Bankers brush off Trump’s trade war concerns, tout economy in second quarter earnings

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Trump Xi trade war

US
President Donald Trump, left, and Chinese President Xi Jinping
arrive for a meeting on the sidelines of the G-20 Summit in
Hamburg, Germany.

AP/Saul
Loeb


  • During second quarter earnings, bank executives from
    Citi, JPMorgan and Bank of America tamped down concerns about
    the impact of Trump’s trade war on their firms.
  • Worries over trade may have actually boosted results,
    the executives said, by increasing client uneasiness which led
    to increased trading business.

Executives from the biggest US banks brushed off concerns that
Trump’s trade war was biting into economic growth or corporate
earnings.  

“If you’re looking for potholes out there, there are not a lot,”
JPMorgan Chase CEO Jamie Dimon
said on a second quarter analyst call on Friday
. He did
acknowledge, however, that consumer and business confidence
levels coming off their highs may have been due to trade
concerns.

Even more, worries over trade may have boosted the bank’s results
by increasing uncertainty and enflaming market volatility that
led to increased trading business.

“I wouldn’t be rooting for a trade war, but when there is
volatility, if we do our job well, were going to be there for
customers and clients and address issues they may have,” Bank of
America CFO Paul Donofrio said on Monday during a call with
reporters. 

At Bank of America,
sales and trading revenue jumped 6% to $3.4 billion during the
second quarter. 

JPMorgan posted record earnings for the second quarter. The
bank’s finance chief Marianne Lake said that ironically, economic
uneasiness has given clients more reasons to rebalance their
portfolios and trade. 

“There’s just more catalysts in the market and just generally
more client participation,” she said. European Union and
emerging-market unrest also helped, she added. 

JPMorgan’s revenue from trading stocks and bonds rose 14% to $5.4
billion, better than analysts had anticipated. Citigroup,

which also reported earnings on Friday, said trading revenue
declined just 1% to $3.9
billion. 

Citi’s finance chief, John Gerspach, also tamped down trade
concerns, saying in a call with media that he saw “little direct
impact” from the first days of the dispute. 

“We haven’t seen changes in behavior of any significance and so
right now, it’s the rhetoric we’re tracking,” he later added on
an analyst call. “I think the markets have the fears of what the
rhetoric leads to but at this point, we’re not seeing it coming
through in the numbers.” 

The Trump administration imposed a 25% tariff on
roughly $34 billion worth of Chinese
goods
 last week, leading Beijing to retaliate with
in-kind tariffs on American products, including soybeans.
President Trump has showed 
no signs of backing down
on threats to impose an additional $200 billion worth of
additional tariffs on China.

Even so, Dimon warned earlier in the day that there’s always a
risk that the current tit-for-tat can escalate and lead to
unintended consequences. 

“There are unpredictable outcomes when you start skirmishes like
this with multiple countries,” Dimon said on a conference call
with journalists. “It’s a worry. I wouldn’t use the word major yet, but
hopefully it gets resolved.”