What’s Behind a Red-Hot Quarter for Bank Earnings

Summary

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WSJ What’s News – PM Edition

Episode: What’s Behind a Red-Hot Quarter for Bank Earnings
Date: July 14, 2026
Host: Alex Osila
Podcast by: The Wall Street Journal

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Episode Overview

This episode covers a range of significant financial and business news, anchored by a deep-dive into why U.S. banks have reported an exceptionally strong quarter. The discussion includes analysis of cooling inflation, the factors behind the banking sector’s boom, macroeconomic risks, updates on U.S.-Iran relations impacting global oil prices, congressional testimony from Supreme Court justices, a health alert over bagged lettuce, and the record-breaking auction of a T. Rex fossil.

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Key Discussion Points & Insights

1. Cooling Inflation and Economic Outlook

• Inflation Data (00:52 - 02:46):
  • Consumer prices rose 3.5% year-over-year, down from 4.2% the prior month, surprising analysts and briefly easing Americans’ concerns over inflation.
  • Key drivers of lower inflation included a “de-escalation with the war in Iran,” which led to lower gas prices, as well as cooler prices in sectors like car insurance, hotels, and cell phone plans.
  • “Overall, even if you exclude food and energy prices, inflation was basically zero month over month in June.” — Matt Grossman, Economics Reporter (01:58)
• Sustainability of Low Inflation:
  • Matt Grossman warns that the present relief may not persist, noting oil prices are already rising as the Iran conflict resumes.
  • Categories such as airfares, groceries, used cars, and hotels are unlikely to keep getting cheaper.

2. Red-Hot Bank Earnings: What’s Driving the Boom?

• Record Profits and Market Conditions (02:46 - 05:21):
  • The biggest banks — JP Morgan, Goldman Sachs, Bank of America, Citigroup, and Wells Fargo — reported combined second-quarter profits of $49B (up 39% year-over-year).
  • Factors cited:
    • A surge in IPO activity, notably SpaceX’s historic listing, which drove up Goldman’s equity underwriting revenues.
    • Market volatility from the Iran conflict, boosting trading revenues.
    • Record-high M&A activity, both domestically and worldwide.
  • “We had this really historic IPO being SpaceX...revenue from its equity underwriting business more than double.” — Gina Heeb, Banking Reporter (03:21)
• Consumers’ Financial Health:
  • Despite concerns over high gas prices, consumers remain resilient, continuing strong credit card spending with improving delinquency rates at the big banks.
  • JP Morgan “dismissed this idea of the K-shaped economy… JPM actually said across income segments it saw continued spending, low loan delinquencies.” (04:01)
• Risks Highlighted by Bank Leaders:
  • Executives cautioned that political uncertainties (e.g., Iran conflict, federal deficits, inflation) could quickly reverse these gains.
  • Businesses and clients remain wary despite current strong financial data.
  • “All of them had this acknowledgement that the good times don’t always last…still have this conflict in the background. It’s very uncertain.” — Gina Heeb (04:44)

3. Geopolitical Update: U.S., Iran, and Global Markets

• Strait of Hormuz Developments (05:21 - 06:16):
  • The U.S. reinstated a naval blockade of Iranian ports, escalating tensions.
  • President Trump walked back his proposal for a 20% shipping fee for cargo through the Strait of Hormuz, instead preferring to strike trade and investment deals with Gulf nations.
  • “They would love to invest more money in the United States at record amounts and that would be very acceptable. And this way there’s no fee.” — Donald Trump, President (06:01)
  • The administration’s inability or opposition among officials to instituting such shipping tolls was noted.
• Market Reaction:
  • U.S. indexes mostly rose on the back of strong bank earnings, led by a 0.9% gain in the Nasdaq.
  • IBM shares plummeted 25% after a profit warning, a record drop for the company.
  • Oil prices eased after presidential policy reversal.

