Wall Street Is Thriving on Chaos — Will It Last?

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**Ed Elson** (1:15)
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If money is evil, then that building is hell.
Welcome to Prof G Markets. I'm Ed Elson. It is April 16th. Let's check in on yesterday's market vitals. The S&P 500 hit a fresh record high on hopes for peace talks in the Middle East. The US and Iran may extend the ceasefire another two weeks for more negotiation time. The Nasdaq also climbed while the Dow fell. Brent crude was roughly flat on the day, hovering around $95 per barrel. And finally, Live Nation shares dropped 6% after a jury found that Live Nation and Ticketmaster held a monopoly in the events industry.
Okay, what else is happening? America's biggest banks just had a strong quarter and largely because of the war. Goldman Sachs, JP Morgan, Wells Fargo, Citigroup, Bank of America and Morgan Stanley all reported higher than expected earnings for the first quarter of 2026 And that was fueled largely by an increase in trading volumes due to the volatility related to Iran. Equity's trading revenue alone jumped nearly 27% on average across the six firms. Still, the US financial sector is up less than 3% over the past week. In the earnings call, several of the CEOs struck a notably cautious tone as geopolitical uncertainty lingers. Jamie Dimon warned of wars, energy price volatility, trade uncertainty, large global fiscal deficits and elevated asset prices. Goldman Sachs CEO David Solomon also pointed out heightened uncertainty in parts of private credit and the conflict in the Middle East. And Citigroup CEO Jane Fraser warned that one great first quarter does not a full year make. So, here to break down Wall Street's latest earnings from these big banks, speaking with Saul Martinez, head of US Financials Research at HSBC. Saul, good to see you. Some solid earnings from the big banks this week. But I think the thing that really jumps out to me and I think to investors too is, great quarter for trading. And it seems like that was largely a result of this volatility related to the war. What do you make of this first quarter for the big banks?

**Saul Martinez** (4:03)
It was a good quarter, as you mentioned. You had very strong earnings for share growth. The median EPS growth for the seven banks and investment banks that I cover was 23 percent. Underlying operating trends were good. But as you mentioned, a key takeaway was that you had exceptional results in capital markets businesses. And if you think about capital markets business, it is good to break them down into two broad buckets. There's the investment banking side where firms work with the clients or corporates and entails advising on M&A and underwriting and raising capital. That was very strong. Also, 29 percent year-on-year growth. You mentioned volatility because it's interesting because historically high volatility has not been good for investment banking, but it has been good for sales and trading. But right now, we're hitting on all cylinders where trading results are really strong and benefiting from volatility, but it's not undermining deal-making. I think a lot of corporates have now come to the conclusion that volatility may be a feature of the system as opposed to a bug and have to continue investing and raising capital and doing deals. Now, on the trading side that you mentioned, yes, the war did help. I do think, though, that trading was already tracking.