JPMorgan Chase & Co. (JPM) Earnings Call Transcript & Summary

For our final session of the day, we have next JPMorgan. From JPMorgan, I'm excited to introduce Troy Rohrbaugh, Head of Global Markets. The Markets business earned about $30 billion in revenue last year, approximately 20% of consolidated revenues. So it's a big part of JPMorgan's franchise.

Maybe, Troy, I was prepping for this going to it, and if I had this right, I think you -- how does the Political Science major from John Hopkins become the head of the most -- largest trading franchise in the world? Give us that journey.

I'll give you the brief version of it. So I actually wanted to be an international relations manager, so political science and economics. And I didn't realize till I was well into it that you actually have to be proficient in a foreign language. And when I was going to fail French 301 in college, I figured maybe I would just shift to economics and political science. And I was going to be a dual major. But back then, Hopkins didn't really allow it. And more importantly, I wanted to write a thesis in political science, and you needed to be a Political Science major. So I picked Political Science, even though I had enough credits for economics. And when my parents found out, they were pretty upset. But at this point, despite my father continuing to give me a hard time about it, it seems to have worked out okay. So -- but no, that's how I failed international relations student cum political science ends up at some point at JPMorgan.

Not a bad journey. But maybe, I guess, just talking about the business. I mean clearly, the last 12 months had been continued heightened uncertainty. As you comment -- as you -- as someone who sits from the operating committee at the bank, how do you sort of balance the need for playing offense, having the troops go out in terms of market share, winning business, but then at the same time, understanding just the disruption that could happen in the markets and sort of defending the balance sheet against that?

Yes. I mean the debate between offense and defense, we have every day all the time, not only at the operating committee, but at the market's level below it. It's rare that we ever have to be totally on defense. You could argue, maybe March of 2020 is a moment where we're predominantly on defense. I think the advantage of JPMorgan's Market business, the breadth, the size of the franchise is there's always somewhere to be on offense. And I think the vast majority of what we do and spend our time on is offense. We never forget about defense. And I think there's either, what I would call, short-term opportunities where you can be offensive where there's a market developing, there's a trading opportunity, a client interest that you can deploy resources, whether that be balance sheet or risk appetite, and find a revenue opportunity or certainly a client opportunity. And then there are more strategic things where we feel like we have gaps that we need to close or we just think there's a growth area that we can really continue to commit resources. I also think we have a large market share, and people talk about defending it. And I actually think you have to be offensive there. You have to be growing it. The instant you're just defending, I think you're losing. So we spend most of our time on that. Beyond that, I think most of you know our President, Daniel, who I report to, and his boss, the CEO, they're generally focused on what could go wrong as well. So we always have a plan. And I think right now, where we think about the defensive side, it's really like a hard landing. Obviously, there's some geopolitics we could talk about. But realistically, if we had an extremely hard landing, that's probably the worst thing for our franchise in terms of exposure. And therefore, I think at this phase where it is a possibility, we're thinking hard about our less liquid risk, some of our counterparty exposure, just sizing it correctly, being in a position that it's an unknown. So we don't want to be where we feel like that we're over our skis, that's too large if the market were to turn.

Got it. And maybe, I guess, just tied to that, you' were talking about this briefly earlier. The last 12 months has been all about monetary policy globally and what inflation is going to do. As you think about -- like is there anything else that matters more? And like how do you handicap -- how do you feel about hard landing versus mild recession versus no landing, I guess, is the new term.

So -- I mean as you just said, we've been through all 3 in the last 2 quarters or less. We went from the Fed is going to hike so quickly and so far that it's a hard landing. So maybe not so much soft landing. And now the Fed is going to have to even hike further because there's no landing. I'm sure we're going to get back through at least 1 or 2 of them again before we're done this. I really think the major theme continues to be what you hit on, which is inflation and the Central Bank policy reaction to it. That's what's going to drive market. It's, first, inflation. And I think the 2 data points that matter to the Fed are unemployment and the actual inflation data. And I think they need both to go in the same direction. We had a pretty strong view. Even though the inflation data was improving, meaning going down, the employment data was not. It was continuing to be extremely strong. And that, that would put the Fed in a position where they could continue hiking. And then when they did stop, they would pause for quite a long period of time. That still is our central case scenario. I think the Fed is likely to go to 5.25%, maybe 5.5%, and then they're going to pause. And that, that pause is likely to be very long. That's our essential case scenario. If they have to go to 6% or beyond, then that's a scenario where we see more curve inversion. A harder landing is more likely, and we would get more defensive per the previous question. But our central case is really that they're able to pause at around 5.25% and then see the lag effect and then go from there. But that's what this year is going to be about, in my view.

