JPMorgan Had a Record 2018. Jamie Dimon Worries About 2019.

(Bloomberg Opinion) -- By many measures, JPMorgan Chase & Company had a stellar 2018, with net income hitting a record —  even excluding the benefits from U.S. tax reforms — driven by loan growth and unprecedented investment banking fees.

But it was a tumultuous fourth quarter that drew much of the attention after the bank announced its results on Tuesday, with one analyst describing it as “very un-JPMorgan like.” Fixed-income trading revenue plummeted 18 percent, the worst performance in a decade, while expenses crept up more than expected. The result was the lender missed estimates on both earnings per share and revenue, the first time that has happened since 2015.

Executives wrote it off as a one-time setback. One quarter isn’t a trend, Chief Financial Officer Marianne Lake said, and the bank doesn’t feel the need to react to the slide in bond trading. The start to the year has been “decent” and the bank is seeing “normal seasonal strength,” she added. Asked by Wells Fargo analyst Mike Mayo how he felt about the year-end slump, Chief Executive Officer Jamie Dimon said he was “very happy” with the performance. He said that he doesn’t care about temporary swings, that the bank isn’t immune from the wider trends and that, in fact, JPMorgan’s market share either held up or grew in the quarter, as was the case in equities. What’s more, the near-term outlook for credit — one of the top investor worries going into earnings season — is relatively rosy.

But beneath that optimism was a clear current of unease about the path that lies ahead. It started with Dimon’s opening remarks.

“We urge our country’s leaders to strike a collaborative, constructive tone, which would reinforce already-strong consumer and business sentiment,” Dimon said in the press release accompanying earnings. “Businesses, government and communities need to work together to solve problems and help strengthen the economy for the benefit of everyone.”

Two headwinds are of concern to Dimon: the protracted government shutdown and uncertainty around the future of global trade. “We need good government policies,” he said. As chairman of the Business Roundtable, a lobbying group that represents about 200 chief executives, Dimon said he would like to see a trade deal get done. 

As for the partial U.S. government shutdown, it’s not just market confidence that’s getting hurt. In one of the starkest forecasts yet on the potential effects of the deadlock, Dimon predicted that growth could go to zero in the first quarter if the shutdown is prolonged; the Federal Reserve projected U.S. GDP growth of 2.3 percent for 2019 in quarterly forecasts it updated last month.

And on the day the U.K. Parliament was scheduled to vote on Britain’s exit from the European Union, it’s hard to ignore that even more unprecedented political shifts around the world could make JPMorgan’s record profit hard to repeat. Dimon, who voiced hope the decision to leave the EU might be reversed soon after the 2016 referendum, said for now there’s no change to the bank’s Brexit plans. The firm, which employs about 10,000 in London, is shifting assets and some staff to the continent. Dimon said he still doesn’t believe there will be hard Brexit because it’s in neither the EU’s nor Britain’s interest. That risk isn’t entirely off the table.

Those are a lot of potential storm clouds on the horizon, near and far. Dimon’s plea to government is a sign of the frustration that, like the weather, what happens in 2019 may be largely beyond his control.

To contact the editor responsible for this story: Daniel Niemi at dniemi1@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Elisa Martinuzzi is a Bloomberg Opinion columnist covering finance. She is a former managing editor for European finance at Bloomberg News.

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