Trump's policies have turned the market upside down! The dreams of mega mergers on Wall Street have been shattered, yet unexpectedly they have still made billions in transaction revenue.

Wall Street banks were once optimistic that Donald Trump's second term would bring a wave of mergers and acquisitions, but instead it brought a trading feast. The trading revenue of the top five banks in the United States in the first half of the year soared by $10 billion compared to the same period last year, reaching a record high. This was mainly due to tariff and tax policies driving a significant increase in trading activity in the stock, currency, and bond markets. However, investment banking revenue increased only slightly by less than $1 billion and was still nearly 40% lower than the peak in 2021, as market volatility affected merger and initial public offering (IPO) deals. Trump's tariffs sparked market turbulence Jim DeMare, global markets head at Bank of America Corp (BAC.US), said, "After Liberation Day, we saw intense market volatility. Clients were trading frequently at the time, but as concerns eased, the market stabilized. Subsequently, investors reconfigured in stocks, rates, and forex." When Donald Trump won the U.S. presidential election in November last year, Wall Street executives believed that his policies promoting economic growth would unleash pent-up matchmaking demand. Jamie Dimon, CEO of JPMorgan Chase (JPM.US) at the time, said that bankers were "very excited" about Trump's victory, and he and other senior financiers predicted that the market would regain its animal spirits. However, Trump's bold tariff policy temporarily disappointed these expectations, and market turbulence stalled merger activities. The market volatility triggered by Trump's tariffs hindered matchmaking activities after Liberation Day, but it further stimulated trading activity in the second quarter, creating record revenue for some of the largest Financial Institutions, Inc. on Wall Street. Bank of America Corp's traders set a new record in the second quarter, while Goldman Sachs Group, Inc. (GS.US) stock traders achieved the highest revenue in Wall Street history. Morgan Stanley's stock traders had the strongest performance in the second quarter, and the trading department at Citigroup (C.US) posted its best performance in five years. Citigroup CEO Jane Fraser said market volatility will be a "feature of the Shanghai New World order, not a defect." Trading activity expected to remain active Overall, trading revenues for the top five U.S. banks in the first half of the year reached $71 billion, setting a record for the same period. DeMare of Bank of America Corp said he expects trading activity to remain high, even if not as active as when tariffs were first announced. He said, "But in recent times, the last 12 months, the economic and political environment has greatly changed compared to before the COVID-19 pandemic." The fixed income department at Bank of America Corp demonstrated the most activity in macro products such as interest rates and forex. In terms of stocks, there was an increase in cash and derivative trading volume handled by traders. Goldman Sachs Group, Inc. CEO David Solomon said that the activities driving the growth of its stock trading business "look sustainable" as both the market and economy continue to grow. He also noted that mergers and IPO trading are picking up, which is also positive for the stock trading business. Second-quarter performance at major banks shows signs of a recovery in investment banking business. JPMorgan Chase's second-quarter investment banking performance exceeded expectations, with investment banking expenses increasing by 7%. Dimon said business is gradually heating up. Citigroup's matchmaking business performance exceeded expectations, with investment banking expenses up 13% from the second quarter of last year, reaching over $1 billion. Morgan Stanley CEO Ted Pick said that investment banking business rebounded in June as boards were generally more open to ongoing uncertainty. While investment banking expenses decreased by 5% to $1.54 billion, it was less than analysts' expectations, as stock underwriting business grew by 42%. Pick said, "The second quarter presented two very different stages. The first stage began with the uncertainty and market volatility brought about by U.S. trade policy, and the second stage ended with increased market participation and steady recovery in capital markets."