Goldmans Blockbuster Earnings Proves How They’re Milking the Trade War Freak Show for All It’s Worth

“Trade war? Never heard of her”-DJ SOL

Well, DJ Sol (read: David Solomon) and The Boys just backed up the brinks truck on uncertainty last quarter. And when I say backed up the brinks truck, I mean Goldman absolutely bodied its equally unhinged Wall Street colleague’s earning estimates. 

(Source: Giphy) 

For starters, earnings per share clocked in at $14.12, beating the $12.35 estimate like it owed them money. Revenue also came in at $15.06 billion vs. the expected $14.81 billion. And if you’re wondering what kind of chaotic market conditions allow a bank to easily beat Wall Street’s expectations by nearly two dollars per share, well, it’s the kind where equities traders thrive on absolute havoc, courtesy of an all out trade war. In short, Goldman’s equities desk posted a 27% YoY revenue surge to $4.19 billion, smashing estimates by more than half a bil. That’s not a beat. That’s a bodybag. And it’s not just Goldman. Morgan Stanley and JPMorgan also dropped monster quarters, with 45% and 48% gains in equities trading, respectively. The common denominator to all of this? Volatility, baby. 

(Source: CNBC) 

Volatility is the new cocaine for Wall Street’s trading desks, and Trump’s trade war antics are pure, uncut Colombian-grade supply—with a special side of Pablo Escobar should you decide to think you’re smarter than you actually are. One day it’s 145% tariffs on semis, the next day chips are exempt again, and while retail is stuck between a red pill and blue pill of getting absolutely rekt, Goldman traders are selling volatility premiums like hot dogs at a ballgame.

Now, with that said, not everything was a DJ Sol rager here. Investment banking revenue dropped 8% to $1.91 billion—just below the $1.94 billion estimate. The reasons for the drop are presumably due to the fact that when the global economy looks like it’s being held together with duct tape and denial, CEOs don’t feel like signing off on $10B M&A deals. Hell, even Goldman admitted the obvious: clients are spooked. David Solomon said the “volatile backdrop” led to “more muted activity.” Translation: everyone and their dogs are sitting on their hands… for now.

(Source: Bloomberg)  

But, but, but… according to management, the backlog of deals are still growing. It’s not dead. It’s sleeping. Just waiting for the Fed to stop gaslighting everyone and for the trade headlines to cool down enough for CEOs to remember how to use a pen. The good but not great news though is that fixed income revenue came in at $4.4 billion—up 2%, but still a miss vs. the $4.56B estimate. What’s more is that asset and wealth management brought in $3.68 billion, which also missed the $3.84 billion forecast. But hey, Goldman now manages $3.17 trillion in assets, and they’re pushing into private equity for retail clients—meaning if you’re rich enough and want exposure to illiquid garbage with the Goldman stamp on it, now's your time. 

Oh, and just to top it all off? David Solomon just locked in a fat $80 million retention bonus to stay CEO through 2030. And love him or hate him (and trust us, plenty of folks in the building do both), he’s steering the ship through a minefield of economic uncertainty like a guy who knows his yacht payments are safe… because they are LOL. So yeah, Goldman Sachs just stunted on everyone, and their message is clear: “Yeah, the world’s a mess. No, we’re not panicking. Yes, we’ll keep printing billions while the rest of you freak out.” Meaning, as long as volatility stays high and uncertainty keeps CEOs frozen like deer in headlights, Goldman’s traders will keep milking this freak show for every last basis point. 

(Source: Giphy) 

Of course, Goldman’s stock is still down -10% YTD, but hell, with numbers like these… that might not last long. Especially if the chaos keeps coming—which, let’s be honest, it probably will. So with that, do what you will with this information, and keep your eyes on Goldman going forward. As always, place your bets accordingly, friends! Until next time… 

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Stocks.News does not hold positions in companies mentioned in the article.