What JPMorgan Is Actually Saying
A JPMorgan research note circulating this week makes a straightforward argument: Wall Street's largest investment banks are set to report strong second-quarter results, and the market hasn't fully priced that in. The catalysts are two things that have been hard to miss — a heavy IPO calendar and the kind of market volatility that keeps trading desks busy.
The note makes a short-term trading call on Goldman Sachs and Morgan Stanley specifically, positioning both as beneficiaries of what JPMorgan describes as bumper IPO issuance and elevated volatility-driven trading income.
The SpaceX Variable
The most attention-grabbing element is the mention of SpaceX and other so-called mega-IPOs as an underappreciated upside driver. That framing is worth unpacking.
A listing at SpaceX's reported private-market scale — the company has traded in secondary markets at valuations north of $350 billion — would be among the largest equity offerings in U.S. history. For the lead underwriters, that means underwriting fees, stabilization trading, and the secondary market activity that follows a high-profile debut. It is not a single line item; it is a revenue event that touches multiple business units simultaneously.
JPMorgan's point is that investors modeling bank earnings may not be weighting this pipeline heavily enough — either because mega-IPO timing is uncertain, or because analysts are applying conservative assumptions to deal fees.
Volatility as a Feature, Not a Bug
The note's other pillar — market volatility as a trading income tailwind — is the kind of argument that sounds counterintuitive until you remember how investment bank revenue actually works. Volatility compresses some business lines and expands others. For equities and fixed-income trading desks, wider bid-ask spreads and higher client activity volumes tend to translate directly into revenue.
The Q2 macro backdrop, characterized by tariff uncertainty and rate sensitivity, has kept volatility elevated by recent historical standards. JPMorgan is arguing that this environment, uncomfortable as it may be for investors, has been good for the trading franchises at the banks it covers.
What the Call Doesn't Say
A few things are worth noting about the scope of this argument. This is a short-term, catalyst-driven trading call — not a claim that Goldman or Morgan Stanley are structurally undervalued or that their business models have changed. JPMorgan is essentially saying: Q2 earnings could surprise to the upside, and the stocks may move on that.
It also doesn't resolve the timing question on SpaceX. A listing that doesn't happen in Q2 doesn't generate Q2 fees. The note's upside case depends on the deal calendar materializing roughly as anticipated — which, in IPO markets, is never a certainty.
For investors in bank stocks, the more durable question is whether a strong quarter driven by deal fees and volatility-era trading income tells you anything about normalized earnings power. On that, the JPMorgan note is quiet — which is itself informative.