4. Supreme Court Justices Testify in Congress (07:34 - 08:14)

• Elena Kagan and Amy Coney Barrett appeared before Congress for the first time in seven years, addressing the court’s $228 million budget request, which includes a notable $14 million for increased security post-Roe v. Wade.
• Amy Coney Barrett shared the personal impact:
  • “I didn’t expect that performing this service was going to put me in the position of explaining to my children what a bulletproof vest was and why I had to wear one.” — Amy Coney Barrett (08:04)

5. ICE Suspends Traffic Stops (08:14 - 08:41)

• In the wake of two fatal shootings by immigration officers in one week, ICE paused its widely used traffic stop arrests, raising questions about the agency’s ability to meet internal quotas moving forward.

6. Midterm Election Funding (08:41 - 09:27)

• Billionaire Ken Griffin, founder of Citadel, has donated $40 million, with potential to double before November, focusing especially on Senate races. His single largest donation: $10 million to the Senate Leadership Fund.

7. Health Alert: Lettuce-Linked Outbreak (09:27 - 10:23)

• An outbreak of cyclosporiasis, a serious foodborne illness linked to pre-washed bagged salads, is under investigation.
• Michigan hardest hit, with over 3,300 cases out of 34 states affected.

8. Record-Breaking Dinosaur Auction (10:23 - 11:41)

• A 38-foot-long T. Rex, nicknamed “Gus,” sold for $50.1 million at Sotheby’s, the highest ever for a dinosaur fossil.
• “It’s 61% complete by bone count, 75 to 80% complete by bone mass, which is extraordinary…” — Julie Davich, Journal Contributor (10:51)
• Gus was named after Gary Licking, the late ranch owner where the fossil was found in South Dakota.

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Notable Quotes & Memorable Moments

• On inflation’s narrow improvements:
  “Even if you exclude food and energy prices, inflation was basically zero month over month in June.”
  — Matt Grossman (01:58)
• On consumer resilience:
  “JP Morgan actually dismissed this idea of the K-shaped economy...across income segments it saw continued spending, low loan delinquencies.”
  — Gina Heeb (04:01)
• On a moment of personal risk for Supreme Court justices:
  “Explaining to my children what a bulletproof vest was and why I had to wear one.”
  — Amy Coney Barrett (08:04)
• On the fossil market triumph:
  “61% complete by bone count, 75 to 80% complete by bone mass…extraordinary.”
  — Julie Davich (10:51)

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Timestamps for Key Segments

• 00:52 – 02:46: Inflation data & expert insight (Matt Grossman)
• 02:46 – 05:21: Bank earnings breakdown (Gina Heeb)
• 05:21 – 06:16: Iran conflict update & market impact
• 07:34 – 08:14: Supreme Court security testimony (Justice Barrett)
• 08:14 – 08:41: ICE traffic stop suspension after fatal shootings
• 08:41 – 09:27: Ken Griffin’s multimillion-dollar midterms spending
• 09:27 – 10:23: Lettuce-linked cyclosporiasis outbreak
• 10:23 – 11:41: Gus the T. Rex’s record-setting sale (Julie Davich)

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Conclusion

This episode offers a brisk yet comprehensive snapshot of the day’s major business, economic, legal, and cultural stories, with special attention to factors underpinning a blockbuster quarter for U.S. banks, the durability of the economic recovery, and the ripple effects of geopolitical events. Noteworthy personal moments from figures like Amy Coney Barrett and details about high-stakes auctions intersperse the financial analysis, maintaining the show's signature blend of expertise and accessibility.

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Transcript

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[Alex Osila]

Inflation cooled last month, offering some relief to Americans, but don't count on it to last. Plus, big banks raked in soaring profits last quarter. We're in a very healthy, active, exuberant

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market with very high prices, very high volumes.

[Donald Trump]

We benefit from that. We just don't know how long it will continue.

[Alex Osila]

And a T. Rex named Gus just became the world's most expensive dinosaur. It's Tuesday, July 14th. I'm Alex Osila for the Wall Street Journal. This is the PM edition of what's news, the top headlines and business stories that move the world today. New data out today show that consumer prices were up three and a half percent last month from a year earlier, beating analyst expectations and giving Americans a bit of a break on inflation. Prices rose somewhat more in May. They were up 4.2% that month. The news came as Fed Chairman Kevin Warsh testified before Congress today, telling lawmakers that the central bank won't tolerate high inflation.

