If you work on the trading floor of an investment bank, 2018 has included some of the best and some of the worst of times. Or at least this looks like the case if you work for J.P. Morgan. The U.S. bank just released its 10Q filing showing gains and losses in its markets division for the first half of the year. They reveal that 2018 has been a wild ride.
As the chart below shows, January 2018 was an exceptional month for J.P. Morgan's trading business. The bank made a trading profit on every day but one and there were two days when trading profits exceeded $100m. When volatility spiked in February, however, January's big profits turned to big losses and the U.S. bank's traders have never quite recovered their stride. Early June was good. Late June was...patchy.
The second chart below shows the distribution of profit and loss-making trading days at J.P. Morgan during the same period of 2017. While last year began with a little less promise there was none of the February blow out and fewer days of dramatic losses.
A count of the trading loss days for both years below suggests that J.P.M made losses on around 50 days this year, compared to 45 last year. However, it's the extent of the losses that are notable - in the first half of 2018 there were five days on which trading losses exceeded $50m and one day on which they exceeded $100m.
By comparison, last year's biggest daily trading loss was $80m, and there were no other days when losses were $50m+.
As we move further into the third quarter, there are all sorts of reasons why volatility could make a comeback for traders at J.P. Morgan and elsewhere. During today's investor call, Barclays CFO Tushar Morzaria said volatility was lower in July, but higher already as we go into August. With an eye to their bonuses, J.P. Morgan's traders will be looking for an opportunity to make good their losses from earlier in the year.
Daily trading gains and losses at J.P. Morgan during the first six months of 2018
Daily trading gains and losses at J.P. Morgan during the first six months of 2017