Goldman Sachs has caused stock market disruption from President Donald Trump’s looming tariffs in its record-breaking haul in the first three months, but CEO David Solomon warned of “material risks” to the economy if there is a world trade war.
The Wall Street giant on Monday was the latest major bank to announce strong revenues, posting net profits of $4.7 billion in revenues in the quarter ending March 31st.
Its trading division reported revenues of $4.2 billion, up 27% from last year’s same time, as investors rushed to remake their portfolios and reduce hits from new tariffs.
“We are entering the second quarter in a significantly different operating environment than we did at the beginning of this year, but we are confident in our ability to continue supporting our clients,” Solomon said in a statement.
He continued, predicting that “the market will remain unstable.”
“Uncertainty about progress and fear about the potentially escalating effects of the trade war has created significant risks for the US and the global economy,” Solomon said.
“The recession outlook is rising with increasing indications that economic activity is slowing around the world.”
Solomon’s warning comes days after Jamie Dimon, Crosstown’s rival at JP Morgan, sounded an alarm that the world trade war would create “substantial turbulence” in the country’s economy.
Goldman’s pimples in the opening quarter were steadily etched despite the market steady inscription after Trump’s inauguration, after vowed to implement tariffs on global trading partners.
On March 27, the administration announced its 25% obligation on foreign automobile imports and auto parts. This came into effect on April 3rd. Trump deployed hard mutual tariffs during his infamous “liberation day” speech at the White House on April 2, leading to a widespread sale.
However, Trump reversed the course last Wednesday hours after mutual tariffs began, announcing a 90-day suspension for all countries except China.
In a revenue call, Solomon praised Trump for his U-turn.
“We are encouraged by the recent actions of the administration to pursue a more progressive policy process that allows negotiations with many countries to be considered,” he said in his revenue call.
“The administration is praiseworthy that focuses on trade barriers and strengthening US competitiveness.”
But after the election victory over Kamala Harris ended, the bank’s highly hampered “Trump Bump” that led to a short increase in transactions was over.
The financial giant said investment bank fees fell by 8% to $1.9 billion, but Solomon also said discussions about M&A transactions are ongoing.
“Obviously, if the landscape is more constrained, there’s a risk that it will be slower,” he said.
Last week, JPMorgan, Morgan Stanley and Wells Fargo all reported better returns than expected.
Goldman shares have fallen 12% since tariffs were announced earlier this month, while JPMorgan and Morgan Stanley are down 4% and 9% respectively.
The income report had some troubling news for Goldman. Its revenue assets and wealth management arms are units that cater to institutions and high net wells, and fell 3% to $3.68 billion due to losses in equity and debt investments.
Solomon, who raked in $309 million in compensation last year, and his assistant director, John Waldron, face heat from Wall Street observers after receiving a five-year, $80 million golden hand cuffs bonus.
The eye-opening amounts subject to being signed by the bank’s compensation committee were considered a play to keep Solomon and Waldron in the company.
Last month, the Financial Times reported that Waldron was focusing on a $500 million job in private equity with Marc Rowan’s Apollo Global Management.
Similarly, payout advocates point to Goldman’s surge in profits, with stock prices plummeting more than 30% over the past year.
