J.P. Morgan Expects strong trading results, rumors of regulation and tax reform spreads

JP Morgan

J.P. Morgan Chase & CO. The biggest bank in the U.S. will kick off the first-quarter earnings season this Thursday, investors expects a bounce in trading results after a weak 2016.

Jamie Dimon, the Chief executive of J.P. Morgan, said that his bank has gained a steady stream of fixed-income since the exit from that business by many European banks that are struggling with new capital requirements that have made some business unprofitable.

Fixed-income, currencies and commodities trading all rebounded in 2016 after a long period of weakness that may lead to cutting staff from their trading desks.

The big U.S. banks were key gainers immediately after the surprise election of President Donald Trump in November, although bank stock gains have been pared in recent months as those same expectations have been scaled back.

The Pullback “is solely a function of policy uncertainty out of Washington, with market participants tempering expectations for tax and regulatory reform in the wake of the health care standoff,” said Sheraz Mian, research director at Zacks. “This reaction likely makes sense. But we do want to point out that the overall backdrop for this industry remains very favorable, particularly given the Fed’s monetary policy stance.”

J.P. Morgan is expected to report in the first quarter in every share earnings of $1.52, according to FactSet, which was up by $1.35 in the year-earlier period. CrowdSoyrces estimates from sell-side and buy-side analysts, Hedge funds, academics and others, is expecting EPS of $1.55.

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