And is that an agreement with, obviously, you see trillions of dollars of fixed income equity at managers, CIOs and how they are going about positioning for this. Like do you think that's kind of the base case for the markets today is some version of a soft landing to mild recession and the Fed peaking out at 5.25%?

I do.

Yes. Okay.

I think that's the central case scenario. The fringes, you've had people shift from a higher probability of hard landing, even though the central case was a soft lending, maybe they have to go further. But I think that's the swing around the edge. The central case scenario, in my view, with most clients is that medium soft landing. Where the Fed goes to the 5.25%, they pause. And that likely, by the third quarter, we'll see whether they have to keep going or they can stay on pause for a longer period of time.

Got it. I guess maybe just pivoting to how you approach the business internally. Clearly, capital and capital management has been a hot button issue for all banks and optimizing for RWA. When you think about just across your business, one, like has that been a theme? How you go about sort of optimizing for RWA? And how do you justify increased capital allocation to the business?

Sure. I mean, I don't think just for us, I think Street-wide, but certainly for us, capital or financial resources are a finite resource. And as a result, you have to optimize very aggressively. And we've been doing that for years. And yet, we still have more capital. Some of it is regulatory-driven, and I would argue, the vast majority of the change. But some of it is growth and where we've invested more capital. I think we continue to earn a very high return compared to our peers and well above hurdle for the firm. And we feel like there's still opportunity even at these higher levels of capital. That said, optimizing it is one of our primary focuses in the Markets business. We do it in a combined product-client lens. Clients expect us to be there. We can't cherry pick with our most important or really any of our major clients. We have to be across the full suite. That means doing lower return business in order to get higher return business. Clients really reward us for being there in some of the basic financing businesses like prime and fixed income financing. The halo effect is really significant. So our view is that we can optimize both across the clients to get the best return we can for the shareholder and also grow market share with clients and then limit our usage in areas where we're just not getting the return. We have a central group that we feel will become much more nimble in allocating capital across the business. The management team in Markets has known each other for a very long time. They work extremely well together. That makes a huge difference when I take resources away from one and give it to another. And we do it transparently, and it's worked really effectively.

Got it. And I guess within sort of the business mix when you think about where you're seeing particular strength, last year clearly was very strong for macro funds. Where are you seeing the opportunity in terms of prime brokerage, macro trading, like when you think about where things are?

Sure. So I mean, I'll start with equities. I mean we've invested for the last decade-plus to really become a real player. Previously, it was a 2-horse race, and we think it's a real 3-horse race. And we can debate who's 1, 2 or 3. We think it's really tight and that we've meaningfully closed the gap. We think we have momentum in this space, and that's across the whole franchise. We've always been strong in equity derivatives, but we've really grown the franchise on the back of growing our prime business into cash equities and the other parts of the more flow piece of the business. Obviously, we can't grow balance sheet in an unlimited fashion. But we think there's a way to optimize and continue to grow our prime footprint and get that spillover halo effect into the rest of our equities business. So we will continue to see opportunity in equities. Obviously, if you have a hard landing where the wallet shrinks, then we would adjust accordingly. But assuming we're in a softer landing scenario, we think there's real opportunity for us to continue to grow market share there. In fixed income, we are the leading franchise, but it doesn't mean there's not real opportunity for us to grow. As you said, macro was extremely a positive outcome for us last year. It started off that way this year. I think volatility is going to remain elevated, particularly in macro products. For our conversation of what's going to be the theme, I think that really benefits as a tailwind to the macro franchise. I'd expect it to normalize a bit, but I think it's still going to be very robust. And then I think you'll get some normalization in the spread products, particularly credit.

Got it. And I guess maybe if you go back this time last year, there was just a ton of turmoil between central banks, the war in Ukraine. As you think about the risk of market disruption and dislocation, like does that feel less concerning to you today than it did 6 to 12 months ago?