[Matt Grossman]

There might be some that look at

[Meta Workforce Academy Announcer]

this morning's data and say, oh, mission

[Alex Osila]

accomplished, everything is swell. That is not my view. For more on what drove inflation lower and whether we can expect that to stick around, I'm joined now by WSJ economics reporter Matt Grossman. Matt, it seems like lower gas prices because of the de escalation with the war in Iran are really the thing that led to these lower inflation numbers. Where else did consumers see that lower inflation play out?

[Matt Grossman]

Prices across the board were pretty cool in categories like car insurance, hotels, cell phone plans. Consumers actually saw price decreases last month as well. And so overall, even if you exclude food and energy prices, inflation was basically zero month over month in June.

[Alex Osila]

Should we expect this cooler inflation to stick around? Oil prices have already risen a lot this week with the Iran war heating up again. Are there other forces that policymakers are watch that could push up prices?

[Matt Grossman]

The news probably won't be this good throughout the rest of the year. Like you said, oil is already rebounding. We can't expect that. Airfares, grocery prices, car insurance, used cars, hotels, that those are going to keep getting cheaper month after month.

[Alex Osila]

That was WSJ economics reporter Matt Grossman. Thank you, Matt. Thank you The Wall street boom just keeps going and it continues to lift profits for the country's biggest banks. You heard Jamie Dimon's note about the quote, healthy active market from JP Morgan's earnings call earlier in our show. Well, JP Morgan, Goldman Sachs, bank of America, Citigroup and Wells Fargo all reported second quarter results today. And as a group, their profits came to more than $49 billion. That's a 39% jump from a year ago and beat analyst estimates.

[Gina Heeb]

We had this really historic IPO being SpaceX, and that was great for these big banks, specifically Goldman. You saw revenue from its equity underwriting business more than double. And that was the bank that led this ipo. We saw a lot of volatility in the market because of the Iran conflict, which is good for traders. And then also M and A activity. We saw some records there as far as volumes go. In the first half of the year, we saw the highest levels both in the US and globally for M and A activity.

[Alex Osila]

That's banking reporter Gina Heeb. She says that the bank's results also suggest that consumers are doing well.

[Gina Heeb]

There were some concerns that higher gas prices would pressure consumers, but they've been pretty resilient. We saw consumers continue to spend on cards and we also saw delinquencies actually improve from a year ago at these big banks. And JP Morgan actually dismissed this idea of the K shaped economy that a lot of executives have been talking about the past year plus. And this is the idea that the bottom half of the income spectrum has been doing a lot worse or certain pockets of it have been. JPM actually said across income segments it saw continued spending, low loan delinquencies. So that was a very good sign.

[Alex Osila]

But the bank executives also talked about risks.

[Gina Heeb]

All of them had this acknowledgement that the good times don't always last. And this was a very strong quarter. But we still have this conflict going on in the background. It's very uncertain. The bank of America CEO noted that that could weigh on market perception on IPOs. Jamie Dimon pointed to deficits and other risks in addition to inflation. And then, you know, you do have businesses and executives and clients who are still exercising some caution out there because of all of these uncertainties, despite these strong surface level. Number

[Alex Osila]

an update on the war with Iran. The U.S. military says a naval blockade of Iranian ports is going back into effect today. But President Trump has abruptly reversed course on another part of his plans for the Strait of Hormuz. The President backed off charging a 20% fee on shipping cargo through the Strait he says that different countries called him to say that they would rather invest in the US Than pay shipping fees.

[Donald Trump]

You have Saudi Arabia, uae, Qatar, Bahrain and Kuwait.

[Alex Osila]

That was Trump at the White House during a meeting with the Iraqi prime minister today. Instead of the 20% fee, Trump says he'll do, quote, trade and investment deals with countries in the Gulf.

[Donald Trump]

They would love to invest more money in the United States at record amounts and that would be very acceptable. And this way there's no fee. I don't like the concept of a fee, but at the same time it's not fair that we're protecting this straight for the entire world.

