Banks reported strong results for the first half of the year, so it seems odd that senior executives at US banks are so concerned about stagnant revenues. It has been an issue for two years, but there were ways of getting around it. First came cost-cutting. Then revenue from the consumer sector held up, with sustained buying and remortgaging of houses, and spending on credit. Third was what banks call yield-curve plays and the rest of us proprietary trading.
None of them exists any more, at least not on the scale and in the seemingly risk-free form seen in the past couple of years.
There's not much more to cut. Consumer spending has levelled off, and the high level of consumer debt is now a concern. That leaves prop trading, which almost every bank has indulged in.
But...
