By Dakin Campbell and Michael J. Moore Bloomberg News
NEW YORK - Citigroup Inc. and JPMorgan Chase & Co. are bracing investors for a fourth consecutive drop in first-quarter trading, a period of the year when the largest investment banks typically earn the most from that business.
Citigroup finance chief John Gerspach said Monday his firm expects trading revenue to drop by a “high mid-teens” percentage, less than a week after JPMorgan CEO Jamie Dimon said revenue from equities and fixed income was down about 15 percent. If trading at the nine largest firms slumps that much, it would extend the slide from 2010’s first quarter to 36 percent.
“It sounds like more bloodletting on Wall Street,” said Jeff Davis, a managing director for the financial-institutions group at advisory firm Mercer Capital in Nashville, Tenn. “What we are seeing is a function of investors being scared of bonds because the math is bad. No one I talk to wants to take a chance adding bonds to the portfolio.”
Clients are trading less as the Federal Reserve slows its monthly asset purchases and leaves bond investors preparing for rising interest rates. An index of global equities tumbled the most in a month yesterday, erasing the year’s gain, as Russia’s growing military presence in Ukraine prompted an emerging-market sell-off.
JPMorgan shares rose 1.1 percent to $56.81 at 9:57 a.m. in New York, leaving them 2.1 percent below where they traded before Dimon’s Feb. 25 remarks. Citigroup climbed 1.5 percent to $48.32, after dropping 2.1 percent yesterday.
Trading results have been hurt by a slowdown in the fixed-income business, which accounts for an average 80 percent of markets revenue at Citigroup, Chief Financial Officer Gerspach, 60, said yesterday at a presentation in Orlando, Fla.