I mean, after Ukraine, which I think no one truly predicted in the fashion, it's really hard to say that you're not concerned. I think starting with geopolitics is -- while I think the market has become comfortable with what is basically a stalemate in Eastern Ukraine for now, that has the possibility to continue to flare in a negative way. If we go into the spring and Russia hasn't made material gains and Ukraine goes on the offensive with lots of impact from Western weapon deliveries, that can get extremely volatile. And again, no one really knows. But that's something that we worry about and we watch closely. China-U.S. relations, it feels that both sides have tried to reset. Tensions are definitely lower than they were in, I would say, the early part of last year. But there's still a lot going on. And from a medium- to long-term basis, this isn't going away. The competition is at a different level. The tension will be higher. And it can have a huge impact, both short term if it were to flare up and then even medium term and what the opportunities are for us. Now you also have the debt ceiling. I mean I think we all assume they'll figure it out. But in a world where there's no compromise on either side, it has the possibility of being really disruptive as we get to the, say, arguably third quarter or the early part of the third quarter. So I mean there are definitely events that can be tailwinds. You could also have a scenario where inflation just doesn't subside. It becomes very sticky. It's very hard for them to get it lower. And the Fed, in my opinion, is most concerned about inflation. I think they will aggressively fight it. And if they have to go well above what's expected right now, they will. And that's really the other tail scenario. That's the one I worry about the most because it's probably the highest probability, but they're all there.

Got it. And I guess even year-to-date, you've seen enough volatility in the equity rates market. In terms of looking at the Markets business, when you look at last year, tough comps. How is the business trending?

Sure. I think Jeremy stole a lot of our thunder yesterday.

And you should blame him for that.

Yes. I mean I think he was a trader. So I think he felt very comfortable doing it. And it's great having a trader or someone who was a trader to be the CFO. It makes my life a lot easier and a lot better. So I think he covered it. I'd say really high level, the compares are really difficult. Q1 last year was excellent for Markets. The whole quarter was good in equities. The latter half was really strong in fixed income because of the geopolitical stress, particularly again, macro. We're trending right now to be slightly down, as Jeremy mentioned, but it's -- we're only halfway through the quarter. There's a lot of possibilities. There's potentially a lot of elevated volatility, so it's really hard to know for sure.

And the primary issuance, it seems like things have started out like the debt markets, Jan was strong for investment-grade issuance. We've seen some anecdotally one-off IPOs in health care, et cetera. What does that look like?

Yes. So -- I mean I think we expected it to rebound. I'd say on the DCM side, it's better than what I would have expected. There's been a lot of issuance. The market has digested it well, and it bodes well for the rest of the pipeline. In equities, you feel capital markets are starting to open up. Like you mentioned, we've had a couple of IPOs broadly gone reasonably well. And again, it feels like I think there's more activity picking up in banking and capital markets. So I think the normalization that we were expecting is starting. I mean where it ends up this year depends on a lot of factors. And after last year, you would expect it to be better. How much better is an unknown.

Got it. And I guess within -- just going back to -- you mentioned halfway into the quarter, a lot could change. But is the mix changing in terms of what's driving? Especially in the fixed side, folks talk about like FX versus rates versus commodities. Like what's driving revenue growth?

Yes, sure. So when we say macro, we mean rates, FX, commodities and then EM for all of them. What we're continuing to see in strong revenues, client flows are is in the whole macro complex. But I would say, when you break it down and look forward for the year, I mean, last year as a year in commodities was really phenomenal and maybe one-off, particularly in the energy side of the business. So again, it's a little bit hard to believe that's not going to normalize. So while that started fine, I mean we'll see. The expectation will be normalization. For the rest of the macro franchise, again, very robust in starting. But again, we're expecting some normalization this year. Where we've really seen a change relative to last year is a pickup in credit, demand from investors, demand from clients, generally speaking, a rebound in what, I would say, pricing, a rebound in spreads. So that has been something we expected and hoped for, and it's played through. SPG, I think we're going to have to wait and see. I mean interest rates are still high. It's a really important business for us. It's always been fundamental to our FICC franchise. I think that's going to take more time to normalize. I don't expect it to be more negative than last year. But I think, broadly speaking, that's going to be a story for the arguably second half of the year.

