Wall Street investment banking business and trading business made a rotation

Wall Street's trading business, which recorded its biggest volume in a decade last year, is expected to report a sharp drop in second-quarter revenue this week as life returns to normal and market volatility from the pandemic subsides. At the same time, however, investment banking is thriving, with record-breaking M&A activity driven by corporate confidence and private equity firms.

Goldman Sachs has always led the M&A rankings, but never like this year: M&A crossed the $1 trillion mark so early. JPMorgan and Morgan Stanley, the No. 2 and No. 3 investment banks by market share, also jumped significantly.

Meanwhile, total trading revenue for the five largest U.S. banks, including Bank of America and Citi, is expected to decline by 28%. whether the wave of acquisitions, equity offerings and debt deals can make up for the decline on trading can be vary. Even for Goldman, the advisory revenue accounts for the largest percentage of its total revenue, this fee income still accounts for less than 10% of the business. For J.P. Morgan, the ratio is much smaller.

    M&A will also drive hedging, derivatives, financing, and more businesses, IPOs have had their best half-year on record, and Wall Street looks set to keep busy in the third quarter.