Goldman Sachs kicked off big-bank earnings with a strong report card, posting its second-best quarter in company history for revenue and profit. The great numbers were fueled by a surge in equity trading, with the company’s stocks business reporting $5.33 billion in revenue, the highest in Wall Street history. Investment banking was also a standout, with fees jumping 48% year over year thanks to solid deal activity last quarter.

But the stock still fell 1.89% today as investors focused on a 10% decline in fixed income, currencies, and commodities (FICC) revenue driven by weaker credit trading and a softer mortgage market. Loan loss provisions—the money banks set aside to cover potential loan defaults—rose almost 10% year over year, more than double estimates and the bank’s largest increase since 2020.

More bank earnings ahead

As the first major bank to report, Goldman is setting the tone ahead of results from JPMorgan, Citigroup, and Wells Fargo tomorrow.

From today’s market reaction, it’s clear that expectations are high for these banks—which haven’t been doing particularly well this year—while investors are worried about the effects of the war in Iran on banks’ bottom lines.

Still, some analysts see a more supportive setup emerging as volatility across markets—driven by AI disruption fears, private credit uncertainty, and geopolitical tensions—has created a favorable trading environment. According to Bloomberg, Wall Street’s biggest banks are on track to generate a record $18 billion in equity trading revenue this quarter, up roughly 14% year over year.

And unlike Goldman, peers may also deliver on fixed income. Bloomberg expects Bank of America to post record results in FICC trading, while Citigroup is projected to log its strongest quarter in that business since early 2020.

What to watch this week

This earnings season is a little different than others—less about beats and misses, and more about what’s beneath the surface.

Private credit is one area in focus. While analysts say the risks are more headline-driven than systemic, it’s still worth taking note of. Goldman said little on the topic, as its own private credit fund stayed below its 5% redemption cap, but the company’s significant rise in loan loss provisions suggests it’s bracing for a more challenging credit environment.

Geopolitics is another wildcard, as tensions involving Iran could stoke inflation and weigh on dealmaking. But if Goldman is any guide, activity is holding up: It’s already been a record quarter for mega-deals, with a steady IPO pipeline—including SpaceX and Anthropic—helping sustain momentum.

So as earnings roll in, the real story may not be which bank is growing, but which one is managing risk best in an increasingly uneven market.—SY

🟢 What’s up

• Oracle rose 12.69% as it spotlighted expanding AI capabilities at its Customer Edge Summit.
• Allogene Therapeutics gained 12.32% on positive Phase 2 data showing its CAR T therapy improved cancer cell eradication in lymphoma patients.
• Revolution Medicines soared 41.35% after its pancreatic cancer drug succeeded in a Phase 3 trial.
• Components manufacturer Leggett & Platt advanced 12.61% on news it will be acquired by Somnigroup International in a $2.5 billion all-stock deal.
• Williams-Sonoma added 2.32% following a Goldman Sachs upgrade to Buy, with analysts pointing to a recent pullback as an attractive entry point.
• CoreWeave surged 8.11% as a new deal with Anthropic to power its Claude models boosted confidence in demand for AI infrastructure.

What’s down

• Conagra Brands fell 4.41% as CEO Sean Connolly announced plans to step down after 11 years at the helm.
• Best Buy dropped 2.48% after a Goldman Sachs downgrade to Sell, with concerns mounting over margin pressure from rising component costs.
• Construction supply distributor Fastenal slipped 6.85% despite posting in-line quarterly results.
• Replimune Group plunged 64.29% as regulatory setbacks forced layoffs and manufacturing cuts tied to its rejected cancer-therapy application.

The benchmark for crude oil prices here in the US is West Texas Intermediate, or WTI, while Brent is the international standard. Those are the two prices you’ll see quoted most frequently online and on CNBC—but considering how quickly things in the Middle East are changing these days, savvy traders are realizing that those aren’t the numbers they should be watching.

