Banking Strategies

The trouble in Europe has certainly put a damp rag on the market sentiment in recent weeks. Not to mention the fact that JP Morgan Chase has warned that it was like to fall about eight percent from last years high. Sad. I also read that Bank of America is expecting to see approximately 30,000 layoffs over the next several months. Not the best market to be in when we see unemployment hovering around 10%.

We are seeing the investment banking institutions brace for the worst as markets roil over what has happened and liquidity squeezes are happening all over the place. Cold feet in the merger and acquisition space also run rampant as companies watch their potential liquidity dry up before their eyes.

So as the banks sound the alarm bells it looks like rough waters remain ahead. Mr. Staley of JP Morgan expects investment banking revenues to fall by approximately $1 billion this quarter, down from about $1.9 billion last quarter. He is also confident that his private equity business will be losing about $100 million as well, an event which he calls “moderate” compared to all the other issues which are currently being seen.

The fall-off seen in trading is only natural given the huge market swings we are currently seeing as the markets begin their downward slope. Mark my words, however, such swings are only natural and will not take too much time to shift to gains. The current political situation also shows large shifts as well. Commodities markets, such as those in electricity & natural gas have also seen major fluctuations of late. This will eventually sort itself out, but in the meantime it may take some time for things to truly come back on an even keel. Meanwhile, the banks will continue to brace for the worst and hope for the best. What will you be doing in the coming months?