Goldman’s ‘Midas Touch’ During Turbulent Quarter Delivers Record Trading Results

A historic trading run by Goldman Sachs seems to have been fueled by three things: Red Bull, coffee and turmoil.

The investment bank delivered its best stock-trading quarter ever in the three months through June, according to a statement Wednesday. Its equities trading unit surfed the waves of market volatility sparked by President Trump’s tariffs to the tune of a record $4.3 billion in revenue, good for a 36% year-over-year gain and more than $600 million more than analysts surveyed by StreetAccount anticipated.

Rocking the Roller Coaster

Goldman’s status as the crème de la crème of investment banking has earned it nicknames of both adulation and ire. Eager and brilliant young minds line up for a shot at an internship at  “Goldmine Sachs,” so nicknamed for the platinum paydays of top executives; the acceptance rate to be one of the firm’s interns is below 1%. Then there’s the less flattering and infamous nickname Rolling Stone bestowed in the wake of the 2008 financial crisis: “a great vampire squid wrapped around the face of humanity.”

But friend and foe alike acknowledge that Goldman is Wall Street’s most prestigious investment bank, which makes Wednesday’s triumph a symbolic achievement in addition to a bonus-padding one:

• When the S&P 500 looks like a roller coaster, as it did during the past three months, Goldman reaps a fee windfall from all the stock-buying and selling that takes place. The bank’s equities “intermediation” fees, or the money it earns from acting as a middleman connecting buyers and sellers, increased by 45%.
• Another key source of revenue in volatile times comes from equities financing, which rose 23%. In short, this refers to the money Goldman makes from lending cash to hedge funds and other large buyers navigating choppy market waters in pursuit of their own returns.

Goldman’s top-line metrics also bested analysts’ expectations, with profit climbing 22% to $3.7 billion and total revenue rising 15% to $14.6 billion. Equities desks at rivals JPMorgan and Morgan Stanley also brought in major hauls, though Goldman’s traders netted over $1 billion more than the former.

Dining Out: During the second quarter, Trump delayed imposition of some tariffs to allow for negotiations with trading partners, leading to the “Trump Always Chickens Out” or TACO trade, whereby investors took advantage of the volatility. But the president, at least for now, appears serious about planned August 1 tariffs. That posture hasn’t prompted another selloff so far, but only time will tell if TACO ends up back on the menu.