Got it. And I guess going back to something you said about the equities business moving to top 3. I think the one thing that you hear often is the market share in trading has been consolidated at the top maybe 3 or maybe the top 4, 5, 6 players. One, do you agree with that statement? And second, what's driving that? Is it technology? Is it the size of the balance sheet?

Sure. So our view is very clearly up till COVID, up till 2020 and maybe arguably in the beginning of COVID, you've seen real consolidation into the leaders, both in equities, which is really at most been a 2- to 3-horse race for quite some time, but even in fixed income. And if you look at overall markets revenue, it really consolidated into, say, the 5 leading players, of which depending on how you want to pick them, they're almost all U.S.-based institutions. So that trend had been really consistent since the great financial crisis. I think it was driven by quantitative easing, lower levels of volatility, increased amount of balance sheet, the investments required in electronic trading, all really played to the larger players who could make that investment, who had large client franchises, who could still deploy balance sheet. What we're seeing now is a bit of a rebound in some of the European counterparties. And I think when you look at this year, you've seen a bounce back in some market share for those players who had lost a lot of market share during that sort of post-great financial crisis. I think a lot of it is driven by just better wallet opportunities in markets. The wallet is significantly higher than it was pre-COVID, and a lot of it is driven by trading opportunity. And I think while the client franchise and the assets under management have grown in fixed income particularly, you just had a really beneficial macro trading environment. Therefore, the wallet was bigger for our clients. The wallet was bigger for everyone. And I think as a result, you got market share gains from some of our European competitors. I think longer term, depending on where the wallet goes, you're not going to see -- it's very hard to break in, but you might not see like that consolidation in the top 3 or the top 5. We might be at a level. If the wallet shrinks, I think that consolidation will resume. If the wallet stays large and -- or continues to grow, I think you're going to see a little bit more room for people outside that top 4 or 5 to compete.

And I guess just on that, your view on the wallet itself, right, like has grown tremendously since 2018, '19 when you look at aggregate trading revenues. And the concern when you talk to investors, like is this sustainable -- and we've talked about this for the last 2 years. Like how do you assess that? Is -- what's the best way to handicap that in terms of just the downside risk there?

Sure. I probably should start by saying we were completely wrong in budgeting in '21 and in '22. So we assumed a lot more normalization. We've always felt that it would normalize between really 2020 and 2019. If you think about that wallet increase, we didn't think it would go back to the pre-COVID levels, but we thought it would normalize. And I would argue in '21, we thought it would normalize much closer to the 2019 level than the 2020. And for good for the firm and for everyone involved in the business, we were wrong. It normalized at a much higher level. We predicted more normalization in 2022, and we were wrong again. And last year was the second best year we've ever had in Markets. Again, are predicting a bit of normalization in the wallet. But hopefully, we're right this time and it's not significant. And the reason we're not predicting as much is higher levels of volatility. We think with the direction of the market, much higher rates, much higher levels of volatility, there's a lot more opportunity, both continuing in the macro side. And fixed income is in. It's actually a tradable investable asset class now. And we're seeing a lot of interest and a lot of capital being deployed in the early part of this year. So we're hopeful that, that continues.

And has anything changed there in terms of the volatility? Because I remember in the years after the GFC, you talked about good volatility and bad volatility. And I think it felt like there was a lot more of bad vol than good vol. And now it's just less talked about.

So I'm often -- we get asked this question a lot when the finance team calls us. And after a lot of years of experience, I realize what bad volatility means is you lose money, and good volatility means you make money. I think that's what people generally mean outside of trading. I would classify it as good volatility enables clients to really participate. They are real themes. So difficult volatility for clients is February and March of 2020, where like they're shedding assets, they're losing money. Good volatility would be last year, where you have real themes in foreign exchange, real themes in rates. Even the negative themes like clients can trade, whether it be lower equities and a repricing of credit and mortgages. So I think we're in a world now where there's real themes to trade. So I'd like to say it's good volatility. We'll see. But I think it's different than market crisis. I think it's volatility in a pre-GFC style, whether it's just higher rates, there's more differentiation, there's more dispersion in asset classes, and there's more opportunity for our clients, particularly on the institutional side.

