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A common complaint from Wall Street bosses is that investors don’t give proper credit for the vast amounts of money that rolls in from flipping shares and bonds. Goldman Sachs’ windfall from equities trading shows why this bothers them — and also justifies investors’ preference for more predictable sources of income.
Goldman made $4.2bn of equities trading revenue in the first three months of 2025. Its chief rivals Morgan Stanley and JPMorgan, which reported earnings days earlier, made around $4bn each. It was a record for all, and an unanticipated one. Their combined $12bn from shifting stocks was about 24 per cent more than expected, according to Visible Alpha.
It’s not true to say investors don’t care about this milestone — but it’s clear they’re not terribly moved. While Goldman’s earnings were 14 per cent higher than analysts had projected, the stock rose 2 per cent on Monday, suggesting this isn’t the kind of boost that’s expected to last. The same, more or less, applied to Morgan Stanley days earlier.
Of course, that’s partly because the first quarter of 2025 is now ancient history thanks to Donald Trump’s stop-start tariffs. Until March 31, this year the S&P 500 had moved at most a couple of per cent in each direction from day to day. In April, it has fallen 6 per cent and risen 9.5 per cent within single trading sessions.
Investors are now back to considering an old Wall Street question: whether what’s coming is ‘good’ volatility or ‘bad’. When the first prevails, clients trade busily and banks sit profitably at the centre of the spider’s web. During the second, sudden lurches cause everyone to press pause, and traders are left twiddling their thumbs.
Morgan Stanley chief Ted Pick thinks this is the good kind. JPMorgan’s Jamie Dimon and Goldman’s David Solomon are a little more cautious. All are open about what they don’t know, which is a lot. And things change quickly: JPMorgan predicted in mid-February that its quarterly trading revenue would grow in low double digits; it actually increased 21 per cent.
Trump’s fickle trade policy is causing volatility to spread to banks’ other divisions too. Morgan Stanley has seen cash balances rise as brokerage clients sell out of positions and keep cash lying around. JPMorgan noted that customers in its consumer bank seem to be spending more now, ahead of tariffs kicking in later.
Some things at least remain predictable. All the big firms have more capital than they need, and ample padding against bad loans. Mergers and underwriting are on hold, but will return. Trading profit comes and goes, but the de facto oligopoly of the big US houses remains in effect unchallenged.
Meanwhile, it makes sense to turn a deaf ear to noise — both good and bad. Solomon said on Monday that “everyone would like less uncertainty”. He was talking about his clients’ views on trade policy, but the sentiment applies to almost everything.
john.foley@ft.com