Brent and WTI reflect the prices of oil futures, which are based on how valuable traders think oil will be in the near future. The oil figure at the top of this newsletter, for example, is really the price of WTI crude futures for May delivery. But the true price of physical oil at this exact moment in time that buyers are willing to pay is known as the spot price. Usually spot and futures prices are a little different simply due to timing, but oil execs and analysts are warning that the prices have diverged dramatically.

For example, spot prices climbed to a record high of $144 per barrel last Tuesday, when WTI closed at $112. In other words, the oil prices you’re seeing on your screen when you’re making investment decisions aren’t the true prices of oil, but where traders expect (or rather, hope) oil prices are going next.

The fact of the matter is that crude costs on the ground are much higher than you think, and that affects every facet of the energy industry, from international refineries to your closest gas station. But knowledge is power, and now that you know the truth, you should prepare your portfolio accordingly.—MR

The Nasdaq is ushering in the new era of the AI trade.

Late Friday, the index announced that memory chip maker Sandisk will be replacing software firm Atlassian in the Nasdaq 100 index starting April 20.

Shares soared 11.83% today on the news. But the single-day move is nothing compared to how much Sandisk has climbed recently: Shares have risen 301.26% this year, and 2,879.36% over the past 12 months (yes, you read that number correctly).

Meanwhile, Atlassian took its ousting like a champ and rose 7.26% today.

The future is hardware

Nasdaq’s move is a sign of the times for how the AI trade is evolving. While traditional software companies have been rattled by the so-called SaaSpocalypse, which questions which of them will survive the AI era, memory storage stocks have had a record-breaking year, as investors anoint them the “picks and shovels” of the AI industry.

Zoom in: Sandisk makes data storage hardware (mainly NAND flash memory chips) which are used for a slew of tech like laptops, servers, USB components, and most importantly, AI data centers. Projections about data center construction and the subsequent need for data storage are the key businesses propelling the stock higher.

The numbers back up the logic: When the company last reported earnings at the end of January, Q2 revenue came in at $3.03 billion, up 61% year over year. Sandisk is projecting its Q3 revenue, which it will report at the end of April, to land between $4.4 billion and $4.8 billion—nearly 60% higher than analyst estimates.

“We expect another very strong quarter driven by continued NAND supply tightness, with investors focused on the path forward for pricing and the company’s customer traction,” wrote Goldman Sachs analyst James Schneider in a note last week, where he reiterated the firm’s Buy rating on Sandisk.

Mesmerized by memory stocks

Sandisk isn’t the only AI hardware name having a blockbuster year. Just today, KeyBlanc analyst John Vinh argued Micron could soar up to 40% higher, even after rising 513.31% over the past 12 months, given the memory chip shortage that has enabled companies like Micron to raise prices for their products.

It’s basic economics: If your product is scarce, you’re in the driver’s seat when it comes to pricing power. But one company’s moment in the sun is another’s downfall. Farewell, Atlassian. Nobody really understood what you did before, and they certainly won’t now.—LB

• Here’s everything you need to know about the US blockade of the Strait of Hormuz, and how it will actually work.
• Trump’s massive reduction in headcount at the IRS has resulted in rampant cheating this tax season.
• Meta Platforms is about to beat Alphabet in the race to become the world’s leading digital ad business.
• Previously-owned home sales fell to a nine-month low this month.
• Trade war deja vu: Trump just threatened 50% tariffs on China in retaliation for the Chinese government reportedly shipping air defenses to Iran.
• Never a good headline: UBS is under fire from the Senate about Nazi bank accounts.

Economic reports: We’ll get another look at inflation with the PPI reading, then small businesses grab the mic with the NFIB small business optimism index. Speaking of grabbing the mic, Fedspeak abounds with appearances from Fed governor Michael Barr, Boston Fed President Susan Collins, Richmond Fed President Tom Barkin, and Philadelphia Fed President Anna Paulson.

Earnings announcements: Big-bank earnings continue with JPMorgan, the biggest bank by assets in the US and one of two non-tech stocks among the 10 highest-earning companies in the S&P 500. We’ll also hear from Johnson & Johnson, Wells Fargo, Citigroup, and BlackRock.