Got it. And I think the one thing you mentioned earlier, so QE played some role here. Now as we look into the Fed doing $100 billion a month in QT, one, how big of a deal do you think that is going to be if they are able to continue? And do you think, from a market standpoint, does that increase the risk of an accident as they move further?

Yes. So first off, I think the Fed is very sensitive to it. I think they've been quite transparent in what they're doing. And I think my view or our Markets' view is that the Fed wants to use one lever at a time. They pulled the QT lever, and they left it alone. And they've been very transparent about what they plan to do. And then they want the variable lever to be interest rate policy. And I think they're going to continue to do that. If they felt the QT lever what's causing real disruption, I think they would push it back and stop. But I don't think they're going to need to because they're doing it very slowly. They're very transparent. And I think the market is adjusted to it. The market knows what they're going to do. So my view is they'll stick to driving policy with interest rates to watch the effect of QT closely. I don't think they're going to need to reverse policy, but I think they would if they had to in QT. The other thing is I think a lot of it is priced in already. I mean you've had the reversal of a lot of QE type behavior or asset appreciation. Equities were down, peak to trough, 25%. They're maybe down depending on what index you want to use, 15%-ish now. You've had a revaluation of tech stocks. You've had a revaluation of a lot of companies that have low profitability, but lots of investment in asset price appreciation. You've had mortgages reprice. You've had credit reprice. So I think the market is adjusted to it. And I think you've seen a lot of QT's asset price effect already built in. That doesn't mean there can't be more, but I think the Fed would be responsive if they thought QT was driving it.

Got it. I guess another, I think, structural theme, you've talked about just electronification of fixed income trading. And we've talked about it for several years, and it seems like it's been very slow. Just if you don't mind maybe spending a minute in terms of the parallels between what happened with the equities business maybe 15, 20 years ago and where we are in that fixed income journey.

Sure. I mean -- so I think about it this way. Historically, at JPMorgan, we were never a leading equities franchise. And it electronified, and we didn't jump on the trend and take advantage of it. And in foreign exchange, we were 1 of the 2 leading franchises. Electronified, we didn't do it, and we fell out of the top 5, arguably came close to falling out of the top 10. For us, getting this right is like fundamental to what we do. Like we -- if I look at my investment budget and the part that's discretionary, 1 of the top 3 categories is spend on electronification and electronic trading. I think when you compare some of the other fixed income asset classes to equities or foreign exchange, you're like, wow, it hasn't gone that far. But you're looking at something that's arguably, in foreign exchange, a single CUSIP product. Euro is the same CUSIP globally. Equities, you have single CUSIP products. You've had a generation of electronification. So the comparison is not really fair. I think in the parts of fixed income that look more similar to foreign exchange or equities, so think precious metals; think some of the liquid indexes, both in credit and in rates; think about on or on U.S. treasuries, we're seeing similar levels of electronification. Maybe not quite where FX and equities are, but well over 50% and, in many cases, approaching what we see on the runs to foreign exchange. You're already starting to see it in things like base metals. We're developing energy trading electronically. You're seeing credit where our biggest investment is really start to electronify. I think in credit, the nonbanks that took the lead, and I think the banks let them get a little bit too far ahead, but I think we're closing the gap, not only us, but some of the other banks.

And does it mean the same thing that it meant in equities as will the spreads tighten, and then you need to look for efficiency at the back-end? How does the economics evolve in that world?

So I think there's some things that are the same. So obviously, generically, electronic trading reduces spreads. So if you assume the exact same volumes with no efficiency in the back-end, it's worse for the franchise. And I think in the beginning, that often is what happens. But it allows a lot more efficiency, I'd argue both, in the downstream, but also in upstream. You can get more done with less people. You can do it more efficiently on both sides, both front- and back-office. So you get efficiency over time if you push for it. And secondly, volumes generically go up. It's also a scale play. The rewards go to the largest. And if you are big and you get economies of scale, you can get a lot more volume, get more market share, do it at much tighter spreads. But overall, it's much more profitable. And if I just use foreign exchange as an example, our spreads are at levels that no trader 10 years ago would have told you it's possible to even think about showing or, let alone, making a positive revenue. And we make positive revenue at levels we never thought of possible. Like we have record revenues like on a relative basis. I'm not talking about this year or last year, but compared to where we were pre-electronification. So we believe that's the journey, and we're going to continue to invest heavily.

