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The trading accounts of US banks topped $1tn in the third quarter — their highest level in more than 16 years and close to an all-time high — as the nation’s largest financial firms seek to profit from rebuilding their market-making businesses.

That growth has at the same time left the banks, particularly the largest ones, more exposed to market moves than at any time since the financial crisis as they hold ever-greater inventories of price-sensitive securities.

Their trading accounts last peaked at just over $1tn, slightly higher than today, in the first quarter of 2008, according to industry tracker BankRegData. That was just a few months before the bursting of the housing bubble that led to a credit crunch, cratered markets and sent the US into a significant recession.

“You see the cash that the banks had sitting on the sidelines flowing recently into their trading books,” said Bill Moreland, who runs BankRegData, which compiled the trading data from the bank’s regulatory filings with the Federal Deposit Insurance Corp. “It is a bet on financial assets, rather than say lending or the economy, because that’s where they see the returns.”

Trading was a key source of the bank instability that contributed to taxpayer-financed bailouts in the financial crisis, as desks took proprietary directional bets that turned against them. After the crisis, lawmakers adopted rules that prohibited banks from speculating with house money and required that trading facilitate client business.

Nearly all of the trading activity in the US banking industry remains concentrated at the nation’s largest banks. The biggest is JPMorgan Chase, which had $506bn, roughly half the industry total, in its trading account at the end of the third quarter, up from $329bn at the beginning of the year, according to its FDIC filings.

But all of the big lenders, including Citigroup, Bank of America and Wells Fargo, have boosted their trading assets this year, according to data logged with the FDIC.

Trading accounts at Goldman Sachs and Morgan Stanley, which generate more of their income from Wall Street activity than lending, are the highest they have been in years.

The biggest jump, for all the banks, has been in plain-vanilla equity holdings. JPMorgan’s stock market traders held $190bn in securities, more than double the $85bn they had at the beginning of the year.

But bank trading desks also have increased their holdings of asset-backed securities. These have been among Wall Street’s hottest financing markets this year, such as bonds comprised of consumer debt like credit cards and auto loans.

Despite the jump in assets, executives and industry analysts say the banks’ trading businesses are significantly less risky than they were prior to the financial crisis.

They say much of the activity that the big banks carry out is either on behalf of their clients or to facilitate client trades. The Dodd Frank Act and other post-financial crisis legislation have made it hard for banks, as they once did, to make proprietary bets or to put their depositors funds at risk.

For example, value-at-risk — or VaR — assessments, which estimate how much a bank could lose in the market in any one day, in most cases stand at levels that are half of where they were before the financial crisis.

And while trading assets are up, they still only make up 4 per cent of the banking industry’s total assets, and about half of what they were as a percentage of assets back in 2008.

“Generally the business of banks these days is to sell the securities and investment to others, not to hold it themselves,” said Christopher Whalen, a veteran bank analyst at Institutional Risk Analyst. “But activity is up and can’t sell everything you want.”

Additional reporting by Joshua Franklin in New York.

As it remains in a state of limbo, Kevin Costner’s four-part Western “Horizon: An American Saga” has already been marked for dead by some in the industry.

Yes, things aren’t looking too bright for Costner’s saga, and with the third film having only been partially shot, his wallet is already looking at financial losses in the excess of $75M, maybe more. These downer numbers still haven’t stopped Costner in seeking financing to complete the third and fourth films.

In an interview with Deadline, Costner admits having had meetings with some of the richest people in the world.

“I’m hoping, I’m dreaming, I’m meeting all the billionaires that we all hear about — they’re all hiding in the shadows,” Costner is now telling Deadline.

“I’m don’t know how I’m going to do it,” he added, “but I’m going to make [Chapter 3] and then I’m going to make the fourth one. And if you want to say ’the end’ at that point, then that’s the end.”

Costner describes the project, and its hopeful completion, to pushing the rock of Sisyphus up the mountain and, alternately, to searching for proof of extraterrestrial life.

“It’s my own private UFO,” he said. “I’ve seen it, and I will never forget it, and I chase it as long as I can. … I will figure out a way to bring you 3 and 4, because you’ve gone to 1 and you’re gonna go to 2, and we’re all gonna go west together.”

Earlier in the year, Costner had repeatedly stated that he would be shooting ‘Part 3’ this fall, but that clearly hasn’t materialized. He shot nine days’ worth of footage in April, but production had to “temporarily” shut down due to lack of funds.

There is currently no release date for ‘Chapter 2,’ which was pulled from Warner Bros’ summer schedule after the first instalment, which cost $110M, failed to lure an audience into theaters, earning just $29M domestically. ‘Chapter 2’ did end up world premiering at the Venice Film Festival in September, albeit to weak reviews which further complicated matters for potential distribution.

Is the dragon slain? Or just wounded?

Inflation has been the scourge of the economy for the last three years. It spiked from a benign 1.4% when President Biden took office in 2021 to a searing 9% some 18 months later. The Federal Reserve took aim with speedy interest rate hikes, and it seemed to work. By September, inflation was down to 2.4%, almost in the normal zone.

Then, an upward blip. The latest data shows inflation ticked back up to 2.6% in October. That could be a spot on the X-ray that turns out to be nothing. Or it could signal that inflation is making a comeback, which would scramble the outlook for interest rates, financial markets, and the policies of the incoming Trump administration.

The inflation uptick in October wasn’t a fluke based on hurricanes or other one-time anomalies. Most important goods and services categories rose, including food, energy, rent, and vehicles. This came one month after the Fed basically declared victory over inflation. In September, the Fed reversed monetary policy and started cutting interest rates, signaling that the time had come to worry more about keeping growth humming than about getting prices down.

The Fed is staying the course for now. It cut short-term rates again on Nov. 14 and may do so again at its next policy meeting in December. But the odds of more rate cuts are dropping, with policymakers waiting for more lab results in the form of forthcoming inflation data.

“Inflation might soon be front-page news again,” Capital Economics announced in a Nov. 13 analysis. The forecasting firm argues that the currently inflationary trend is OK, but the future outlook is more worrisome — in large part because of what Donald Trump plans to do once he takes office next January.

At least two elements of Trump’s agenda are inflationary: new tariffs on imports and the mass deportation of undocumented migrants. Tariffs are taxes that raise the cost of imported goods directly. Deporting migrants would reduce the size of the labor force, especially targeting lower-wage workers. Replacing them with workers who might demand higher pay — or with costly machines — would raise costs one way or another, with producers passing as much as they could on to consumers.

A third inflation concern is Trump’s desire to cut taxes further, which can have a stimulus effect by putting more money in people’s pockets, boosting spending and demand and sometimes leading to higher prices.

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“Given all that President-elect Trump has promised to do quickly — such as hike tariffs, cut taxes further and slash immigration — one can easily foresee a re-acceleration of inflation next year,” Bernard Baumohl, chief global economist at Economic Outlook Group, wrote on Nov. 13. “The Federal Reserve is now in a real quandary.”

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