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Market volatility drives record bank trading revenue
“Now, on the trading side that you mentioned, yes, the war did help. I do think, though, that trading was already tracking—the markets businesses were already tracking to pretty good results even before the war. On average, I think you had 17% year-on-year growth overall. As you mentioned, equities was a particular standout. I think one of the big questions, though, as we go forward is how durable these results are, especially in markets.”
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Corporates view volatility as a permanent feature
“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.”
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Prime brokerage provides durable bank revenue growth
“But the business has changed some, so it's not just intermediation, which you're talking about, but there's a financing piece of it. Things like prime brokerage and where investment banks are providing loans to hedge funds, that has grown a lot. If you look at the segment disclosures, for example, and you look at the markets businesses and the size of the balance sheets of these businesses, they are growing quite a bit. And that tends to be a little bit more durable than the intermediation side.”
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Consumer spending remains stable in E-shaped economy
“Unemployment is really important here. As long as people are employed and wages are going up, they're spending. We hear a lot about the two-speed economy and the K-shaped economy. I think a better way to frame it is an E-shaped economy, where the high end is growing more, spending more than the low end. But there's no delta, there's no inflection in terms of the trends right now. There's not a worsening at the low end. It's kind of stable.”
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Bank CEOs remain cautious despite record profits
“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.”
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“But the business has changed some, so it's not just intermediation, which you're talking about, but there's a financing piece of it. Things like prime brokerage and where investment banks are providing loans to hedge funds, that has grown a lot. If you look at the segment disclosures, for example, and you look at the markets businesses and the size of the balance sheets of these businesses, they are growing quite a bit. And that tends to be a little bit more durable than the intermediation side.”
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Cloudflare enterprise sales cycles have finally shortened
“The language we had been talking, we've been using over the last couple of years with Cloudflare, and with a number of enterprise software type companies, the elongated sales cycle, sort of the trepidation of their customers to commit to spending, those days seemed to be well past us. It was another very solid report. They grew revenue 34% for the quarter, well exceeding their own guidance, guiding for another tremendous year, 28% revenue growth.”
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Airbnb is transitioning into a mature lodging business
“Increasingly, when I look at Airbnb, I see Marriott. I see a mature lodging business, asset light, that can outperform but is not going to be a high-growth stock. I've kind of given up on experiences as kind of a new rocket ship. I think now we're just kind of waking up to this is more of a lodging company than it is a tech company, maybe?”
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Shopify pivots toward AI-driven agentic commerce
“I think one of the question marks I have with Shopify, it's not really specific to their business, but we just hear more and more talk about this agentic commerce, right? And exactly what that means. And so I think we're going to see how that opportunity and agentic commerce shapes up over the coming quarters and years. They certainly discussed their AI investments on the call. They're very excited with the opportunities, the efficiencies, helping their merchants run better businesses.”
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Ferrari projects minimal revenue growth for 2026
“They're only guiding for minimal revenue growth in 2026, under 5%, no margin expansion. This, they say, is temporary. They're doing model changeovers, but look, the Ferrari model is you got a huge waiting list. Just sell the cars, just jack up prices. I don't get why it's working. I think I still like this company, but it's still trading at more than 30 times expected earnings.”
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Spotify exhibits significant pricing power and margin expansion
“I saw operating margin for the quarter 15.5%. That's versus 11.2% a year ago. And so I think we had some questions really early on in the Spotify story as to exactly how quickly they could get to profitability and how profitable the company could be given the nature of the relationships with publishers and just the music business in general. You know, Travis, I just realized they passed a $2 price increase on the family plan... I'm happily, happily paying.”
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