New York (CNN Business)Market volatility is tricky business for banks. Sometimes it helps, allowing banks' trading teams to make money off of big swings. But that's not what's happened last quarter, if JPMorgan Chase's earnings are any indication.
Bond trading revenue fell 16% in the final three months of 2018, the company said when it reported earnings Tuesday. JPMorgan's results were below analyst expectations, a rare miss that caused the company's stock to fall about 1.5% in morning trading before recovering.
Global markets veered wildly in December, battered by the trade conflict between the United States and China as well as fears over rising interest rates.
Instead of encouraging trading, this volatility appears to have spooked investors. Repeat sell-offs may have encouraged them to stay on the sidelines or cash out investments without making new ones.
On a call with analysts, CEO Jamie Dimon brushed off the loss.
"I honestly couldn't care less," he said. He pointed to the company's strong performance in other areas, such as loans and credit cards.
JPMorgan (JPM) still brought in $7.1 billion in profit for the last three months of 2018. That's a 67% increase compared to the same period in 2017, when profit was weighed down by one-time charges related to President Donald Trump's tax reform law.
Overall, the bank earned a record $32.5 billion in profit last year, buoyed by tax cuts and a healthy economy.
Still, the trading hit highlights the effects of so-called bad volatility. Citigroup (C) reported similar problems when it shared earnings on Monday. The company's revenues were below what Wall Street expected due to a drop in its fixed-income trading division. Bond trading revenue plunged more than 20% from a year ago.
JPMorgan executives made clear that despite the noise from markets, they believe the economy can keep expanding — though they said the rate of growth may slow and that the government shutdown could have an impact.
"We can see slower growth but still grow, in the US and across the globe," Chief Financial Officer Marianne Lake said.
Dimon took pains during the analyst call to note that even if a recession were to hit, it would look very different from the one that followed the 2008 financial crisis. The credit portfolio that banks have right now is much stronger, he added.
"Credit is pristine," he said.
While some non-bank lenders could be in trouble, the quality of loans on JPMorgan's books is strong, Dimon continued.
The bank does appear to be preparing for more people to default on their loans. It earmarked $1.5 billion for credit losses last quarter, up $240 million compared to last year.
"We're not immune to what goes on in the economy," Dimon said. But "it won't be anything like you saw last time for much of the large banks."
On an earlier call with reporters on Tuesday, Dimon expressed aggravation with the partial government shutdown, which has lasted 25 days.
"If it goes on for the whole quarter, it can reduce growth to zero," he said.
A shutdown "is not going to help the economy," Dimon added. The closure cramps lending and hurts spending. It could even affect capital markets activity by preventing companies from going public.
"We don't know exactly what it's going to do," Dimon said, "but it's not a positive."
