Cyclical or secular? JPMorgan warns again on trading business

|About: JPMorgan Chase & Co. (JPM)|By:, SA News Editor

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.