Equities Boom, Fixed Income Plateaus at Goldman
- Equities revenue rockets 72 percent in quarterly blowout
- Derivatives and prime financing drive the feeding frenzy
- Fixed income business hits a brick wall, goes nowhere
- Second-best quarter in history for the vampire squid
Brief Summary
Goldman Sachs is back to doing what it does best: churning massive profits off the volatility of the stock market. While the bank’s fixed-income division is stuck in neutral, their equities arm just delivered its second-best quarter on record, fueled by a 72 percent revenue surge. It seems the high-stakes world of derivatives and portfolio financing is more than making up for the stagnation in bonds.
Why This Matters
When the big banks are feasting on record-breaking equity revenues, it is a loud signal that the market is currently addicted to speculation and leveraged bets. You should pay attention because this level of institutional activity often precedes wider market swings. As Goldman profits from the churn, expect the volatility in your own portfolio to remain elevated, as the bank's appetite for risk is rarely satisfied without creating ripples that eventually reach your retirement accounts.