The market chaos from one year ago was a blessing in disguise for the likes of JPMorgan and its peer banks, which scored a bonanza quarter amid the trading frenzy and soaring VIX (not to mention the latest and greatest bailout of the US financial system by the Fed which proceeded to buy not only trillions in government bonds, but also IG bonds and HY ETFs).
Fast forward to today when the far more stable and boring market is proving to be a major challenge for banks which literally printed money one year ago, as none other than Jamie "I will fire anyone who trades bitcoin" Dimon said on monday during a Morgan Stanley virtual conference, when he suggested that Wall Street’s pandemic-era trading boom could be drawing to a close.
According to Dimon, trading revenue at the largest U.S. bank will drop to just over $6 billion in the second quarter, a 38% decline from a year ago, and a far bigger drop than previously expected. Absent some miraculous revenue surge in the last 2 weeks of the quarter, that total would end up far lower than the already reduced average analyst estimate of $6.5 billion.
This quarter will be “more normal” for fixed-income and equities trading, meaning “something a little bit north of $6 billion, which is still pretty good, by the way,” he said. Investment-banking revenue, meanwhile, will be driven up by an active mergers-and-acquisitions market, resulting in what “could be one of the best quarters you’ve ever seen” for that business.
JPMorgan shares dropped as much as 2% after Dimon’s comments, continuing a slide after the stock hit an all-time high earlier this month, with other bank stocks declining as well.
More ominously - because it hints at a combination of slowing sales and rising operating costs - Dimon also cut JPMorgan’s forecast for net interest income, predicting $52.5 billion this year, down from a previous estimate of $55 billion for 2021.
“I know it’s a little disappointing,” Dimon said.
Maybe it is, but it' nothing that another viral crisis that Anthiny Fauci quietly funded in top secret Chinese virus labs over the past decade won' fix...