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A common complaint from Wall Street bosses is that investors don’t give proper credit to the vast amounts they’ve got caught up in by turning stocks and bonds over. The windfall from Goldman Sachs stock trading shows why this bothers them. It also justifies investors’ preferences for more predictable income sources.
Goldman generated $4.2 billion in stock trading revenue in the first three months of 2025. Its major rivals Morgan Stanley and JPMorgan reported revenue a few days ago, but each made around $4 billion. It was a record for everyone and was unexpected. According to visible Alpha, a total of $12 billion from shift inventory was about 24% more than expected.
It’s not true that investors don’t care about this milestone, but it’s clear that they’re not moving badly. Goldman’s revenue was 14% higher than analysts expected, but the stock rose 2% on Monday, suggesting it’s not a kind of boost expected to continue. The same applies to Morgan Stanley a few days ago.
Of course, that’s because the first quarter of 2025 is current ancient history thanks to Donald Trump’s stop-start tariffs. Until March 31st this year, the S&P 500 was moving at most a few percent in the direction of each day. In April, it fell 6% in a single trading session, rising 9.5%.
Investors are now back to considering old Wall Street questions. When the first win comes, clients trade busy, and banks sit profitably at the heart of the spider web. During the second, everyone presses pause in a sudden hurry, leaving the trader to mess with his thumb.
Morgan Stanley’s Chief Ted Pick thinks this is a good variety. Jamie Dimon of Jpmorgan and David Solomon of Goldman are a little more careful. Everything is open about things they don’t know, and there are a lot of them. And things change rapidly. JPMorgan predicted that quarterly trading revenues would rise in double-digit low digits in mid-February. In fact, it increased by 21%.
Trump’s whimsical trade policy will widen volatility in other sectors of the bank. Morgan Stanley’s cash balance has risen as brokerage clients sell out positions and lie in cash. JPMorgan noted that consumer bank customers now appear to be spending more ahead of later tariffs.
At least some remain predictable. All large companies have more capital than they need and have enough padding for bad loans. The merger and underwriting are pending, but will be back. The profits of the transaction come and go, but the virtual oligogoly of a large US home is virtually unchallenged.
On the other hand, turning something stunning into noise makes sense. “Everyone wants to reduce uncertainty,” Solomon said Monday. He was talking about his client’s views on trade policy, but feelings apply to almost everything.
john.foley@ft.com
