Hardly a few months back, JPMorgan Chase traders experienced such a smooth sailing that there was not a single day they had to suffer, in the first quarter. However the hot streak seems to come to an end with the bank reporting its second-quarter results this week.
According to the expectations of the analysts, JPMorgan would experience a 20 % decline in its trading revenues as well as sales, indicating a deceleration in investor activity and the miserable performance of its commodities and fixed-income groups.
Analogous news is expected from Morgan Stanley, Goldman Sachs, Citigroup and Bank of America. As per Credit Suisse research, after assisting in the sustenance of Wall Street during the monetary crisis, projections are that the core trading revenue would drop, on an average, by as much as 25 % in comparison to the first quarter.
The banks’ growth prospects, that are already stressed by sluggish loan growth and more strict regulation, would feel further pressurized. Approximately every major Wall Street firm is being prompted to contemplate another round of suspensions amidst increasing concerns that at least some part of the weak results are of permanent nature.
Lower levels of activity are undoubtedly having an impact on us, as there is too much uncertainty in the environment, says a financial services analyst with UBS, William Tanona.
The business was especially hard hit during the second quarter. Among the biggest moneymakers on the Wall Street, fixed-income traders faced a bruising market. But as crevices in the recovery kept resurfacing, prices headed south leaving most of the desks at Wall Street, that had built up inventory for facilitating trades, with losing positions.
