Three of the largest brokerages saw trading revenues increase on average 81.4% in the first quarter relative to the quarter before. Goldman Sachs and J.P. Morgan had first-quarter trading revenues of $4.8 billion and $3.7 billion, respectively, a quarterly increase for Goldman of 95% and 97% for J.P. Morgan. Morgan Stanley (MS), which typically sees less variability in its trading revenues, earned $3.9 billion in the first quarter, a 52% jump from the fourth quarter of 2017.
Goldman Sachs’ trading revenue has historically shown a pattern of tracking the variability of the VIX with revenues perking up as markets become choppier. Increased market volatility is typically a boon for active management, long-only and hedge fund traders alike, as greater market dislocation creates more opportunity for profits.