Got it. Maybe, I guess, if we can just talk about geographies a little bit and spend some time in terms of, one, emerging market, like what role does China play? Maybe it's a 100-year opportunity, maybe it's a 10, you tell me. And then how is Europe holding up just post-Brexit, the market structure there and the competitive landscape?

So -- I mean I would start -- I think it's both a 10-year opportunity and, depending on how global competition and the relationship goes, arguably 100-year opportunity. There is a possibility, it's not an opportunity. I think that's a lower probability. And look, we can talk about other things, but our philosophy is you assume it is going to be the opportunity, you invest accordingly but thoughtfully. And if it turns out to be wrong, fine, it was money you invested that didn't work out. But you can't afford to miss it if it turns into that type of opportunity. If I look at our emerging markets franchise, the biggest opportunity continues to be growth in China. I think it will be one of the biggest drivers of our overall growth in emerging markets, certainly for the Asia franchise overall. And if I look at our international footprint, I know everyone thinks about us as a U.S. institution, but over 50% of our total Markets revenue is international now. And the growth we've had in Asia is just above 50% in the last several years, depending on when you go to the starting point. But that type of growth, we would expect maybe not at those levels, but we would expect that to continue. And while we continue to want to grow our North American franchise, we expect it to be a smaller proportion of the total over time. I think China is, by far, the biggest opportunity for us. And we continue to invest as we did previously. Obviously, cautiously, we're ready to adjust if necessary, but we're assuming it continues to be the opportunity we expect. One of the other places that I think has really changed recently is the Middle East. I think it's gone from being an exporter of capital to potentially an importer. I think there's a lot going on there. There's been a lot of movement in clients from Asia into Dubai in terms of locating offices, et cetera. I think that's the beginning. So it's not just a client coverage. I think as they get more capital importation, the opportunities there will really go up. We have a very strong foundation there, and I think it's a real opportunity over the next 2 to 3 years for us.

Got it. And correct me if I'm wrong, but it feels like the Chinese government has been opening up the financial services sector. You've seen a lot of JVs being 100% owned by U.S. companies. Like has that stopped because of what's happened over the last year or 2 geopolitically?

In our experience, no. We feel like they're still focusing on the plan that they had previously, which is to open up the opportunities to non-Chinese banks. Look, I'm always careful. I mean I've done this job for a long time. And for the first 20 years, every presentation on the future was a picture of Asia with the population of China on it and how you had to be there. And nothing really materially moved for a generation. I really feel like that's changed in the last 3 to 5 years. Like there's real opportunity. There's real movement. I feel like that the opportunity is finally like close to being more of a real -- we can realize it. And so, therefore, I think you would have been a little concerned with increased geopolitical tensions that the experience we had might have changed, but at this point, it hasn't.

Got it. And quickly on Europe in terms of just the post-Brexit, how that's shaping up?

Sure. I mean we've chosen, for the Markets business, Paris is our second center. I had the fortune of working in Paris in 1994 and 1995, really 1995. When all of Europe was spread out, all -- everyone had their own national financial center. I think we're going back towards a little bit of that. But we believe quite strongly in centralizing. We want to try to go with a 2-center approach, London and Paris. It doesn't mean we don't have operations elsewhere, but that's predominantly where we'll be. It's gone relatively smoothly. I think the environment to do business is quite good. The French have leaned in heavily, along with other people in Europe. And -- but look, the reality is you're going to have a European entity, and you're going to have to staff it appropriately. And I think there's opportunity there. You need to get it right or you're going to balloon your cost base. But at this point, we still believe Europe offers real opportunity. And we don't have any plans to like shrink our presence or change the capital footprint we have there in Markets.

And you mentioned earlier, I mean, the European financial institutions have been market share givers over the last decade, give or take. When you think about them coming back in, you mentioned about -- depending on the size of the wallet share, are they more competitive just globally? Are they more competitive at home and more aggressively defending that share?

