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Hopes Fade at JPMorgan, Bank of America for 2017 Trading Turnaround

Bradley Keoun

Wall Street giants JPMorgan Chase & Co. and Bank of America Corp. see few signs of a revival in sluggish bond markets in 2017, extending a malaise that has saddled the banking industry with one of its worst trading years since the financial crisis almost a decade ago.

JPMorgan CFO Marianne Lake and Bank of America CEO Brian Moynihan both said Tuesday at an investor conference in New York that they expected fourth-quarter trading revenue to fall roughly 15% from a year earlier, based on the observed pace of market activity since the end of September.

Unusually low price swings this year in assets from stocks to bonds and commodities have limited the opportunities for Wall Street firms to score market gains, while reducing the need for investor clients to place new trading orders. Goldman Sachs Group Inc. , a rival Wall Street firm, has fared so abysmally that the firm had to shake up leadership within its trading division. Dick Bove, a Vertical Group analyst who's been covering the banking industry for five decades, called recently for the ouster of Goldman Sachs CEO Lloyd Blankfein.

"The environment hasn't changed," Lake said via webcast. "Volatility remains pretty low across the spectrum."

Among the challenges is that a frenzy of trading took place following President Donald Trump's surprise election victory in November 2016, hurting comparisons between the current quarter and the same period a year earlier.

The remarks by the JPMorgan and Bank of America executives echo similar comments made in November by Goldman Sachs CFO Martin Chavez, who said then that client activity "remains subdued."

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