Morning Coffee: Bank of America says 2025 is not the best year for traders either. JPMorgan techies may be ready to hit the bricks
Trading, they always say, is a game of second derivatives. It’s not a matter of whether things are good or bad, or even if they’re getting better or worse. The best traders start to get worried when they see that the rate that things are getting worse is speeding up, or if the rate that things are getting better is slowing down.
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Which means that they might be sipping their coffee a bit more nervously after hearing Bank of America’s Jim De Mare on Bloomberg TV yesterday. Although it is apparently “a good quarter”, De Mare said that “Clients are doing a little bit less today than they were when we were coming into the beginning of the year and certainly where we were ending the fourth quarter of last year”. After having seen the best Q4 figures ever in both fixed income and equities, BoA is looking at a Q1 that’s going to be … just … good.
The problem appears to be that “People are … waiting to get more information to make further adjustments to their portfolios”. At the end of last year, the consensus view was optimistic heading toward euphoric, as everyone expected that the Trump administration would get rid of regulations, cut taxes and stimulate the economy. Now we’re nearly two months into 2025, and everything just seems a little bit more chaotic than expected – nobody knows whether there is going to be a trade war or not, or between whom, and the federal government is having chunks cut out of it seemingly at random. It’s not surprising that investors with cash to spare are taking advantage of their option to wait and see.
Unfortunately, the same logic applies to companies doing investment banking deals, and to clients of other banks. Jenn Piepszak of JPMorgan said ten days ago that Q1 revenues would be … kind of all right, up a bit more than 10% on the same quarter last year. And that M&A “may take time to pick up”, because although “customers are more optimistic about doing deals”, they are also just as happy to wait and see whether it’s the right idea.
As we said at the time, the prevailing attitude is “so far, so good, so what”, to quote the poetry of Megadeth. In both sales & trading and capital markets & advisory franchises, volumes are likely to be good enough to justify banks’ decisions not to make big staff cuts, but not so great as to make executives feel any serious FOMO. Boringly, the industry has got things more or less right, so there is unlikely to be any great tension in labour markets. Which means that unless and until the Trump train really gets moving, the outlook for bonuses isn’t great either – few bankers or traders will feel like they have any particularly attractive alternative options, so employers will give them enough to stop the worst of the whining, but no more. Things are still pretty good, but they’re definitely improving at a slower pace than bankers might like to see.
Elsewhere, the problem with telling your employees to get a job somewhere else if they don’t like your RTO policy is, of course, that they might take you at your word. Although the banking industry is not particularly hot at the moment, engineers and coders can go back and forth between finance and tech if they want to, and some skills are in structurally short supply. So, as one JPMorgan techie puts it “Jamie Dimon’s like, 'Well, hey, if you don't like it, you know where the door is.' Yes, we do".
This can’t be news to JPM, which used to take a very different approach to the prima-donna tendencies of specialist programmers – they opened up a whole campus in Seattle when they found it hard to recruit cloud specialists. Now, as another employee puts it, “I'm still going to be getting on Zoom calls. The only difference is, two of the people I'm on Zoom calls with might be sitting right beside me”. So it’s possible that we’re seeing a subtle change in strategic direction.
Dimon’s time as CEO has been marked by very large technology spend in general, and by big investment in cutting-edge technologies like quantum computing and AI. (Even this year, they are paying good money for prompt engineers, albeit that you have to come into the office to earn it). If JPMorgan is now prepared to lose exactly these coders in order to enforce a general remote working policy, that itself is a change of mind.
Meanwhile …
“To flush out the full payment, they severed one of Balland’s fingers.”. Crypto tycoons are gradually becoming aware that cybersecurity isn’t the only important kind of security. (WIRED)
Veteran industry observers have noted cynically that one reason that big banks have been so quick to abandon commitments to DEI in the face of MAGA pressure is that it saves the embarrassment of having to announce that they never got anywhere near making them. (Bloomberg)
Sam Bankman-Fried’s Twitter account was a quite important asset for FTX in many ways, but it wasn’t recorded in the bankruptcy schedule. However, someone appears to have acquired it and is now posting leadership memes. (Business Insider)
When they don’t have visiting bankers to resent, villagers in the Hamptons seem to like to spend the winter embroiled in furious drama over things like a headteacher allegedly taking a $25 gift card intended for someone else. (WSJ)
Andrew Grant, the founder of financial PR company Tulchan, is going to Rothschild, with an undisclosed title but one that’s likely to involve advising on UK M&A. (Bloomberg)
A high court judge has called Lee Robinson of Altana Wealth a “dishonest bully”. The company apparently “respectfully disagrees” according to its press release. (The Times)
Foxtons, the ubiquitous estate agent from which roughly 100% of London bankers have either bought or rented a house, sounds like a horrendous working environment. (Bloomberg)
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