Episode summary
Bloomberg Businessweek Daily Podcast: Big Bank Earnings Begin
Bloomberg Businessweek Daily
· · Hosts: Carol Massar, Tim Stenovec · Guests: Herman Chan, Mamadou-Abou Sarr, Gautam Mukunda, Natalia Emanuel
Summary
Big bank earnings were the day’s first read on markets, and the message was mixed but still constructive. The analyst said Goldman Sachs stood out on equity trading, with equity trading up 72% year over year, while fixed income lagged in a higher-for-longer rate backdrop. JPMorgan was strong on equities but showed a surprise drop in fixed-income trading revenue, and Wells Fargo beat on resilient customers and historically low delinquencies. The analyst argued that credit remains solid, deposits and lending are still growing, and another Fed hike could support net interest income into 2027.
The conversation then turned to the AI trade and whether enthusiasm has outrun fundamentals. The founder of V-Square said the market is still resilient, but valuation risk is real, especially around hyperscaler spending and the debt used to finance it. He pointed to 219 billion of new hyperscaler issuance by August and said 2027 is when the market may begin judging whether the buildout is producing cash flow rather than just investment deployment.
A columnist warned that AI companies may be underestimating the scale of the security threat. He argued that recent hacks suggest AI tools are lowering the barrier to cyberattacks, which could eventually lead to a much more serious systemic event. The final segment shifted away from markets and into workplace design, where the economist argued that in-person work boosts creativity, mentorship, and idea generation, especially for younger workers, even though remote work still helps caregivers and parents.
Key takeaways
- The analyst said Goldman Sachs led the banks on equity trading, with equity trading up 72% year over year.
- The analyst said Wells Fargo’s consumer book showed historically low delinquencies and strength in prime and near-prime borrowers.
- The founder of V-Square said AI-related spending is still an investment rollout phase, with 2027 likely to be the real test of cash flow.
- The columnist said AI tools are making cyberattacks easier and that the industry should back real regulation instead of lobbying against it.
- The economist said in-person brainstorming produced 14% more ideas than Zoom in research she cited, with the biggest gains for junior workers.
Notable quotes
“Goldman Sachs led. And we say Goldman was the gold standard for the third quarter, uh, particularly, uh, with equity trading up 72% year over year”
“Cracks and credit really habit really formed. We were hoping to hear. We were looking to hear for something in terms of, um, anecdotal shifts and changes in the in the bank's stance”
“For me it's more about are we going to far on stretch valuation not backed by the balance sheet health and the quality of this”
“what we see is that in-person connection, face to face, is really important for boosting creativity and boosting mentorship”
How the episode opens
This is Bloomberg Businessweek daily reporting from the magazine that helps global leaders stay ahead with insight on the people, companies, and trends shaping today's complex economy, plus global business, finance and tech news. As it happens. The Bloomberg Businessweek daily podcast with Carol Massar and Tim Stanback.
As you know, big banks kicking off our earnings season earlier this morning, JPM, uh, JP Morgan, uh, Goldman Sachs shares little change we've seen. Keep in mind JPM rallied 3% on its intraday high. Goldman rallied 4% at its intraday high.
And then Tim there's Wells Fargo down about 1.7% down as much as 3.6% its intraday low today. Citi dropping back to after an earlier 1% gain but now down roughly about 4%. I just point that out because I just feel like investors have been trying to kind of read the tea leaves or make sense of these reports.
It feels like, well, they'll help us make sense of this. We've got Herman Chan with a senior U.S. bank analyst at Bloomberg Intelligence.
He joins us here in the Bloomberg Businessweek studio. Here are some of the headlines. JP Morgan Post's surprise drop in fixed income trading revenue.
Goldman's equity traders post big haul as credit rates miss. Wells Fargo beats as resilient customers curtail loan losses. That's just a handful.
That's what we've learned so far today. How would you characterize this this group as a whole? Lots of puts and takes.
And you see this in today's trading action. Uh, equity trading was the highlight for the group. Uh, Goldman Sachs led.
And we say Goldman was the gold standard for the third quarter, uh, particularly, uh, with equity trading up 72% year over year. Uh, JP Morgan also strong on the equity trading fronts, but fixed income lagged uh, the higher for a longer rate backdrop.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- ai trade concerns
- chipmaker selloff
- bank earnings season
- semiconductor weakness
- fed rate hike expectations
Companies and tickers mentioned
- V-Square
Watch the episode
Watch “Bloomberg Businessweek Daily Podcast: Big Bank Earnings Begin” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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