It depends. Like they're definitely all more competitive at home, right? And I'd argue, in many cases, they didn't lose their competitiveness there. Some did that were under real duress, but some of others have always been very competitive locally. I think what's really changed is they're all competitive locally now with some mild exceptions. And some of them have bigger aspirations in markets more broadly. And I think you've seen it, particularly in places like financing, where it's easier to make an inroad with clients.

Right. Got it. And in terms of like just secular growth opportunities that you're seeing, I mean, the themes like electronification. But where do you see the significant runway for JPM to invest and continue to grow?

Sure. I think one is really a little bit more tactical for us. We reinvested in, what I would say, our natural gas business. We started that 3 or 4 years ago. Obviously, last year, it was like a really important part of our commodities business and our macro business. We believe that in commodities, the opportunity, particularly in energy, will last more than just last year. We expect it to normalize, as we mentioned or discussed earlier. But I think the global demand for energy and then particularly the move towards renewables and carbon trading are really important to get right for our commodities franchise. So the reinvestment in natural gas, I mean we still are very cautious about what we do. There's definitely parts of the physical energy business that we won't do. But in natural gas and investing heavily in renewables, I think, is a real opportunity for us, and that's only going to grow. Elsewhere, one of our big investments is -- we call it corporate FX, but it's basically the combination of the power of the firm between our TS business, our Payments business and the Markets business. If I look at our franchise globally compared to the #1 in the space, that was a big gap. And we feel like we've closed that gap in a more material way. There's plenty more to go. The #1 leader out there has the most market share, but that's a huge opportunity for us. And I think that will not only be a positive impact to revenue, it's really capital-light, so it's quite attractive, but it will really help our corporate franchise globally and our corporate franchise in EM and in international locations. I mean they're 2 quick ones. I think they're a huge opportunity for us. You mentioned e-trading, but I think the electronification in credit and the growth in ETFs in credit is just beginning. And we're investing heavily in that. And I think there's, again, a lot of upside for us to pair that with what is arguably a best-in-class credit franchise.

And we have a couple of minutes. I just wanted to see if anyone in the room had a question, if we do, raise -- go ahead.

I just wonder if I could ask you to respond to the fact that it was the second best year of trading last year and like new issue kind of shut off post-March. I'd have to imagine that has an impact on your businesses.

Sure. I mean it's certainly -- if we look at Markets, like the most challenging piece of it was arguably in the primary space. We have a great leading credit franchise, but primary is an important part of it. That combination of primary with secondary is a really important part of what we do for clients. And so part of the reason I'm more bullish and we think credit will normalize is that primary market this year. And then when you jump over to the equities side, obviously, it has an impact there, too. I mean it has an impact on the whole ecosystem in equities, and it has an impact on block trading. It has an impact on what the spillover is to our cash business. So again, if you look at our equities franchise, while they had a really good year, cash was a little bit more challenging relative to the other parts of the business. And I would think if you see primary markets continue to rebound there or start to more meaningfully rebound, that will be a tailwind to our cash equities franchise.

Any other questions? I have one last question around -- it seemed like 4 or 5 years ago, there was a lot of discussion on blockchain and distributed ledger technology and how that would help efficiencies in the trading business. One, is that still the case? And from a tokenization standpoint, like do you see that impacting your business meaningfully at any time soon?

So I mean I think for good or bad, up until recently, the cryptocurrency sort of took all the oxygen out of the room when you talked about these things. And now that, that's abated, you can have a more rational discussion. I think it's fair to say the investment in digital ledger technology relative to the output outside of cryptocurrencies in other uses in markets has been slightly disappointing. That said, we've invested a lot in it. We have real products, particularly our repo product. We think they're going to continue to grow. How big they become, it's really hard to know. I think DLT technology is really suited for some things, but it's not for other parts of the market. So I just don't see it as -- now that we're having a more rational conversation, it's going to be a bit more focused. Tokenization is a little bit different. I think depending on how that develops and digital asset trading more generally, that could potentially be a very big thing. If you can tokenize assets that are traditionally the realm of large investors, it can really change who the client base is. And I think we're watching that really closely. And despite the firm's obvious and publicly stated view on cryptocurrency, we've invested a lot in digital technology and the potential of digital assets and tokenization, and we're going to continue doing that.

Got it. I know we are out of time. Thank you so much.