: "Certainly J.P. Morgan's forecast does not bode well for the other big banks," says RBC's Gerard Cassidy.