How Far Could Trump Drive Goldman Sachs’s Earnings?

Trump-induced volatility spikes trading activity

Post-election uncertainty has spurred volatility in stock markets around the globe. But as investors adjust their portfolios according to the election outcome, trading volumes have risen, and banks (XLF) with large exposure to trading activity like Goldman Sachs (GS), Morgan Stanley (MS) and J.P. Morgan (JPM) have become direct beneficiaries of the heightened volatility.

How Far Could Trump Drive Goldman Sachs’s Earnings?

Guy Moszkowski, an analyst at Autonomous Research, said that if the volatility seen on election night persists, “you could have some significant interest rate and stock market activity. If they’re within reason, rather than a collapse in valuations, you could see a pretty active fourth quarter and first quarter next year, during the critical first 100 days of any presidency.”

In a note to employees last week, Goldman Sachs Chief Executive Officer Lloyd Blankfein asked everyone to stay optimistic after the election outcome. Blankfein noted that while he can’t be certain if the election will be “good or bad in the long-run,” Trump’s proposed plan to lower taxes and increase spending could be a boon for economic growth. Additionally, easier regulations and higher interest rates will also benefit the bank’s earning capacity.

Separately, at a news conference, Blankfein mentioned that Trump’s policies are “asset friendly and market friendly.” Notably, shares of Goldman Sachs have risen ~20% since November 9.