[Alex Osila]

It wasn't clear how the administration would have put shipping tolls in place, and some top US Officials have said in the past that they disagreed with a fee like that. US Indexes mostly rose today after the big bank's strong results kicked off earnings season. The Nasdaq led the gains and closed up 0.9%. The S& P also rose while the Dow was flat. But IBM sank 25%, its biggest decline on record after a profit warning. And oil prices pared their gains after President Trump walked back the plan for a shipping fee on the Strait of Horror Moose Coming up, why Supreme Court justices testified in front of Congress for the first time in seven years and ICE is suspending traffic stops. Those stories and more after the break.

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[Alex Osila]

Supreme Court Justices Elena Kagan and Amy Coney Barrett testified before Congress today. It's the first time the court has sent justices before lawmakers since 2019. So why are they on Capitol Hill? Congress is looking at the court's budget request for the coming fiscal year. The court is asking for $228 million. That includes more than $14 million for increased security for the justices and their families. Barrett told Congress that after the court overturned Roe v. Wade, her security detail sent her home with a bulletproof vest.

[Gina Heeb]

Maybe I lack imagination, but I didn't expect that performing this service was going

[Alex Osila]

to put me in the position of

[Gina Heeb]

explaining to my children what a bulletproof vest was and why I had to wear one.

[Alex Osila]

The US Marshals service says that the number of threats against judges has risen drastically in recent years. Current and former ICE officials tell the Journal that the agency has suspended traffic stops. The decision comes a day after a federal immigration officer fatally shot a man in Maine. It was the second fatal shooting by an immigration officer in a week. Traffic stops are one of the most common ways that immigration officers have to arrest immigrants. If they're not using them. It would likely make it difficult for the administration to meet its internal arrest quotas. And billionaire Ken Griffin, the founder of investing giant Citadel, has poured roughly $40 million into helping Republicans win the midterms, and that number could easily double before November. He's particularly focused on Senate races. The Journal understands that he thinks that's where his money can have the greatest long term impact. Analysts say that Republicans have a better chance of keeping control of the Senate in the midterms while the House is more up in the air. Griffin's single biggest gift this year was $10 million to the Senate Leadership Fund. That's a group aligned with Senate Majority Leader John Thune. If you're eating a salad right now, you may want to take a short breather. Health officials in Michigan are narrowing in on a culprit behind the foodborne illness that has sickened thousands across the US they suspect that it's lettuce, with bagged pre washed salad kits posing a particular risk. The FDA says lettuce is one of several produce items under investigation. The CDC says that so far 34 states have reported cases of cyclosporiasis. It can cause explosive diarrhea and vomiting. More than 140 people have been hospitalized. Michigan has been hit hardest with more than 3,300 cases. But cases are also climbing in Ohio, Texas and Illinois. And finally sold. A 38 foot long Tyrannosaurus rex named Gus has sold for $50.1 million at Sotheby's. It's an auction record for a dinosaur skeleton. The buyer won a 10 minute bidding war and remains anonymous. The fossil market has been on the rise, but the US Is the only country where fossils taken from private land can be sold, and it's a whole matter of debate whether dinosaur skeletons should be privately owned at all. Many buyers do loan their dinosaurs to museums for the public to enjoy, like the previous dinosaur record holder, Apex the Stegosaurus. Ken Griffin, the Citadel founder we just told you about, spent $44.6 million on APEX in 2024. And that dinosaur is now on display at New York's Museum of Natural History. So what makes Gus a $50 million dinosaur.

[Julie Davich]

It's one of the largest T. Rexes ever discovered. Also, its percentage of completeness. No dinosaur is ever going to be 100% complete because you know, it is 67 million years old. So it's 61% complete by bone count, 75 to 80% complete by bone mass, which is extraordinary, especially considering the size. That's what makes it so special.

[Alex Osila]

That's Journal contributor Julie Davich. She says Gus got its name from where it was found.

[Julie Davich]

It was named for Gary Licking. Gus was his nickname. He owned the ranch in South Dakota where Gus the T. Rex was found and excavated. He sadly passed away about a year into the excavation process. And so they decided to name it after him and use his nickname. And it's actually Gus Rex.

[Alex Osila]

And that's what's news for this Tuesday afternoon. Today's show is produced by Danny Lewis and Anthony Banci with supervising producer Tali Arbel. I'm Alex Osola for the Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.

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