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(Bloomberg) -- A struggle by investors to predict President Donald Trump’s mercurial policies set trading records at Wall Street banks in the first quarter. But as industry leaders looked ahead, they had no great answers and scant optimism for what’s to come.
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Variations of “uncertainty,” “unknowns” and “turbulence” arose again and again as three of the biggest US banks kicked off the industry’s earnings reports on Friday. It’s not just the economy that’s murky and unpredictable, JPMorgan Chase & Co.’s Jamie Dimon said on a conference call. There are more significant questions about whether Western economic and military alliances remain intact.
His bank, the nation’s largest lender, surprised analysts by stockpiling $973 million for soured loans — over 40% more than they had estimated. The firm is sitting atop more capital than required and has plenty of liquidity “to get through whatever the stormy seas are,” Dimon said.
“Maybe when we do this call next quarter, we won’t be guessing,” he said.
The trio of lenders — JPMorgan, Wells Fargo & Co. and Morgan Stanley — each beat earnings estimates before describing the nervous behavior of consumers and corporations. All three stocks jumped in early trading only for those gains to fade or turn to losses once markets opened.
Trump’s chaotic tariff announcements and efforts to shrink or shutter government agencies — aimed at unleashing US growth — have stoked concerns about trade, inflation, unemployment and a potential recession. Companies are pausing expansion, including lucrative mergers and acquisitions handled by Wall Street dealmakers, bank executives said.
“Anecdotally, a lot of people are not doing things because of this. They’re going to wait and see,” Dimon said. “And that’s M&A, that’s M&A with middle-market companies, that’s people’s hiring plans.”
Should international US companies — such as JPMorgan — be concerned about getting caught in the middle of a trade war, analyst Mike Mayo asked Dimon.
“We will be in the crosshairs,” the CEO acknowledged. “That’s what’s going to happen. And it’s OK.”
Wells Fargo CEO Charlie Scharf said the San Francisco-based bank supports the administration’s effort to challenge barriers to free trade, but noted that’s fueling risks for companies.