The numbers don't know there's a war on
INTERNAL MEMO: Q1 2026 DEBRIEF
TO: Anyone who still reads these
FROM: The desk
RE: The numbers don't know there's a war on
DATE: April 15, 2026
Colleagues,
Per our ongoing tradition of pretending we have things figured out, I'm pleased to report that Q1 earnings season has kicked off with the kind of results that make macro bears question their entire value system.
Goldman Sachs — $17.23 billion in revenue, second-highest quarterly total in the firm's history. Net earnings up 19% year-on-year. EPS of $17.55, against an estimate of $16.49. Advisory revenue up 89%. Equity trading: a record $5.33 billion, up 27%. The stock fell 3% on the news, because of course it did.
JPMorgan followed on Tuesday. Net income rose 13% to $16.49 billion. Revenue of $50.54 billion against a $49.17 billion estimate. Fixed income trading up 21% to $7.08 billion. Investment banking fees up 28%. Jamie Dimon used the word "resilient" twice in his statement, called the outlook "uncertain," and trimmed full-year net interest income guidance from $104.5 billion to $103 billion. The market shrugged at the beat and fixated on the trim. Shares slipped nearly 3% in early trading before recovering.
Citigroup hit $7 billion in markets revenue for the quarter, with Jane Fraser describing it as an "exceptionally strong start." Fixed income up 13%. Equity markets up 39%. M&A fees at a record for a first quarter.
Three of the most powerful financial institutions on the planet just reported some of the best quarters in their respective histories. The Strait of Hormuz has been partially closed for six weeks. Brent crude touched $103 on Monday. The US Navy is blockading Iranian ports. A ceasefire technically expires in seven days.
I raise these facts not to alarm you, but because they seem relevant.
Here is what the numbers are telling us, if we are willing to listen to them without filtering out the parts that don't fit the narrative:
The banks made extraordinary money in Q1 because of the chaos, not in spite of it. Goldman's record equity trading revenues were driven by prime brokerage financing to hedge funds and surging cash equities volumes — that's volatility monetised. JPMorgan's 21% FICC surge came from "rising activity in commodities, credit, currencies and emerging markets." War-era oil spikes, emerging market stress repricing, FX dislocations from the dollar-euro divergence as the ECB moves toward hikes while the Fed sits still — these are the inputs. The trading P&L is the output.
The banks are the casino. The geopolitical crisis is the foot traffic.
This is not a criticism, exactly. It is a structural observation about how large financial institutions relate to disorder. They warehouse risk. When risk moves, they earn the spread. The worse things get — up to a certain threshold — the more activity they see, the more their desks hum. War is, among other things, a revenue event for the trading floor. Goldman's advisory business posted an 89% jump in M&A fees in a quarter when global growth forecasts were being slashed and the IMF was modeling scenarios where oil stays 100% above its January baseline into 2027. Somewhere, amidst the geopolitical wreckage, deals were getting done.
What breaks the model isn't volatility. It's the kind of sustained, paralyzing uncertainty that freezes decision-making entirely — the kind where nobody transacts because nobody knows what anything is worth. We're not there. We are, apparently, somewhere considerably more profitable.
Now. The guidance.
JPMorgan cut its NII forecast. Dimon acknowledged "mounting uncertainties." The CME consensus now prices zero rate cuts from the Fed in 2026. Forward curves have the ECB hiking twice by September. If you run the arithmetic on a world where Frankfurt tightens and Washington holds — EUR/USD already nudging 1.18 — then the dollar weakness story reasserts, EM assets get a temporary reprieve, and European consumers absorb the double hit of energy-driven inflation and higher borrowing costs simultaneously. The ECB's own projections have eurozone headline HICP hitting 3.1% in Q2, against growth of 0.9% for the full year. The Bundesbank's Nagel has been clear about what he thinks needs to happen. Lagarde has been less clear about whether she agrees, which is functionally the same as disagreement, at least for now.
The Fed watching all of this from the sideline is not a neutral posture. It is a choice — a bet that the oil shock is transitory enough that waiting is less costly than moving. Every week the Strait stays clogged, that bet gets more expensive. The March PPI print came in soft, which gave markets something to point at. Core remains contained. But as BMO's rates desk has noted, if the energy shock persists, it will start filtering into core in coming months through transportation, logistics, and manufacturing input costs. The lag is real. The lag is also running.
What strikes me, sitting here with the Q1 reports in one window and the crude futures in another, is the degree to which the financial system has compartmentalized.
The equity market, broadly, is fine. The S&P is trading inside 1% of its all-time high. The Nasdaq added nearly 2% on Tuesday alone, on the back of Oracle, Nvidia, Palantir. Tech doesn't care about the Strait. AI infrastructure build-out doesn't run on Brent crude, it runs on electricity and venture conviction, and both remain available in abundance.
The banking complex just printed some of its best numbers ever.
The IMF is releasing global stability reports with scenarios involving 200bps corporate risk premium spikes and sovereign spread widening in emerging markets.
These things are simultaneously true. That's the environment. Not a world on fire in a way that burns the financial system — a world on fire in a way that creates extraordinary dispersion between those who hold claims on financial activity and those who hold claims on physical-economy outcomes. The hedge fund that cleared record prime brokerage balances at Goldman is not the same entity as the Indian manufacturer trying to procure aluminum feedstock through a constricted supply chain. The JPMorgan trading desk that earned $7 billion on FICC is not the same organism as the European household facing a gas bill 40% above last year's.
The financial economy and the physical economy have always been related but distinct. Right now, they are running in almost opposite directions. That divergence is not sustainable indefinitely. At some point, demand destruction in the physical economy becomes earnings weakness in the financial one. At some point, the loan loss provisions Dimon is carefully managing tick upward.
The question is timing. The market, apparently, has decided that timing is someone else's problem.
No formal action items arising from this memo.
Keep watching the ceasefire clock. April 22 matters more than any earnings call.
— The desk